Mutual agency implies that each partner in a partnership is a fully authorized agent of the partnership. Which of the following statements is correct regarding the authority of a partner to bind the partnership in dealings with third parties?
A) Only a partner with a majority interest in a partnership has the authority to represent the partnership to third parties.
B) A partner has authority to deal with third parties on the behalf of the other partners only if he has written permission to do so.
C) The partner's authority must be derived from the partnership agreement.
D) The partner's authority may be effectively limited by a formal resolution of the other partners, even if third parties are not aware of that limitation.
E) A partner may be able to legally bind the partnership to actions even if the other partners are unaware of his actions.

Question

Quizplus · Accepted Answer

A partner in a partnership can legally bind the partnership to actions with third parties due to mutual agency, even if the other partners are unaware of his actions, unless there are specific limitations known to the third parties.

Mutual Agency Implies That Each Partner in a Partnership Is