Asked by Emily Freeman on May 04, 2024
Verified
A disadvantage of partnerships is the mutual agency of all partners.
Mutual Agency
The legal principle in a partnership where each partner is empowered to make decisions and enter into contracts on behalf of the partnership.
Partnerships
A form of business structure where two or more individuals share ownership, profits, and liabilities, operating under a legal partnership agreement.
- Comprehend the benefits and drawbacks of partnerships as opposed to corporations.
Verified Answer
CH
Cornecia HamptonMay 09, 2024
Final Answer :
True
Explanation :
In a partnership, each partner has the authority to bind the partnership and make decisions on behalf of the other partners. This means that if one partner makes a mistake or enters into a risky contract, all partners are equally responsible and may be held liable. This is known as mutual agency, and it can be a disadvantage for some partners who do not want to be held responsible for the actions of others.
Learning Objectives
- Comprehend the benefits and drawbacks of partnerships as opposed to corporations.
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