My company shipped $10,000 worth of merchandise to a customer. We sent numerous invoices, but he did not pay his bill. My partner, Chaim, tracked him down and told him that if he pays $5,000, we will forgive the remainder of the bill. When I heard about their agreement, I called the customer and told him that I expect the remainder to be repaid, as I had never agreed to forgive half the debt. He responded that Chaim forgave half the loan, and he is not obligated to pay the other $5,000.

Q: Who is correct?

A: The essential issue is whether one partner has the right to forgo money that is owed to the partnership. In the case of an agent, the halacha (C.M. 182:3) is clear: generally, if an agent makes even the slightest of errors, his agency is suspended. Any transactions then performed would be invalid, since the principal authorized the agent to act for his benefit - not to his detriment. However, in the event that the principal stated that he is authorizing the agent to act on his behalf, whether to his benefit or his detriment, all transactions are binding unless the agent was negligent or intentionally damaged the interest of the principal (Sema ibid 7 and Taz).

Halachically, a partner is considered an agent of the partnership. There are differing opinions on whether he is considered an agent whose errors nullify his agency or not. One approach is that he is categorized as an agent who is authorized to act for the partnership for the benefit or detriment of the partnership. The rationale is that each partner needs to have that autonomy in order to function on a daily basis. Although detrimental decisions would be binding, the agent who made those decisions is obligated to reimburse the other partner for the loss that he suffered (Shach 77:19, see also Nesivos 176:48).

Others disagree and maintain that a partner does not have the authority to forgo money that is owed to the partnership or make other damaging decisions. However, when forgoing money is beneficial to the partnership, one partner can make the decision to do so. For example, if it is necessary to make a compromise in order to collect money that is owed, one partner may negotiate that deal, even though it means that the partnership will not collect all of the owed money (Tumim 77:9, Nesivos 77:8, Sha’ar Mishpat 77:4, Haghos Imrei Baruch).

In light of the above, it would seem that all opinions agree that Chaim’s compromise is binding, since he acted in the interest of the partnership to assure collection of at least half of the money. However, there are some who maintain that there is an expectation that, when possible, partners will communicate before making decisions that compromise the interests of the partnership. Accordingly, since it is easy nowadays for people to communicate even across great distances, Chaim should have called you to confirm your agreement to the compromise. If he was negligent in this regard, the compromise agreement is not binding (Tumim 77:9). However, according to the first opinion, it is binding and Chaim must reimburse you for your portion. Being that the issue is subject to debate, all parties should reach a compromise.