Limits on a partner's authority normally are effective only with respect to third parties who are notified of the limitation.

Question

Limits on a partner's authority normally are effective only with respect to third parties who are notified of the limitation.​

Quizplus · Accepted Answer

This is because third parties cannot be expected to know the internal limitations of a partnership without being notified, and therefore they can only rely on the representations and actions of the partner who appears to have authority. If a partner exceeds their authority and enters into a transaction that is not within the scope of the partnership's business or otherwise violates a limitation, the partnership may be bound unless third parties were notified of the limitation beforehand.

Limits on a Partner's Authority Normally Are Effective Only with Respect