Guide 4 of 5Partnership Acts, NSW and Queensland
When one partner binds the whole firm
In New South Wales and Queensland, every partner in an ordinary partnership is an agent of the firm and of the other partners, so an act done for carrying on, in the usual way, business of the kind the firm carries on binds the firm and every partner. The exception needs two things together: the partner had no authority in that matter, and the other person knew it, or did not know or believe them to be a partner.
General information about two states’ Acts, not legal advice. Dotto is not a financial adviser, and this guide is not legal or financial advice. This page covers New South Wales and Queensland only, as a selection; each state or territory’s own Partnership Act governs partnerships there.
The core rule, in Queensland’s words
Queensland’s Partnership Act 1891, as current at 1 July 2025, puts the rule in section 8(1):
“(1) Every partner in a partnership, other than a firm that is a limited partnership or incorporated limited partnership, is an agent of the firm and his or her other partners for the purpose of the business of the partnership, and the acts of every partner who does any act for carrying on in the usual way of business of the kind carried on by the firm of which the partner is a member bind the firm and his or her partners, unless
(a) the partner so acting has in fact no authority to act for the firm in the particular matter; and
(b) the person with whom the partner is dealing either knows that the partner has no authority, or does not know or believe the partner to be a partner.”
Partnership Act 1891 (Qld), s 8(1), current as at 1 July 2025
New South Wales sets the same rule in section 5(1) of its Partnership Act 1892, read in the version of 13 January 2023, in near-identical words: each partner is an agent of the firm and the other partners for the partnership’s business, and the same two-part exception applies.
Read the exception slowly. Lacking authority is not enough by itself. The firm escapes only where the other person also knew of the lack of authority, or did not know or believe they were dealing with a partner.
How far a partner’s acts reach
The sections that follow the core rule fill it out. In each state they apply to a firm other than an incorporated limited partnership, and some also leave out limited partnerships; each section has a further subsection for those.
| Rule | What the section says | NSW | Qld |
|---|---|---|---|
| Acts in the firm’s name | An act or instrument about the firm’s business, done in a way that shows an intention to bind the firm by a person authorised to bind it, partner or not, binds the firm and all the partners. | s 6(1) | s 9(1) |
| Credit for a private purpose | Pledging the firm’s credit for a purpose apparently not connected with its ordinary course of business does not bind the firm, unless the other partners specially authorised it. NSW adds that the partner’s own personal liability is not affected. | s 7(1) | s 10(1) |
| Agreed limits on a partner | An act against the partners’ agreed restriction does not bind the firm toward people who had notice of the agreement. | s 8(1) | s 11(1) |
| Debts | Each partner is liable “jointly with the other partners” for all the firm’s debts and obligations incurred while they are a partner. | s 9(1) | s 12(1) |
| Wrongs in the ordinary course | Where a partner’s wrongful act or omission, in the ordinary course of the firm’s business or with the co-partners’ authority, causes loss or injury to a non-partner, or a penalty is incurred, the firm is liable to the same extent as that partner. | s 10(1) | s 13(1) |
| Money misapplied | The firm must make good a third person’s money or property misapplied by a partner acting within apparent authority, or by partners while it is in the firm’s custody. | s 11(1) | s 14(1) |
| Liability for wrongs | For what the firm becomes liable for under the two rows above, each partner is liable jointly with the co-partners and also severally. | s 12(1) | s 15(1) |
| Trust property | Where a partner who is a trustee improperly uses trust property in the partnership’s business or on its account, no other partner is liable for that property to the people with a beneficial interest in it. That does not affect a partner’s liability arising from notice of the breach of trust, and the trust money can still be followed and recovered from the firm while it is in the firm’s possession or control. | s 13(1) | s 16(1)–(2) |
| Admissions | What a partner admits or represents about the partnership’s affairs, in the ordinary course of its business, counts as evidence against the firm. | s 15(1) | s 18(1) |
| Notice | Notice to a partner who habitually acts in the partnership business operates as notice to the firm, except in a fraud on the firm committed by or with that partner’s consent. | s 16(1) | s 19(1) |
A partner who sits on a company board
Both Acts deal with a partner who is also a company director. Queensland’s section 13(2) is about the firm’s liability for wrongs. A partner who does wrong while acting as a company director is not, it says, acting in the ordinary course of the firm’s business, or with the co-partners’ authority, merely because of any 1 or more of these:
the partner got the agreement or authority of some or all of the co-partners to be appointed, or to act, as a director;
the pay the partner receives as a director forms part of the firm’s income;
another partner also sits as a director, of the same body corporate or a different one.
NSW’s section 10(2) lists the same three matters. Whether that person is a director in the first place is a question for section 9AC of the Corporations Act, covered in the director guide.
Being held out as a partner
A person who is not a partner can still be liable as one. Queensland’s section 17(1) reaches anyone who, “by words spoken or written or by conduct”, represents themselves as a partner in a firm, or knowingly lets others represent them as one. That person can be held liable, as if a partner, by a person who extended credit to the firm relying on that representation. It applies whether or not the representation was made or passed on to that person by, or with the knowledge of, the apparent partner. NSW’s section 14(1) is to the same effect.
The section turns on a representation, in words or by conduct, and on credit given to the firm on the faith of it.
General partners in incorporated limited partnerships
Each of these sections has a second subsection for limited partnerships or incorporated limited partnerships, and those subsections apply to general partners. In an incorporated limited partnership, a general partner is liable for the partnership’s debts only to the extent the partnership cannot pay them, or a greater extent the partnership agreement provides. The incorporated limited partnerships guide sets that out.