Section 20 of IPA : Section 20: Extension And Restriction Of Partner?S Implied Authority

Explanation using Example

Imagine a partnership firm where the partners have agreed that Partner A will be the only one authorized to purchase inventory for their business. This agreement between the partners restricts the implied authority of the other partners to make such purchases. One day, Partner B, unaware of this restriction, goes ahead and orders a large quantity of supplies from a vendor. The vendor, who knows Partner B as a representative of the firm but is unaware of the internal restriction, completes the sale. According to Section 20 of The Indian Partnership Act, 1932, the firm would still be bound by Partner B's action and would be required to accept and pay for the supplies, as the vendor did not know about the restriction on Partner B's authority.