Business Law Case 10

Business Law Case 10 - Court of Appeals, Plaintiff wins,...

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Banyei Isoh William H. Proctor 10/31/09 RNR Investments Limitied Partnership V. Peoples First Community Bank Court of Appeal Florida, First District, 2002 812 So.2d 561 Facts: RNR Investments a Florida limited partnership was formed to purchase land in Florida. They were supposed to construct houses and put them up for resale. The limited partners gave the general manager some restrictions that he had to adhere to. In June 1998 through its general partner RNR entered into a construction loan in an amount over what he was restricted to do. RNR defaulted on the loan and the other partners stated that the bank failed to review the limitations on the general partnership. They stated that the bank negligently failed to investigate and realize that the general partner had no authority. The bank to RNR to court seeking foreclosure based on defaulted payments. Issue: Was the bank negligent in not investigating what the general partner’s authority was? Holding: Trial Court, Plaintiff wins, Judgment for foreclosure
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Unformatted text preview: Court of Appeals, Plaintiff wins, Affirmed Reason: Even though the partnership had given the general partner had his actual authority restricted by the agreement, the general partner possesses the apparent authority to make a purchase for the partnership. It is not the job of the bank to investigate whether the partner did indeed have the actual authority to place this order. The general partner was carrying on the business the way that the business should have been run. The partnership did not send anything to the bank in writing or make it known to the bank that the general partner could not make these purchases, therefore, they are liable. Rule of Law: General Partners have the apparent authority to bind the partner to bind the partnership to an agreement in an ordinary course of business. As a result of the partnership not making it aware to the bank, the bank was not negligent in granting the loan....
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