2. Themba, Vusa and Newberg are partners in a venture whose sole business is to manufacturing matchstick for profit. Their partnership agreement provides that any partnership contract worth 100 000 and above will be signed by Vusa only. In May 2023, Newberg entered a contract on behalf of the partnership in terms of which the partnership was to sell 20 000 boxes of matchsticks to a Malaysian Company, LXX Xhoung for 1000 rands per box.

Question

2.	Themba, Vusa and Newberg are partners in a venture whose sole business is to manufacturing matchstick for profit. Their partnership agreement provides that any partnership contract worth 100 000 and above will be signed by Vusa only. In May 2023, Newberg entered a contract on behalf of the partnership in terms of which the partnership was to sell 20 000 boxes of matchsticks to a Malaysian Company, LXX Xhoung for 1000 rands per box.

Based on case law and other legal authority, discuss whether the contract signed by Newberg is binding upon the partnership

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In this scenario, the partnership agreement provides that any contract worth 100 000 and above will be signed by Vusa only. However, Newberg entered into a contract on behalf of the partnership with LXX Xhoung to sell 20 000 boxes of matchsticks at 1000 rands per box.

The question is whether this contract is binding upon the partnership. According to the law of agency, a person who acts on behalf of another person or entity with authority to do so, creates a principal-agent relationship. In this case, Newberg acted as an agent for the partnership by signing the contract with LXX Xhoung.

However, Newberg’s authority as an agent was restricted by the partnership agreement which states that contracts worth 100 000 and above can only be signed by Vusa. Newberg could only act within the scope of his authority and the contract he signed was clearly outside the scope of his authority.

Therefore, based on this, the contract signed by Newberg may not be binding upon the partnership, as it was not authorized by the partnership agreement. LXX Xhoung could argue that they believed Newberg had authority to sign the contract, and may try to hold the partnership liable for breach of contract. However, the partnership could argue that the contract was not authorized and as such voidable.

In conclusion, the contract signed by Newberg may not be binding upon the partnership, since it was outside the scope of his authority as per the partnership agreement. However, the specific circumstances and interpretation of the agreement may be critical to a final ruling.