Act of Firm

Section 2 of the Act defines act of firm as any act or omission by all the partners (or by any partner or agent of the firm) which gives rise to a right enforceable by or against the firm. Thus it is not necessary that a partner should do an act in the name of the firm under his own hand but it can be done by any other partner or even by an agent of the firm. The act of the firm therefore binds all the partners of the firm as if it were an act done by all of them. Every partner is liable jointly with all the other partners and also severally for all the acts of the firm done while he is a partner.
Mode of doing an act to bind the firm:
Section 22 of the Act gives the mode of doing an act to bind the firm. In order to bind a firm an act or instruments done or executed by a partner or other person on behalf of the firm shall be done or executed in the firm’s name or in any other manner expressing or implying an intention to bind the firm. Where a partner fails to do an act on behalf of the firm the firm shall not be liable.
Following acts are acts of a firm
1) Admission by a partner (Sec 23).
2) Wrongful acts of partner (Sec 26)
3) Misapplication by partners (Sec 27).
A, B, C and D enter into an agreement to purchase goods in the name of A and to divide the goods is specie. There was no agreement to resell the goods. The seller of goods sues A, B, C and D for the price. Are they liable?
There is no partnership between A, B, C, and D since it does not fulfill the essentials of the partnership. There is no agreement that the business must be carried on by all or any of them acting for all.
The seller of goods may however, sue A, B,C and D as joint owners of the goods since they have agreed to divide the goods in specie among themselves besides agreeing to purchase the goods together in the name of A.
Partnership and co-ownership distinguish:
Meaning of co-ownership: Two or more persons may own a property jointly and enjoy the common rights and profits of the property together as co-owners thereof. They are also called joint owners.
1) Agency: partners are agents of one another.
2) Creation: partnership is created by an agreement
3) Transfers of interest: A partner cannot transfer his interest in the partnership without the consent of the other partners.
4) Business: to carry on business is an essential element
5) Profits: An agreement to share profits is an essential element of partnership.
6) Lien: A partner has a lien on the property of the firm owned in common.
7) Partition of property : A partner cannot partition the property of the firm. He can have the partnership property sold upon dissolution of the firm and proceeds divided.
1) One co-owner is not the agent of the other.
2) Co-ownership is created either by no agreement or by the law. It may so exist by virtue of status.
3) Co-owner may transfer his interest in co-ownership without the consent of the other co-owners.
4) Co-ownership may exists without carrying on any business
5) Since the co-ownership may have interest without doing any business, sharing of the profits is not essential.
6) Co-owner has no lien on the property owned in common.
7) A co-owner is entitled to partition or with the consent of the other co-owners, he can have the property sold and obtain the share in the speech.


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