(1) Subject to the effect of a statement of partnership authority under section 7-64-303, every partner is an agent of the partnership for the purpose of its business, and the act of every partner, including the execution in the partnership name of any instrument for apparently carrying on in the usual way the business of the partnership of which the partner is a member, binds the partnership, unless the partner so acting has in fact no authority to act for the partnership in the particular matter and the person with whom the partner is dealing has knowledge of the fact that the partner has no such authority.
(2) An act of a partner which is not apparently for the carrying on of the business of the partnership in the usual way does not bind the partnership unless authorized by the other partners.
(3) Unless authorized by the other partners or unless they have abandoned the business, one or more but less than all the partners have no authority to:
(a) Assign the partnership property in trust for creditors or on the assignee's promise to pay the debts of the partnership;
(b) Dispose of the goodwill of the business;
(c) Do any other act which would make it impossible to carry on the ordinary business of the partnership;
(d) Confess a judgment.
(e) Repealed.
(4) No act of a partner in contravention of a restriction on authority shall bind the partnership to persons having knowledge of the restriction.
Source: L. 31: p. 649, § 9. CSA: C. 123, § 9. CRS 53: § 104-1-9. C.R.S. 1963: § 104-1-9. L. 75: (3)(e) repealed, p. 578, § 3, effective July 14. L. 2004: (1) amended, p. 1422, § 71, effective July 1.
ANNOTATION
Law reviews. For article, "A Law Firm Pension Plan?", see 37 Dicta 351 (1960).
Annotator's note. Relevant cases decided prior to the earliest source of § 7-60-109 have been included with the annotations to this section.
Effect of subsection (1) is that the status of a partner, as both principal and agent of the partnership, serves as complete authority with respect to acts which are apparently within the usual course of the partnership's particular business, unless the other party knows that he has no such authority. This obviates the necessity of a specific written authorization from the other partners. Ball v. Carlson, 641 P.2d 303 (Colo. App. 1981).
Each active partner a general agent. When acting in furtherance of the objects and business of the firm and within the scope of its business, one partner is clothed with the full powers of all the partners and is authorized to bind the firm in all transactions, for the very nature and purposes of a partnership association necessarily constitute each active partner a general agent of the firm. Wilcox v. Jackson, 7 Colo. 521, 4 P. 966 (1884); Sch. Dist. No. 3, Clear Creek County v. Central Sav. Bank & Trust Co., 113 Colo. 487, 159 P.2d 361 (1945).
This agency principle is subject to the terms of the partnership agreement. Dissenting partners, who had delegated to the managing partners the right to enter into certain transactions, could not later rely on their status as agents of the partnership to attempt to rescind those transactions. Adams v. Land Servs., Inc., 194 P.3d 429 (Colo. App. 2008).
Where a promissory note was made by a partner, purportedly in a partnership capacity, and the partnership's name appeared thereon, which inferred that the note was partnership business, these facts indicated a basis for the court's conclusion that the partner had ostensible authority to sign the note on behalf of the partnership. Rocky Mt. Nat'l Bank v. McCaskill, 16 Colo. 408, 26 P. 821 (1891); Kruse v. Bank of Fountain Valley, 28 Colo. App. 364, 473 P.2d 171 (1970).
A confession of judgment by one partner without any authority from the other partner is void. Buchanan v. Scandia Plow Co., 6 Colo. App. 34, 39 P. 899 (1895).
Sale of partnership realty. The act of a partner in selling real estate, when in the apparent scope of the partnership's business, is binding upon the partnership and the other partners without obtaining their written consent, notwithstanding the statute of frauds requirement of § 38-10-109, that the authority of an agent to sell real estate must be in writing. Ball v. Carlson, 641 P.2d 303 (Colo. App. 1981).
Transfer of assets under plan authorized by partnership did not violate subsection (3)(c). Silverberg v. Colantuno, 991 P.2d 280 (Colo. App. 1998).
The acts of one joint venturer are binding upon other joint venturers if those acts pertain to matters within the scope of the joint venture, and the joint venturer had authority to act. A.B. Hirschfeld Press v. Weston Group, 824 P.2d 44 (Colo. App. 1991).
Applied in Moynahan v. Prentiss, 10 Colo. App. 295, 51 P. 94 (1897); Singer Hous. Co. v. Seven Lakes Venture, 466 F. Supp. 369 (D. Colo. 1979); Erickson v. Oberlohr, 749 P.2d 996 (Colo. App. 1987).