This section is from the book "Popular Law Library Vol8 Partnership, Private Corporations, Public Corporations", by Albert H. Putney. Also available from Amazon: Popular Law-Dictionary.
As to third parties the law presumes mutual agency unless these parties have notice of the terms of the contract providing for some other agency.
Within the scope of the business of the partnership one partner may contract in the name of the firm and bind the firm by his contract, if the party with whom he deals has the right to assume that the contracting partner has the authority of the firm.
Third parties are not interested in the division of the profits, but the law presumes an equal division unless the contract provides otherwise, notwithstanding shares of capital are unequal.
On the dissolution of a solvent firm, partners are entitled by law, nothing in the contract to the contrary, to a division of the assets remaining after debts and profits are paid, in proportion to the capital advanced. In this connection skill or experience, though considered as capital, has no return in such division. The idea being that it has not been diminished or impaired. If there are no losses the full capital will be returned. If there are losses, these are to be made good by charging them against each partner equally, if the profits were to be shared equally, or otherwise in proportion to share in profits, or according to the partnership contract. Each partner then would receive back his capital minus his share of the loss; and the fact that one partner contributed his skill or experience as his advancement to the business and that there were more than sufficient assets to pay the debts would not relieve him from this obligation to share in the losses, the capital in money or property advanced being a liability to be met on dissolution by the firm members. In other words, in the final accounting between partners, each partner is charged with his share of the losses and given credit for his capital advanced.
On firm contracts the firm only is liable to suit and not the individual members, that is, the members of the firm jointly and not severally; but on a judgment against the firm the levy of execution may be against the individual property of one or more members or against the property of the firm at the option of the judgment creditor. And a judgment against all the members jointly as a firm is a lien upon the real estate of each individual member of the firm. Of course, if necessary to satisfaction, the execution could be against both the firm property and the individual property of each member. The doctrine of priority of individual and firm claims in bankruptcy will be treated hereafter. While no contract between the members can affect the rights of judgment creditors on execution, there may be provisions in a partnership contract for indemnity against losses binding upon the members themselves, and any member forced to pay a debt of the firm by process of law, of course, has his right of contribution against the other members of the firm.
Other presumptions and obligations of law will be treated hereafter, such as those in relation to the termination of the partnership relation; but it is sufficient to say now that the powers, duties, liabilities, shares and profits of the members during the existence and at the dissolution of the partnership should be carefully stated in the articles of co-partnership, having in view the law of partnership.