Final answer:
When a partner in a partnership engages in necessary business agreements, they are exercising their implied authority, which is essential for the business operations of the partnership. This authority is part of the contractual rights based on property rights within the partnership structure, and includes obligations tied to joint liability among partners.
Step-by-step explanation:
When a partner in a partnership enters into agreements necessary for the conduct of the partnership's business, that partner is said to have exercised their implied authority. Implied authority is not explicitly stated but is assumed to be granted as a result of the role a partner plays within the partnership. This type of authority allows partners to enter into contracts and conduct business on behalf of the partnership within the scope of the partnership's usual business activities.
Partners in a business arrangement are granted contractual rights based on their property rights, which allow them to make agreements with others concerning the use of their property. In such a business structure, one of the disadvantages is the joint liability where partners are responsible for the actions of one another. If any partner makes decisions or incurs debts, the other partners may be held accountable.
Moreover, a partnership can be affected by changes in its composition, such as when a partner leaves or passes away. It is essential for the remaining partners to understand the kind of authority each one holds to prevent any legal or financial issues that may arise from unauthorized actions.