A partnership firm operating a travel agency is facing legal issues because one partner took a loan in the firm's name without informing the other partners. How does the principle of mutual agency apply to this situation?

The principle of mutual agency means that the partnership business can be carried on by all the partners or by any of them acting on behalf of the others. Every partner is an implied agent of the other partners and of the firm. Each partner is liable for acts performed by other partners on behalf of the firm.

In this situation:

1. Since the partner took the loan in the firm's name in the normal course of business, the firm and the other partners are bound by his act, even though they were not informed.

2. All partners are jointly and severally liable to repay the loan to the lender because of mutual agency.

3. Each partner can bind the others by his acts performed in the ordinary course of business. The act of one partner is treated as the act of the firm.

4. The other partners cannot escape liability merely on the ground that they were not consulted.

Thus, the principle of mutual agency holds all partners liable for the loan taken by one partner in the firm's name.