Question

Assertion (A): Each partner carrying on the business of the firm is the principal as well as the agent for all the other partners of the firm.
Reason (R): There exists a relationship of mutual agency between all the partners.
Choose the correct option from the following:

• A. Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
• B. Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
• C. Assertion (A) is correct, but Reason (R) is incorrect.
• D. Assertion (A) is incorrect, but Reason (R) is correct.

Hint:

Always remember that mutual agency is the cornerstone of partnership—it explains both rights and liabilities of partners in business.

Answer 1

The Correct Option is A

In a partnership, each partner operates as both a principal and an agent. This duality implies:
A partner is obligated by the actions of their co-partners (as a principal).
A partner can commit the firm to obligations through their own business-related actions (as an agent).
This concept is referred to as the principle of mutual agency, a cornerstone of partnership. Consequently:
Assertion (A) is accurate.
Reason (R) is also accurate and adequately elucidates the foundation of Assertion (A).
Therefore, option (1) is the correct selection.