 Hello in this lecture we will define mutual agency. According to fundamental accounting principles wild 22nd edition the definition of mutual agency is legal relationship among partners whereby each partner is an agent of the partnership and is able to bind the partnership to contracts within the scope of the partnerships agreement. When we're thinking about mutual agency we're thinking about it within the context of a partnership. The partnership being the business being different than the individual partners. Each agent having the ability to make decisions make decisions about contracts related to the partnership that's what an agency agreement is. So if we have two partners here they have come together made a partnership. We think of that partnership as a separate entity in terms of the agency because either of those partners can make decisions about the joint assets that have been put into the partnership as well as obligating future assets in terms of creating liabilities through their creation of contracts. This is an important note to be aware of when we're thinking about partnership agreements because either partner can make contracts that will obligate the partnership and in so doing they put the other partner on the line as well and a general partnership does not just limit itself to the assets of the partnership that are usually subject to liability problems. If there is a problem the individual partners have less liability protection in terms of a general partnership as in other types of entities such as a C corporation where they have more liability protection. Therefore the mutual agency is something to be very aware of when we're in a partnership because either partner can act in the interest and make decisions on behalf of the entity of the partnership as a whole which could put other partners into obligations related to their interest within that partnership.