In a partnership, mutual agency means that:
A)the addition of a new partner does not dissolve the old partnership and mutually exchange the ownership with the exiting partner.
B)every partner must bring the same amount of capital.
C)the agency problem between the principal and agents are mutual and gets neutralized.
D)any partner can bind the business to a contract within the scope of its regular business operations.

Question

Quizplus · Accepted Answer

Mutual agency means that each partner has the authority to act on behalf of the partnership and bind it to contractual obligations within the scope of its regular business operations. This is known as the principle of mutual agency or the presumption of joint authority. It allows each partner to act quickly and independently in the interests of the partnership, providing flexibility and adaptability to changing situations.

In a Partnership, Mutual Agency Means That