The doctrine of mutual agency is a legal principle that arises from the relationship of partnership. According to this doctrine, every partner in a partnership firm is considered an agent of the other partners as well as the firm itself. This means that each partner has the authority to act on behalf of the firm and bind the firm in transactions within the scope of the partnership’s ordinary course of business.
Notice to Third Parties: The doctrine of mutual agency extends to third parties dealing with the partnership. If a person has knowledge of the partnership’s existence and the partnership’s business activities, they can reasonably assume that any partner acting on behalf of the firm has the authority to do so.
It’s important to note that the doctrine of mutual agency is applicable to general partnerships and limited partnerships where the general partners have mutual agency powers. However, it may not apply in the same way to other forms of business entities, such as limited liability partnerships (LLPs) or corporations.
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