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Section 250: Sections 239 to 266 [Repealed by the Indian Partnership Act, 1932]

Indian Contract Act • Official Statutory Text & Practice Guide

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Act 1872
Section 75 All 266 Sections of Indian Contract Act Section 77

Legal Commentary & Landmark Judgments: Section 250

Section 250 historically enacted the vicarious liability of the firm and all co-partners for any wrongful act, tort, fraud, or negligence committed by a partner in the ordinary course of the business of the firm, now reenacted as Section 26 of the Indian Partnership Act, 1932.

  • Vicarious Tortious Liability: The firm and all partners are jointly and severally liable to third parties for any loss, damage, or penalty caused by the wrongful act or omission of any partner.
  • Condition of 'Ordinary Course of Business': Liability fastens on co-partners only if the wrongful act was committed while acting in the ordinary course of the firm's business or with the actual or ostensible authority of co-partners.
  • Modern Reenactment in Section 26 IPA 1932: Repealed by Act 9 of 1932 and reenacted as Section 26 of the Indian Partnership Act, 1932, governing civil wrongs and regulatory penalties in commercial firms.
Key Landmark Precedents:
  • Hamlyn v. John Houston & Co. [1903] 1 KB 81: The Court of Appeal held that where a partner bribed a competitor's clerk to obtain confidential trade secrets in the course of business, all co-partners were vicariously liable for the tort under Section 250 principles.
  • Lloyd v. Grace, Smith & Co. [1912] AC 716: The House of Lords established that a firm is liable for fraud committed by its representative acting within apparent authority, even if the fraud was committed entirely for the rogue's own benefit.
  • State Bank of India v. Smt. Shyama Devi (1978) 3 SCC 399: The Supreme Court recognized the boundaries of vicarious liability in commercial agency, holding that acts committed outside the scope of employment do not bind the enterprise.
Courtroom Practice & Strategic Litigation Guidance:

When suing a partnership for damages arising from fraud, professional malpractice, or negligence committed by one partner, plead Section 26 of IPA 1932 and demonstrate that the transaction was handled within the ostensible business of the firm to secure a joint and several decree against all partners.

Section 75 All 266 Sections of Indian Contract Act Section 77