1. Meaning of Mutual Agency

• Mutual agency is a core principle of partnership
  
• It means every partner is both an agent and principal of the firm
  
• A partner can act on behalf of the firm and bind all other partners
  
• This authority arises from the mutual trust between partners
  
• The firm is responsible for the acts done by any partner within the business scope
  

2. Legal Basis of Mutual Agency

• Defined under the Indian Partnership Act, 1932
  
• Sections 18 and 19 provide the legal foundation for this principle
  
• It applies to all acts done in the usual course of business
  
• The firm is liable for contracts and decisions made by partners
  
• The law presumes implied authority unless restricted in the deed
  

3. Scope of Partner’s Authority

• A partner can sign contracts and enter into agreements in the firm’s name
  
• Partners may represent the firm to clients, suppliers, and third parties
  
• Actions within the ordinary business are binding on the firm
  
• The authority must be used honestly and in good faith
  
• Unauthorized acts outside the business scope may not bind the firm
  

4. Importance in Business Operations

• Promotes shared responsibility among all partners
  
• Allows flexible and quick decision-making by individual partners
  
• Builds trust and cooperation in daily business dealings
  
• Encourages accountability as each partner’s action affects all
  
• Supports efficiency in managing clients, contracts, and operations
  

5. Limitations and Restrictions

• The partnership deed can limit the scope of mutual agency
  
• Public notice must be given if any partner’s authority is withdrawn
  
• Silent or sleeping partners usually do not act as agents
  
• The firm is not bound by acts done for personal benefit
  
• Careful monitoring is needed to avoid misuse of authority