Chapter IV - Relations of Partners to Third Parties
Section 26
Section 26: Firm liability for a partner’s wrongful acts
Section 26 makes a firm liable in specified circumstances for loss, injury or penalty arising from a partner's wrongful act or omission.
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Need advice on Section 26?
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
Where, by the wrongful act or omission of a partner acting in the ordinary course of the business of a firm, or with the authority of his partners, loss or injury is caused to any third party, or any penalty is incurred, the firm is liable therefor to the same extent as the partner.
Central rule and applicability
The partner must act in the ordinary course of the firm's business or with the authority of the other partners. If the wrongful act or omission causes loss or injury to a third party, or a penalty is incurred, the firm is liable to the same extent as that partner. The activity, authority and resulting harm must therefore be connected.
Limits and related provisions
The section does not automatically make the firm responsible for every personal wrong of a partner. The ordinary-business or authority condition and the relevant consequence must be established. Other statutory liability rules and any applicable state amendments require separate consideration.
Hypothetical business example
Hypothetical: A partner, while carrying out an authorized delivery for the firm, wrongfully damages a customer's property. The facts are examined against the ordinary-course or authority condition and the loss caused, rather than assuming firm liability solely from partner status.
Practical decision flow
Identify the wrongful act or omission, the partner and the affected third party or penalty.
Establish whether the partner acted in ordinary firm business or with the partners' authority.
Document the resulting loss, injury or penalty and assess the firm's corresponding extent of liability.
Check the applicable state law
This guide explains the central Section 26 baseline. State amendments, notifications and rules can affect its application. Confirm the law applicable to the firm's location and the relevant partnership agreement before acting.
Practical checklist
Do
- Identify the wrongful act or omission, the partner and the affected third party or penalty.
- Establish whether the partner acted in ordinary firm business or with the partners' authority.
- Document the resulting loss, injury or penalty and assess the firm's corresponding extent of liability.
Avoid
- The section does not automatically make the firm responsible for every personal wrong of a partner. The ordinary-business or authority condition and the relevant consequence must be established. Other statutory liability rules and any applicable state amendments require separate consideration.
Glossary
- Wrongful omission
- A failure to act that is wrongful in the relevant circumstances.
- Same extent
- The statutory link between the firm's liability and the partner's liability for the qualifying wrong.
Frequently asked questions
Is an omission covered?
Yes. The section expressly includes a wrongful act or omission.
Does every private wrong create firm liability?
No. The ordinary-course or authority condition must be satisfied.
Are penalties mentioned?
Yes. The section includes the stated situation where a penalty is incurred.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026