Question

Explain the meaning og principal-agent relationship for partnership.

Answer 1

Principle agent relationship for partners means that the Partnership may be carried on by all the partners or by any one of them on behalf of all. All partners have an equal right to participate in the activities of business. There exist a principal and agent relationship among partners of a firm. As an agent a partner may bind the other partner by his/her act and as a principal, a partner is himself / herself bound by acts done by the other partners. Therefore it can be concluded that partners are the agents as well as principals.