Partnership Law

Who signs a contract on behalf of a partnership?

Any partner in a partnership is an agent of the partnership and their fellow partners for the purpose of the partnership business (section 5, Partnership Act 1890). This means that each partner can form a contract on behalf of the partnership that is binding on all of the other members.

A simple contract can be signed by one partner on behalf of the whole partnership and a deed may be signed by two partners or a partners using a witness to be properly executed on behalf of the partnership.

If the partners in a partnership have entered into a partnership agreement, this may include clauses that allow or limit a partners authority to do certain things or to take certain steps, including entering into contracts.

However, even if a contract is signed by a partner in breach of the relevant restriction on their authority under the terms of a partnership agreement, the contract is still capable of binding the partnership if the third party was not aware of the lack of authority.