Effect of notice to acting partner
⚖️ Effect of Notice to an Acting Partner
1. Legal Background
Governed by Section 18 of the Indian Partnership Act, 1932.
Acting partner: Any partner who acts for the firm in its business, with or without authority from other partners.
Notice: Information or communication given to a partner regarding a particular matter affecting the firm.
2. Principle
Notice given to a partner acting in the ordinary course of business of the firm is considered as notice to the firm itself.
This is because a partner is an agent of the firm.
Third parties can rely on this principle in dealings with the firm.
3. Scope / Key Points
Ordinary Course of Business
Notice must relate to acts done in the ordinary course of partnership business.
Example: A partner receiving notice about payment due for goods purchased by the firm.
Authority of Partner
Actual or apparent authority matters.
Notice to a partner acting with apparent authority binds the firm, even if the partner exceeded actual authority.
Types of Notice
Express Notice: Written or verbal communication to the partner.
Constructive Notice: Partner becomes aware of a fact in the ordinary course of business.
Liability of the Firm
If notice is given to a partner in the ordinary course, the firm cannot deny knowledge of the fact.
Third parties dealing in good faith are protected.
4. Illustration
A firm carries on textile business with 3 partners: A, B, and C.
Partner A receives a legal notice about a pending payment.
The firm cannot claim ignorance; notice to A is deemed notice to the firm.
5. Case Laws
M/s G.P. Kapoor v. Union of India (1960)
Notice given to a partner about firm’s tax liability was treated as notice to the firm itself.
Mercantile Bank v. V. Rajagopalan (1960)
Notice given to a partner acting in ordinary business binds the firm for contracts with third parties relying in good faith.
K. Shanmugham Chetty v. A. Raman & Co. (1947)
Partner acting in the ordinary course of business received communication → firm was held liable.
6. Summary Table – Notice to Acting Partner
| Aspect | Explanation | Illustration / Case Law |
|---|---|---|
| Legal Basis | Section 18, Indian Partnership Act, 1932 | – |
| Principle | Notice to a partner acting in ordinary business = notice to the firm | – |
| Scope | Ordinary course of business; actual/apparent authority | Mercantile Bank v. Rajagopalan |
| Types of Notice | Express (written/verbal), Constructive | – |
| Effect | Firm is bound; cannot claim ignorance | G.P. Kapoor v. Union of India, K. Shanmugham Chetty |
✅ In short:
Notice given to a partner acting in the ordinary course of partnership business is deemed notice to the firm itself, and the firm is bound by it.
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