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Prohibited Transactions

There are certain transactions a partner cannot enter into on behalf of the partnership unless he is expressly authorized.  A third person who enters into such a transaction does so at the risk that the partner has not been authorized by the other partners to enter into such a transaction.

Cessation of Business

A partner cannot bind the partnership by a contract that would make it impossible for the partnership to conduct its usual business.


A partner has no implied authority to bind the partnership by contracts of surety, guaranty, or indemnity for purposes other than the partner­ship business.  For example, I have no authority to guarantee the debt of my brother in my partnership’s name.

Personal Obligations

A partner cannot satisfy personal obligations or claims of the partnership by interchanging them in any way.  For example, a partner cannot satisfy a personal debt to a business by canceling a claim of the partnership against that business.

Inside Prohibited Transactions