Section 27 of IPA : Section 27: Liability Of Firm For Misapplication By Partners

Explanation using Example

Consider a scenario where a partner in a retail business, under the guise of his authority to make purchases for the store, collects money from a customer as advance payment for a bulk order. Instead of using this money to procure the goods, the partner uses it for personal expenses. According to Section 27 of The Indian Partnership Act, 1932, the retail business (the firm) is responsible for the misapplication of the customer's money and must compensate the customer for the loss.