Question
After the failure of All Electronics Here, Mike and Lucy start up a new business together as a partnership.They are both partners in the business.They
After the failure of All Electronics Here, Mike and Lucy start up a new business together as a partnership.They are both partners in the business.They run an online store selling household appliances to customers around Australia.Their partnership agreement provides that Mike is responsible for purchasing stock from suppliers, and that Lucy is responsible for selling stock to customers via the online store.Mike has no authority under the partnership agreement to sell stock to customers, and Lucy has no authority under the partnership agreement to purchase stock from suppliers.
While Lucy is processing customer orders in the online store, she sees a wholesale advertisement for coffee machines at a very competitive price.The offer is only open for the next hour, and she is unable to contact Mike.She decides to purchase 100 coffee machines, on behalf of the partnership business, on ordinary credit terms.When Mike later finds out about the purchase, he is very upset and tells Lucy that she is solely responsible for the debt.
Explain whether Mike is also responsible for the cost of the coffee machines, according to the law of partnerships.Make sure that you fully explain your answer, and that you refer to relevant sources of law (cases and legislation).
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