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:

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Always remember that mutual agency is the cornerstone of partnership—it explains both rights and liabilities of partners in business.
  • Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
  • Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
  • Assertion (A) is correct, but Reason (R) is incorrect.
  • Assertion (A) is incorrect, but Reason (R) is correct.
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The Correct Option is A

Solution and Explanation

In a partnership, each partner acts both as a principal and an agent. This means that:
As a principal, a partner is bound by the actions of the other partners.
As an agent, they can bind the firm by their own actions done in the course of business. This is known as the principle of mutual agency, which is a fundamental feature of partnership. Therefore:
Assertion (A) is true.
Reason (R) is also true and clearly explains the basis of Assertion (A). Hence, option (1) is the correct answer.
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