{"id":174866,"date":"2022-08-22T06:34:27","date_gmt":"2022-08-22T05:34:27","guid":{"rendered":"https:\/\/legalvision.co.uk\/?p=174866"},"modified":"2025-07-02T00:40:31","modified_gmt":"2025-07-01T23:40:31","slug":"agreements-without-consent","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/business-structures\/agreements-without-consent\/","title":{"rendered":"Can Business Partners Enter Into Agreements Without Consent in England?"},"content":{"rendered":"

As a matter of commercial sensibility, partners in a <\/span>general partnership<\/span><\/a> usually create a partnership agreement. This agreement sets out the terms of the partnership and specifies each partner\u2019s ability to enter transactions and other commercial agreements. Situations may arise where one partner signs a contract without the consent of other partners, but the partnership must nonetheless honour. This article will explain how one partner can bind the partnership and enter into agreements without the other partners\u2019 consent. It will also examine some remedies if a partner has entered into an unauthorised transaction.<\/span><\/p>\n

Partnerships and the Law of Agency <\/span><\/h2>\n

The law of agency plays an important role in partnerships. Typically, the law takes the default position that each partner acts as an agent on behalf of the partnership (the principal). By entering into an agreement, one partner binds the other partners to the agreement. This is because a partnership is not its own <\/span>legal entity<\/span><\/a>. <\/span><\/p>\n

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Agency law governs the ability of one person (the agent) to act on behalf of another (the principal) and enter into agreements on their behalf. <\/span><\/p>\n<\/div>\n

There is no problem when a partner enters into an agreement with the knowledge and consent of the other partners. However, issues can arise if other partners are unaware of the transaction or do not consent. <\/span><\/p>\n

Where the Partners Consent to the Transaction <\/span><\/h3>\n

Suppose a <\/span>partnership agreement<\/span><\/a> contains a provision requiring all partners to obtain unanimous consent for transactions involving more than \u00a340,00. If you decide to purchase new <\/span>premises for \u00a350,000, you are <\/span>technically in breach of the partnership agreement. However, all partners might agree that it was a good deal after the fact.<\/span><\/p>\n

By entering into the<\/span> \u00a350,000 deal, you have <\/span>exceeded your authority to act as an agent of the partnership. Strictly speaking, you did not have the authority to enter the agreement. However, if all partners consent to the transaction, the partnership can ratify the agreement <\/span>as if you did have the authority. <\/span><\/i><\/p>\n

Fortunately, the law has no problem allowing your business to ratify the <\/span> \u00a350,000 <\/span>agreement. Accordingly, your partnership can simply go ahead and perform the transaction as if you all had consented all along. <\/span><\/p>\n

Where the Partners Do Not Consent <\/span><\/h3>\n

Unfortunately, situations can arise where partners do not consent to certain deals. Taking the above example, suppose you entered into the<\/span> \u00a350,000 contract, but the premises was overvalued by<\/span> \u00a325,000. <\/span><\/p>\n

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The general rule is a partnership is bound by the decision of another partner, even if the partner acted outside of their authority. <\/span><\/p>\n<\/div>\n

This rule applies if an objective person would answer yes to either of the following two questions:<\/span><\/p>\n