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(i) Each partner is liable for acts performed by other partners.
(ii) Each partner can bind other partners and the firm by his acts done in the ordinary course of business.
Which feature of partnership is highlighted by these two statements?
(ii) Each partner can bind other partners and the firm by his acts done in the ordinary course of business.
Which feature of partnership is highlighted by these two statements?
- a)Implied authority
- b)Utmost good faith
- c)Mutual agency
- d)Agreement
Correct answer is option 'C'. Can you explain this answer?
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(i) Each partner is liable for acts performed by other partners.(ii) E...
Mutual Agency
The feature of partnership highlighted by the two statements is mutual agency. Mutual agency refers to the authority given to each partner to act on behalf of the partnership and bind the other partners and the firm.
Statement (i): Each partner is liable for acts performed by other partners.
In a partnership, each partner has the authority to act on behalf of the firm. This means that if one partner enters into a contract or incurs a liability, all partners are equally responsible for the consequences of that action. This principle is known as joint and several liability. It allows any partner to be held liable for the actions of other partners, even if they were not directly involved in those actions. For example, if one partner enters into a contract with a supplier and fails to pay, the supplier can hold all partners responsible for the unpaid debt.
Statement (ii): Each partner can bind other partners and the firm by his acts done in the ordinary course of business.
This statement highlights the concept of mutual agency. It means that each partner has the authority to act on behalf of the partnership and make decisions that are binding on all partners and the firm. Any act done by a partner within the ordinary course of business, such as entering into contracts, making purchases, or conducting transactions, will be considered as binding for the partnership. For example, if a partner signs a contract with a client, all partners are bound by the terms of that contract, and the partnership as a whole is obligated to fulfill its obligations.
Conclusion:
The feature of mutual agency in a partnership allows each partner to act on behalf of the firm and bind the other partners and the firm to their actions. This means that partners have the authority to make decisions and enter into contracts that are legally binding for the partnership as a whole. Mutual agency also implies that partners share joint and several liability, making them collectively responsible for the actions and liabilities of the partnership.
The feature of partnership highlighted by the two statements is mutual agency. Mutual agency refers to the authority given to each partner to act on behalf of the partnership and bind the other partners and the firm.
Explanation:
Statement (i): Each partner is liable for acts performed by other partners.
In a partnership, each partner has the authority to act on behalf of the firm. This means that if one partner enters into a contract or incurs a liability, all partners are equally responsible for the consequences of that action. This principle is known as joint and several liability. It allows any partner to be held liable for the actions of other partners, even if they were not directly involved in those actions. For example, if one partner enters into a contract with a supplier and fails to pay, the supplier can hold all partners responsible for the unpaid debt.
Statement (ii): Each partner can bind other partners and the firm by his acts done in the ordinary course of business.
This statement highlights the concept of mutual agency. It means that each partner has the authority to act on behalf of the partnership and make decisions that are binding on all partners and the firm. Any act done by a partner within the ordinary course of business, such as entering into contracts, making purchases, or conducting transactions, will be considered as binding for the partnership. For example, if a partner signs a contract with a client, all partners are bound by the terms of that contract, and the partnership as a whole is obligated to fulfill its obligations.
Conclusion:
The feature of mutual agency in a partnership allows each partner to act on behalf of the firm and bind the other partners and the firm to their actions. This means that partners have the authority to make decisions and enter into contracts that are legally binding for the partnership as a whole. Mutual agency also implies that partners share joint and several liability, making them collectively responsible for the actions and liabilities of the partnership.
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(i) Each partner is liable for acts performed by other partners.(ii) E...
A mutual agency is a legally binding relationship entered into by business partners, which gives each partner authority on behalf of the business.
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