Since mention has been made of commission merchants, we must individualize once more, and mention brokers. A broker simply effects a sale or purchase, as of merchandise or stocks. Unlike commission merchants they neither have, for the purpose of effecting the one, nor acquire by the accomplishment of the other, absolute possession of the chattels bought or sold.
In whatever capacity as special agent for another, one is acting, he is ever bound to keep and render proper account of the business entrusted to his care; to keep his principal properly informed regarding it; to use due diligence in business; to treat the property of his principal with same care and handle with same prudence, as a man of ordinary carefulness and forethought would his own. All this means only, that he should act with ordinary skill, and should render to his principal fair and honest service.
What terminates the agency? Death or insanity of either party; completion of work undertaken; expiration of time agreed upon; by express declaration of either party at pleasure, the other having due notification, and by such action acquiring a valid claim for whatever damages result on account thereof.
Partnership.
It is of constant occurrence that persons deem it advisable to unite themselves together for the prosecution of some general or particular business, paying their respects, by such act, to the old saw, “In union there is strength.” They agree by such an association to undertake the business, which induced them to unite their efforts with the hope of attaining to better results. The partners may or may not equally participate in the activities of the business to be undertaken, and may or may not stand on equal footing so far as relates to the sharing of the gains and losses. All of this is governed by their agreements at the outset, and its subsequent mutually agreed upon changes.
Like other species of contracts, the conditions of partnerships may be agreed upon verbally, may be in writing, and may result by implication. Of the three, which? Regarding this and all other engagements, establish a rule to which adhere rigidly. The rule: Have a thorough understanding with all parties with whom you contract; reduce it to writing, and have all interested parties sign. In this way the difficulties of misunderstandings and convenient forgetfulness will be less troublesome. It is worth all it costs to bear this precaution in mind.
Partners assume different relations and responsibilities as regards the partnership and the business world. There are the ostensible partners who boldly advertise themselves as such, and as such assuming the hazards incident to commercial enterprises; then the nominal partner who seeks to help a partnership by lending it his name, and thereby holding himself out as a member of it and making himself liable to creditors for partnership debts, providing credit was given, because of his supposed connection with the firm, as a regular partner; secret partners, who keep their names from the public, seeking by this means to avoid liability, but at same time sharing with the other partners the profits arising from the business. If such partnership becomes known to creditors, they may enforce collection of claims due from the partnership, as against the property of the secret partner; and the special partner, recognized by the laws of some of the states, which limit his liability to the amount of his investment, on condition that he gives public notice of such partnership agreement in a manner prescribed.
The partnership is organized, the partners assuming such relation to the partnership as they mutually agree upon, bearing in mind the above description of liabilities.
The element agency becomes quite conspicuous here, for each partner is an agent of the partnership and invested with plenary power to bind the other partners by his acts, when within the business sphere of the firm. It will be observed that we say in the line of the copartnership business, because otherwise it would not be sanctioned. As an illustration: A member of a partnership engaged in the flour trade would not have authority to bind his partners, if he attempted to involve them in stock speculations, unless previous similar enterprises by him had been approved by them, in which case there might be a fair presumption that such authority existed. This leads us to the question of liability; and liable they are, each and every partner, unless by virtue of exception previously mentioned, exempted. Their individual property, in the event of there being insufficient partnership assets to liquidate the indebtedness of the firm, must respond to the creditors’ call.
Now, since the acts of a partner may result in a manner disastrous to all associated with him, it is his duty to act with all fidelity and perfect good faith; to give his attention carefully to the business, acting as his best judgment may advise for the benefit of all. While, however, a breach of these obligations creates a liability for such misfeasance or wrong act as a partner may be guilty of, it does in no way affect outside parties, unless cognizant of and participating in same.