Accountancy Part AAccounting for Partnership

Which of the following characteristics is highlighted in the statemen…

Which of the following characteristics is highlighted in the statement: "He can bind other partners by his acts and also is bound by the acts of other partners with regard to the business of the firm."

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → Mutual Agency

The statement describes a partner who acts both as a principal (he is bound by what the others do) and as an agent (he binds the others by what he does). That two-way relationship is mutual agency.

NCERT (2026-27 edition):
Nature of Partnership – “… 4. Mutual Agency: The business of a partnership concern may be carried on by all the partners or any of them acting for all. This statement has two important implications. First, every partner is entitled to participate in the conduct of the affairs of its business. 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.”