When a partner misrepresents their authority, what principle applies to the partnership's liability?

The principle related to a partner misrepresenting their authority centers on the notion of apparent authority and the impact of representation on third parties. When a partner acts in a way that misleads a third party into believing that they have the necessary authority, the partnership can still be held liable for the partner's actions, especially if the third party had no knowledge of the misrepresentation.

This principle operates under the idea that partnerships are often bound by the actions of their partners when those actions fall within the scope of the partner's apparent authority, even if that authority was not actually granted. If a third party reasonably relies on the partner's representation of their authority, the partnership cannot deny liability simply because the partner did not have the actual authority to make that representation.

In practical terms, this means that partnerships need to be aware of the implications of their internal authority structures and how those structures are communicated externally. For instance, if a partner routinely engages in business transactions on behalf of the partnership, third parties may assume that this partner retains the authority to act on behalf of the partnership in those matters unless explicitly informed otherwise.

Thus, option B accurately captures the essence of partnership liability in cases where a partner misrepresents their authority, emphasizing the protection of third parties who