A partnership represents a voluntary association of individuals carrying out a business purpose. In this association, a fiduciary relationship exists among the partners, requiring them to exercise good faith, loyalty to the partnership, and sound business judgment in conducting the partnership's business. An individual partner is viewed as a co-owner of partnership property, creating a tenancy in partnership. When specific assets are contributed by a partner, they lose their identity as to source and become the shared property of the partnership. Without the consent of all partners, such property cannot be utilized by any partner for personal purposes.
The relationship between partners also is characterized as one of mutual agency, which means that each partner is an agent for the other partners and the partnership when transacting partnership business. Therefore, in carrying on the business of the partnership, the acts of every partner bind the partnership itself, even when a partner commits a wrongful act or a breach of trust. However, if a partner has no authority to act for the partnership and the party with whom the partner is dealing knows this, the partnership is not bound by the partner's actions.
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