Final answer:
In partnership debt, mutual agency means that each partner is an agent for the others and has the authority to bind the partnership to contracts and incur debts on its behalf.
Step-by-step explanation:
In the context of partnership debt, a mutual agency refers to the fact that each partner in a partnership is an agent for the others. This means that each partner has the authority to bind the partnership to contracts and incur debts on behalf of the partnership.
For example, if Partner A takes out a loan on behalf of the partnership, Partner B is also legally responsible for repaying that debt. This shared liability is a fundamental aspect of mutual agency in a partnership.
It's important to note that mutual agency applies to all partners in a general partnership, but not necessarily in limited partnerships or limited liability partnerships.