Every partner is both principal and agent of other partners”. State whether this statement is true/false along with reason.
Answers
There must be a mutual agency between the partners:
The agency relationship is the foundation of partnership. The agency relations means that the business of partnership must be carried on by all the partners or by any partner acting for all other partners.
In other words, in a partnership ,a person must not act for himself alone,but for other partners also,Thus,each partner is a representative of all other partners. And he acts in both capacities i.e., as an agent as well as principal. A partner is an agent of the other partner in the sense that by his acts he can bind the other partners. He is principal in the sense that he can be held liable for the acts of the other partners.
Answer:
True
Explanation:
Yes this is statements true that every partner is both principal and agent.
The partners of any firm are the joint owners of the business. All of them have equal right to participate actively in the management of this firm.
Each partner can act as an agent of the firm. When a partner enters into a business transaction with any other party, he acts as the agent of the other partners and at the same time the other partner becomes the principal. Thus in all partnership firms there is an principal-agent relationship between the partners.
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