“Each partner is called an implied agent of the other”. Explain.
Answers
QuestioN :
“Each partner is called an implied agent of the other”. Explain.
ANswer :
=> 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.
=> In other words, each partner in the partnership is an agent in the business and the authority to make business decisions that commit or bind the partnership, as a whole, to a business agreement with a third party or entity.
=> Mutual agency only exists for partners acting within the scope of normal business operations and dealings. For example, a retailer apparel partner with agency would not be able to contract the other partners into a deal to purchase a piece of investment real estate because this would be outside the normal operations of the business.
=> One of the retail partners can, on the other hand, purchase goods from a vendor and require the partnership pay for the goods.
=> This transaction is within the normal course of operations of the business.