Alain: What kind of voodoo is this?? Ignorance of the
Law has never been a legitimate excuse for breaking
it. Doesn't the same principle apply here?
It is the third party's right to be ignorant of your private contract because
it is not part of the published law. Yes ignorance of the law is no excuse,
but while there is an irrebutable presumption that you and every other person
are in fact aware of the law, this presumption does not apply to private
contracts.
What the law is protecting is this : partners owe each other a fiduciary duty
of loyalty. You are quite correct in saying that the partner must watch out
for the interest of the other partners, and has a duty to the partner not to
be stupid. But that duty is to the other partner and not to third parties. If
the third party reasonably relies on your partner and the partner was wrong,
you can recover against the partner (who in practice will not have anything
against which to recover...)
Once again: partners owe each other a duty of loyalty and must not act stupid.
But if they do third parties can sue both partners. This does not change the
fact that injured partner can recover against injuring partner.
Illustration:
Partner A
Partner B
C: the Third Party
B enters into a contract with C. The contract entered into is beyond the
authority granted B. C may enforce the contract against A.
A may seek damages against B, either on a theory of breech
of contract or on a theory of breech of fiduciary duty.
Same facts, but now the contract entered into is _within the scope granted to
B by the partnership agreement. B may still be liable to pay A if the contract
entered into was badly negotiated - for B owes A a fiduciary duty of loyalty -
that is B must look out for A's best interests.
Variation: B acts outside the scope of his partnership. C _knows or should
know that B is acting outside the scope of his partnership. In such a case the
contract would _not be enforced.
The thing is, when should C know, or when does C actually know? That depends
on the facts. However the fact that they are partners indicates that
ordinarily - and one can make exceptions to this rule - the partners share
decision making authority and thus _ordinarily would have authority to enter
into contracts for the partnership.
Shortened version: if C _actually knows that the partnership contract
explicitly states that B has no authority, then A cannot be held liable.
"This is a damned accurate statement of the law."
Alain: You spoke of partners "owing each
other a fiduciary duty". I would argue further that
part of this duty is to NOT expose anyone in the
partnership to liability by contracting with someone
that believes that you are acting on the part of this
partnership.
Absolutely correct. The partner here has broken his fiduciary duty and is
liable to other partners. None the less the contract is valid, unless the
third party knew or should have known otherwise.
Any partner may engage in business, of
course, but he must make it unambiguously clear to his
client(s) that these ventures are his own, and have
absolutely nothing to do with our partnership.
Should and must are different. He certainly should, but whether he must is a
question of fact.
Eric: Essentially each partner and associate would
hold an equal percentage in all rights to any
partnership property. {unless otherwise agreed, and such can be done...
Alain: Intellectual property for the most part.
Eric: Yes
Eric: Ok, on out-laws - have not encountered the legal definition in the
common law, but definitely _DOES exist in civil law! Since an out-law has NO
legal rights, he may be legally killed, cannot marry, nor vote... It is
possibly against the US constitution - but really does exist in civil law. If
anyone cares, I'll look it up.
Alain: Yes, this is absolutely necessary. We cannot
accept contributions that we would build upon that
could later on be retracted arbitrarily by its
contributor. A gift is a gift, eh!
Eric: GIFTS-THE LAW
A gift is the irrevocable transfer of a property interest effective upon
delivery or constructive delivery of that interest.
1) gifts are indeed, irrevoacable.
2) they are only effective upon delivery
a) in fact OR
b) in symbol, i.e. a key to a house
A mere promise of a gift is _not binding. Delivery, actual or symbolic is
required.
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