Accountancy Part AAccounting for Partnership

Identify the feature of partnership that says a partner can bind othe…

Identify the feature of partnership that says a partner can bind other partners by his acts and also is bound by the acts of other partners with regard to business of the firm.

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → Mutual agency

Under mutual agency, every partner is both a principal and an agent of the other partners: his acts in the firm's business bind the others, and their acts bind him.

Option (1) Business — Incorrect. This feature says the agreement must be to carry on a lawful business.

Option (3) Agreement — Incorrect. This feature says partnership arises from an agreement, oral or written.

Option (4) Liability of partners — Incorrect. This feature is about joint, several and unlimited liability to third parties.

NCERT (2026-27 edition):
Mutual Agency – “… Second, that there exists a relationship of mutual agency between all the partners. Each partner carrying on the business is the principal as well as the agent for all the other partners. He can bind other partners by his acts and also is bound by the acts of other partners with regard to business of the firm.”