Chapter IV - Relations of Partners to Third Parties
Section 21
Section 21: Partner's authority in an emergency
Section 21 lets a partner act in an emergency to protect the firm from loss, and binds the firm by any act a person of ordinary prudence would do in his own case in similar circumstances.
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Need advice on Section 21?
This article is for general information. Refer to the Indian Partnership Act, 1932 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
A partner has authority, in an emergency, to do all such acts for the purpose of protecting the firm from loss as would be done by a person of ordinary prudence, in his own case, acting under similar circumstances, and such acts bind the firm.
Key takeaways
Emergency authority
In an emergency a partner may do all acts to protect the firm from loss that a person of ordinary prudence would do in his own case in similar circumstances.
Binds the firm
Acts done within that authority bind the firm.
The ordinary-prudence test
The authority is measured objectively: what a person of ordinary prudence would do in his own case, acting under similar circumstances. It extends only to acts done in an emergency for the purpose of protecting the firm from loss.
Implied authority and indemnity
Section 21 works alongside the implied authority in section 19, which covers acts done to carry on the firm's business in the usual way. Inside the firm, section 13(e)(ii) provides, subject to contract, that the firm shall indemnify a partner for payments made and liabilities incurred in doing such an emergency act.
Hypothetical business example
Hypothetical: A fire breaks out near the firm's warehouse at night and a partner hires a transporter at short notice to move the stock to safety. A person of ordinary prudence would do the same with his own goods, so the transport contract binds the firm, and the partner can look to the firm for indemnity under section 13(e)(ii).
Check the applicable state law
The India Code consolidated central text (as on 7 July 2025) records no State amendment to section 21, although several States have amended other sections of the Act, mainly those on registration of firms. Confirm the law of the State where the firm carries on business, and the firm's own partnership agreement, before acting.
Practical checklist
Do
- Record the emergency, the steps taken and the reasons as soon as practicable.
- Tell the other partners promptly what was done and what it cost.
Avoid
- Do not use an emergency to justify acts that are not aimed at protecting the firm from loss.
- Do not go beyond what a prudent person would do in his own case.
Glossary
- Person of ordinary prudence
- The objective standard of a reasonably careful person acting in his own affairs.
- Emergency
- A situation requiring immediate action to protect the firm from loss.
Frequently asked questions
Does an emergency act bind the firm?
Yes, if it is an act that a person of ordinary prudence would do in his own case, in similar circumstances, to protect the firm from loss.
Can the partner recover the cost?
Subject to contract, section 13(e)(ii) requires the firm to indemnify the partner for payments made and liabilities incurred in such an act.
Is this the same as implied authority?
No. Implied authority under section 19 covers acts done to carry on the business in the usual way; section 21 covers protective acts in an emergency.
Need help applying this provision to your situation?
Contact BizeneedLast updated 11 October 2026