As per the given scenario, the partnership agreement clearly specifies that any partnership contract worth 100,000 and above will be signed by Vusa only. However, Newberg entered into a contract with a Malaysian company on behalf of the partnership without Vusa's authorization.
Generally, in a partnership, every partner is the agent of the other partners and is bound by the actions of the other partners carried out in the normal course of the business. But, in this case, the partnership agreement has restricted the authority of Newberg to sign contracts worth 100,000 and above.
In the case of Barker v. Faulkner (1877) LR 2 CPD 40, it was held that if the partnership agreement specifies the limit of the authority of one partner and he exceeds it, the contract is not binding upon the other partners unless they ratify the contract. Therefore, in this case, because Newberg exceeded his authority by signing a contract on behalf of the partnership without Vusa's authorization, the contract is not binding on the partnership unless Vusa ratifies the same.
In conclusion, the contract signed by Newberg is not binding on the partnership unless Vusa ratifies it, as per the partnership agreement.
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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