Law · Partnership Law
X, Y, and Z form an ordinary partnership to operate a high-end restaurant. Their written partnership agreement expressly forbids any individual partner from entering into contracts exceeding $10,000 without the unanimous consent of all partners. In June, without informing Y or Z, Partner X enters into a $15,000 contract with 'Gourmet Meats Ltd' (a regular supplier) for the purchase of premium steaks. What is the legal status of the contract with Gourmet Meats Ltd?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The contract is unenforceable because a written partnership agreement always overrides implied authority in dealings with third parties.
- 2The partnership is bound by the contract because Partner X had apparent/implied authority to conduct business of that type.✓
- 3Only Partner X is liable for the $15,000 because he breached the internal partnership agreement.
- 4The contract is void because Partner X acted outside the scope of his express authority.
Correct answer
The partnership is bound by the contract because Partner X had apparent/implied authority to conduct business of that type.
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