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:

Options

• 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.

Answer 1

Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).

Explanation:

In a partnership, each partner functions both as a principal and as an agent for the others; this means any partner can first enter into contracts and obligations and is also authorized to act on behalf of the other partners.