Liability for torts and wrongful acts – Section 26
Section 26: Where by the wrongful act or omission of a partner acting in the ordinary course
of the business of the firm, or with the authority of is partner’s loss or injury, is caused to any
third parties, or any penalty is incurred, the firm is liable to the same extent as the partner.
– A principal is vicariously liable for the torts and other wrongful acts committed by his agent in the course of business of agency. Every partner being an agent of the firm, the same principle has been recognised by IPA.
i) Llyod v. Grace Smith & Co. – M Rs Llyods – two cottages were misappropriated by the Managing Clerk of the firm of solicitors by fraudulently preparing a gift deed in his own name.
– The Co. was held liable for the fraud of their agent even though the agent had been acting for his personal gain and without the knowledge of his principal.
ii) Hamlyn v. John Houston & Co. (bribing the clerk) – held that although the wrong of inducing breach of contract had been committed by only one of the partner’s and other partners had no notice of the same yet since wrong was done in the scope of the authority of the wrong doing partner, the other partner was also held liable.
iii) Hurruck Chand v. Gobind Lal – One of the partners knowing that goods were stolen ones
purchased and sold them without knowledge of the other partner who was a sleeping partner. It was held that both the partners were liable for tort of conversion to the owners of the goods.