In Elting v. Elting, under what conditions is a partner liable for a contract entered without actual authority but in violation of the partnership agreement?

• A. If the partnership approves a majority of partners after the fact
• B. If a majority of partners ratify
• C. Ratification requires actual knowledge of material facts
• D. If there is constructive knowledge only

Answer: (C)

When a partner acts without actual authority and in violation of the partnership agreement, the partnership can still become bound only if the remaining partners ratify that act. The crucial condition for ratification is actual knowledge of the material facts. In other words, the partners must know what the contract says, its terms, and its consequences, and still choose to approve it. If they approve after the fact but lack knowledge of the essential facts, or if their knowledge is only constructive (not actual), the ratification isn’t valid and the partnership isn’t bound. In that situation, the partner who entered into the contract would generally remain liable to the third party.