Question

Consider the following statement

Statement 1: "Each partner carrying on the business is the principal as well as the agent for all the other partners."

Statement 2: There exists a relationship of mutual agency between all the partners.

Options

• Only statement 1 is correct.

• Only statement 2 is correct.

• Both the statement is correct.

• None of these

Answer 1

Both the statement is correct.

Explanation:

A partnership's business can be run by all of the partners or by any of them acting on behalf of the others. This remark has two significant consequences. To begin, each partner has the right to participate in the management of the company's operations. Second, there is a mutual agency relationship between all of the partners. Each business partner is both the principal and the agent for all of the other partners.