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National Biscuit Company v. Stroud

Supreme Court of North Carolina
106 S.E.2d 692 (1959)

National Biscuit Company v. Stroud


Stroud (defendant) and Freeman formed a general partnership to sell groceries. The partnership agreement did not limit either partner’s authority to conduct ordinary business on behalf of the partnership. Several months before the partnership was dissolved, Stroud told a National Biscuit Company (NBC) (plaintiff) official that he would not be personally liable for any bread sold to the partnership. Freeman subsequently ordered more bread on behalf of the partnership, and NBC delivered that bread to the partnership. Shortly thereafter, the partnership was dissolved, and Stroud refused to pay for the bread delivered at Freeman’s behest. NBC sued the partnership and Stroud for the price of the bread. The trial court found in favor of NBC.

Rule of Law


Holding and Reasoning (Parker, J.)

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Questions & Answers

Addition to the rule

It is important to note that in addition to general partners having the power to engage in activities that are within the scope of "ordinary business" the partnership decisions bind each partner ***unless the acting partner has in fact no authority to act on behalf of the partnership**. An important question that I believe was overlooked pertains to where a court looks to determine what this "authority" encompasses... in such cases would they turn to the partnership agreement? would they look at industry customs? UPA? etc. (Just a thought)

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