Partner authority and liability · Select two

Apply the rule

Harlan, Osei & Pike is a general partnership of three architects in Denver. Its written partnership agreement provides that no partner may commit the firm to any purchase above $5,000 without a vote of the partners. In February 2026 the firm emailed a copy of that provision to its office supplier, Summit Office Interiors, when opening an account. In April, partner Nia Osei ordered $12,000 of workstations from Summit without a vote. In May, partner Reed Pike, without consulting anyone, signed a guaranty in the firm's name of a $200,000 construction loan taken out by a client, in exchange for the client's promise of future work. The firm has never guaranteed anyone's debt. Summit and the client's lender each seek to hold the firm.

Which two of the following statements are correct?

Choose exactly two answers.

A. The firm is bound on the workstation order because buying office furniture is in the ordinary course, and internal limits on a partner's authority never affect third parties.B. The firm is bound on the workstation order because Nia, as a partner, had actual authority to make any purchase for the firm.C. The firm is not bound on the workstation order because Summit had notice that Nia lacked authority for purchases above $5,000.D. The firm is bound on the guaranty because each partner is an agent of the partnership and the lender had no notice of any restriction.E. The firm is not bound on the guaranty because guaranteeing a client's loan is outside the ordinary course of an architecture practice and the other partners did not authorize it.F. Only Reed is liable on the guaranty, because the other partners are liable for firm obligations only in proportion to their profit shares.

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Question ID: business-associations-mcq-c2-02 · Report an issue with this ID · Coverage and review status