BUISENESS MANAGEMENT
BUSINESS STRUCTURE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Each partner is seen as an agent for the entity and has a right to enter into contracts for the entity which bind the other partners.
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Unknown to the partnership
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Only some can make decisions while some can not (silent partner)
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None of the above
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Detailed explanation-1: -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.
Detailed explanation-2: -A partnership agreement where one partner can bind all partners in an agreement to partnership debts. This is also called unlimited liability.
Detailed explanation-3: -What does mutual agency mean? It means that each partner is a fully authorized agent of the partnership. Under mutual agency what is any partner allowed to do? A partner can commit or bind the partnership to any contract within the scope of the partnership business.
Detailed explanation-4: -3] Mutual Agency This is the truest test of a partnership, it I the cardinal principle of a partnership. So if a partner is both the principle as well as an agent of the firm we can say that mutual agency exists. This means that the actions of any partner/s will bind all the other partners as well.