Can one partner bind the whole partnership to a contract without the other partners' consent?
Generally, yes. Under Ontario's Partnerships Act, each partner is treated as an agent of the partnership and of the other partners for the purposes of the partnership's business, which means a partner can generally bind the whole partnership to a contract made in the ordinary course of that business, even without the other partners' specific consent to that particular deal.
There are limits. If the partner had no actual authority to make that particular contract, and the third party dealing with them either knew that or didn't genuinely believe they were dealing with a partner acting for the firm, the partnership may not be bound. But in the ordinary run of business — the kinds of contracts the partnership routinely makes — outsiders are generally entitled to assume any partner can bind the firm, which is exactly why the unlimited liability rule matters so much in a general partnership. Partners who want to limit each other's authority to bind the firm need to address this explicitly in a written partnership agreement and communicate any limits clearly to the people the partnership deals with, since the default statutory rule favours the outside party's reasonable assumptions.
Key takeaways
- Each partner is generally an agent who can bind the partnership in the ordinary course of business
- This applies without needing the other partners' specific consent to that contract
- The partnership may not be bound if the third party knew the partner lacked authority
- Limit partner authority explicitly in a written partnership agreement if this is a concern