Multiple choice

The true test of partnership is mutual agency i.e where the business is carried on by a partner or by another on his behalf so that there is a mutual agency between them. If the relation of Principal and agent exists between the parties constituting a group and formed with a view to earn profits of a business. It is said to be a partnership. Of course, other essential elements should be also present.

  1. True

  2. False

  3. Partly true

  4. Cannot say
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A Correct answer
Explanation

Mutual agency is the true test of partnership. If parties carry on business with a view to profit AND there is mutual agency (each can act for the others), it's a partnership. Other elements must also be present, but mutual agency is the defining characteristic.

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