Question

John and Lisa form a partnership to operate a restaurant. Lisa signs a two-year lease on a space for the restaurant without consulting John. Under the legal concept of ________, John and the partnership are responsible for this lease, although it was only signed by Lisa. ANSWER Unselected unlimited liability Unselected mutual agency Unselected limited life Unselected capital accounting Unselected I DON'T KNOW YET submit

Answer 1

John and the partnership are bound by the lease Lisa signed due to the concept of mutual agency, which applies in a general partnership where partners share unlimited liability for business debts and actions.

Step-by-step explanation:

Under the legal concept of mutual agency, John and the partnership are responsible for the lease signed by Lisa for the restaurant space. In the context of a general partnership, each partner acts as an agent of the partnership and can bind the entire partnership to contracts and debts, even if one partner enters into a contract without the consent of the other partners. This happens because in a general partnership, there is personal liability by all owners, which means that each partner is responsible for the actions of the other partners and for all of the business's debts.

A limited liability partnership, on the other hand, protects individual partners from the actions of their colleagues to a certain degree, limiting their liability to their individual investment in the company. However, in this case, the partnership formed by John and Lisa does not appear to be a limited liability partnership, hence they share unlimited liability for the lease that Lisa has signed.