Which relationship is typically governed by agency law in a partnership?

The relationship between a partner and the partnership is a primary focus of agency law within the context of partnerships. In partnerships, partners act as agents for one another in conducting business on behalf of the partnership. This means that each partner can bind the partnership to contracts and obligations, which is a fundamental aspect of agency law. The actions taken by one partner in the course of the partnership's business can create legal implications for the entire partnership, including liabilities and responsibilities.

This agency relationship underscores the mutual agency inherent in a partnership, where partners have both duties to each other and rights derived from their roles. For example, partners owe fiduciary duties to the partnership and to each other, emphasizing loyalty and care in their dealings, which are governed by agency principles.

In contrast, the relationships between partners and outside vendors or customers, while significant in a business context, are secondary to the internal agency dynamic among partners themselves. Likewise, the relationship between shareholders and partners involves a different legal framework altogether and does not fall under partnership agency law. Thus, the relationship between a partner and the partnership is the one most directly governed by the principles of agency law.