Explain the concept of mutual agency in partnership with a suitable example.
Explain the concept of mutual agency in partnership with a suitable example.
Mutual agency is the legal relationship between partners in a partnership where each partner has authorization powers and the ability to enter the partnership into business contracts. In other words, each partner in the partnership is an agent in the business and the authority to make business decisions that commit or bind the partnership, as a whole, to a business agreement with a third party or entity. For example, a partner of a grocery store who purchases a delivery truck creates a binding contract in the name of the partnership even if the partnership agreement denies this authority. On the other hand, if a partner in a law firm purchased a snowmobile for the partnership, such as act would not be binding on the partnership. The purchase is clearly outside the scope of partnership business.
Mutual agency is the legal relationship between partners in a partnership where each partner has authorization powers and the ability to enter the partnership into business contracts. In other words, each partner in the partnership is an agent in the business and the authority to make business decisions that commit or bind the partnership, as a whole, to a business agreement with a third party or entity. For example, a partner of a grocery store who purchases a delivery truck creates a binding contract in the name of the partnership even if the partnership agreement denies this authority. On the other hand, if a partner in a law firm purchased a snowmobile for the partnership, such as act would not be binding on the partnership. The purchase is clearly outside the scope of partnership business.
