Contract of Agency – Multiple Choice Questions (MCQ) -

Last Updated on: 9th January 2025, 01:15 pm

Contract of Agency- Multiple Choice Questions (MCQ)

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1. Which one of the following statements is incorrect?

An agency relationship may be created through necessity.
An agency relationship may be created through estoppel.
All agents are entitled to be paid for their services.
An agent creates a legal relationship between a third party and a principal.

Normally, Agents are entitled to be paid for their services, But, in certain circumstances, a gratuitous agent i.e. someone who is not paid for their service, may also be an Agent.

Answer: C

2. An agency relationship which is made retrospectively is know as an agency by:

Estoppel
Ratification
Necessity
Commerce

An agency agreement may be created by estoppel, necessity or ratification. Where a principal retrospectively ratifies an agreement, after it has been made on his behalf, then an agency by ratification is created.

Answer: B

3. X Ltd has two directors, Jai and Harish. Neither of the directors have authority to individually enter contracts on behalf of the company. In practice, Jai (with Harish’s acquiescence) enters into all the contracts on behalf of the company. What type of agency has been created when a third party acting in good faith enters into a contract with Jai who states he is acting on behalf of X Ltd?

An express agency.
An agency by estoppel.
An agency by ratification.
An agency of necessity.

This is a case of agency created by estoppel between Company X and the third Party.

Answer: B

4. Cute appoints Govind, to act as his agent for two weeks. Govind agrees to act without payment. Cute instructs Govind to collect rent each Friday morning from his tenants and pay the rent into the bank next door. In the second week, Govind collects the rent but fails to bank it. On the way home he leaves it on the bus and it is never recovered. Can Cute take action against Govind for breach of his agency duties?

No, Cute has provided no Consideration and therefore there is no agency agreement.
No, Govind is a gratuitous agent and has no duty to follow instructions.
Yes, even though Govind is a gratuitous agent if he must do in accordance with instructions set out by the principal.
Yes, provided he pays Govind for being an agent.

An unpaid (gratuitous) agent will have no duty to act as no Consideration has been provided by the principal, but if he does act, he must do so in accordance with the instructions set out by the principal.

In this case, Cute has provided no Consideration. But Consideration is not essential to create an agency agreement. So, a valid agency is created.

Even though Govind is a gratuitous agent, he must do in accordance with instructions set out by the principal. So, Cute can take action against Govind for breach of his agency duties?

Answer: C

5. Pranab asked his agent, Hari to purchase her 500 shares in X Ltd. Hari owned 600 shares in X Ltd., so without informing Pranab where the shares come from he sells his shares to Pranab at market value. Is Hari in breach of his agency duties?

Yes, because he has a duty to avoid a conflict of interest.
Yes, because he has a duty to account.
No, because he has sold Pranab the shares at market value.
No, because he has acted according to Pranab’s instructions and she has the shares as she requested.

Even though the shares are sold at market, Hari is in breach of his agency duties, due to conflict of interest.

Answer: A

6. When does apparent (ostensible) authority of an agent arise?

When the agent acts with the usual authority of his job.
When the principal gives the agent implied authority to act.
When the agent has actual authority to act.
When the principal represents to a third party that an agent has authority to act when in fact he does not.

The authority of an agent may be actual, express, implied or apparent (ostensible) authority. If a third party relies on the representations of the principal that the agent has apparent authority, the principal will be bound by the agreement.

The Agent may act on behalf of principal, if the Principal represents to a third party that an agent has authority to act, though, in fact he does not.

Answer: D

7. Which one of the following is not a duty of an agent?

Duty to exercise care and skill.
Duty to take a commission.
Duty to account.
Duty to avoid a conflict of interest.

Agents have a number of duties but they do not have a duty to take a commission.

Answer: B

8. Fakir enters into a contract with Shilpa believing that Shilpa is acting on her own behalf when in fact she is acting as an agent for Dipak on his express instructions. In the event of a breach of contract, against whom Fakir take action?

No-one, the contract is invalid.
Shilpa.
Dipak.
Dipak or Shilpa.

In this case, an undisclosed agency has been created. So, the third party, Fakir can take action against either the agent (Shilpa) or the principal (Dipak).

Answer: D

9. What is an undisclosed agency?

Where a third party is not informed of the existence of the principal and believes the agent is acting on his own behalf.
Where the agent indicates through conduct he is acting as an agent.
Where the principal is not in existence.
Where the third party knows there is a principal but does not know his name.

In a disclosed agency, the agent indicates expressly or through conduct that he is acting as an agent. The actual name of the principal need not be disclosed.

Where a third party is not informed of the existence of the principal and believes the agent is acting on his own behalf, is an undisclosed Agency.

So, option A is correct

Click here to Play the MCQ Video 1-9 with explanation & answer in Hindi

10. Which of the following statements is incorrect?

An agency may be terminated by death of either party.
An agency may be terminated by express agreement.
An agency agreement can always be terminated by a principal.
Mental incapacity of an agent will terminate the agency relationship.

Some agency agreements such as a Lasting Power of Attorney cannot be revoked once registered with the Office of the Public Guardian and the principal no longer has his mental capacity.

Hence the Option A that an agency agreement can always be terminated by a principal is correct, as the Statement is incorrect. All other staements are correct.

Answer: A

11. Principal is NOT liable for the agents act if
(a) Agent acts within the scope of his authority
(b) Agent exceeds his authority
(c) Fraud or misrepresentation committed for benefit of the principal
(d) Work done out of his authority but the principal accepts it

Options and Analysis:

(a) Agent acts within the scope of his authority

If an agent acts within the scope of their authority, the principal is generally liable for their actions. So this statement is Incorrect.

(b) Agent exceeds his authority

If the agent acts outside the scope of their authority, the principal is not liable for those actions. So this statement is Correct.

(c) Fraud or misrepresentation committed for the benefit of the principal

If the agent commits fraud or misrepresentation for the principal’s benefit and within their authority, the principal may still be held liable. So this statement is Incorrect.

(d) Work done out of his authority but the principal accepts it

. If the principal accepts or ratifies the work done by the agent outside their authority, the principal can be held liable. So this statement is Incorrect.

So, Correct Option is (b)
Explanation: The correct answer is (b) because a principal is generally not liable when an agent exceeds their given authority, unless they later ratify the agent’s actions.

12. An agency comes to an end:-
(a) By performance of contract
(b) By agreement between the principal and the agent
(c) By renunciation of his authority by the agent
(d) All of the above

Options and Analysis:

(a) By performance of contract

Once the contract’s objectives are achieved, the agency relationship typically terminates. So this statement is Correct.

(b) By agreement between the principal and the agent

The principal and agent can mutually agree to end the agency at any time. So this statement is Correct.

The agent can renounce their authority, effectively ending the agency. So this statement is Correct.

(d) All of the above

Each of the above options represents a valid reason for agency termination under the Indian Contract Act, 1872. So this statement is Correct.

So, Correct Option is (d)
Explanation: Option (d) is correct because an agency can end through any of the means mentioned above, like, completion, mutual agreement, or renunciation by the agent

13. An agency is irrecoverable:
(a) Where the authority of agency is one coupled with interest
(b) Where the agent has incurred personal liability
(c) Both (a) and (b)
(d) None of the above

Options and Analysis:

(a) Where the authority of agency is one coupled with interest

Correct. An agency is irrevocable when the agent has an interest in the subject matter, as the agent’s rights are protected.

(b) Where the agent has incurred personal liability

Correct. When the agent incurs personal liability, they have an interest in ensuring the agency’s continuation, making it irrevocable.

(c) Both (a) and (b)

Correct. Since both situations make the agency irrevocable, this option is correct.

(d) None of the above

Incorrect. Since options (a) and (b) provide valid circumstances for an irrevocable agency, this option is not correct.

So, Correct Option is (c)
Explanation: Option (c) is correct because an agency is irrevocable both when coupled with an interest and when the agent has incurred personal liability, protecting the agent’s stake in the agency relationship.

14. In case the contract of agency has been terminated and a third party enters into a contract with the agent without knowing this fact, then
(a) The contract will be binding on the principal
(b) The contract will not be binding on the principle
(c) The contract will only be binding on the agent
(d) None of the above

You see that this question is about, if a contract of agency is terminated, and a third party unknowingly contracts with the agent, what is the legal consequence?

(a) The contract will be binding on the principal : If the third party has no knowledge of the termination, the principal may still be bound by the agent’s actions, under the doctrine of apparent authority. So, this option is Correct.

(b) The contract will not be binding on the principal :This disregards the third party’s lack of awareness of the agency termination, which can make the principal liable. So, this option is Incorrect.

(c) The contract will only be binding on the agent : While the agent may have personal liability in certain cases, this does not absolve the principal of their responsibility if the third party reasonably believes the agent still acts on the principal’s behalf. So, this option is Incorrect.

(d) None of the above : Option (a) correctly identifies the situation. So, this option is Incorrect.

So the Correct Option is: (a)
The principal remains bound under apparent authority because the third party had no notice of the agency’s termination.

15. A, an agent engaged in carrying on for B a business, in which it is the custom to invest from time-to-time, at interest, the moneys which may be in hand, omits to make such investments.

A. A need not make good to B the interest usually obtained by such investments

B. A can partially make good to B the interest usually obtained by such investments

C. A must make good to B the interest usually obtained by such investments

D. None of these

You see that this question is about, if an agent fails to invest funds in a customary way, must he compensate the Principal?

(a) A need not make good to B the interest usually obtained by such investments : An agent is required to act with diligence and follow customary practices; failure to do so makes them liable. So, this option is Incorrect.

(b) A can partially make good to B the interest usually obtained by such investments : Compensation is typically for the full loss caused by negligence, not partial. So, this option is Incorrect

(c) A must make good to B the interest usually obtained by such investments : The agent is liable for failing to perform their duty in a customary manner, including making good on the interest lost. So, this option is Correct.

(d) None of these : Option (c) correctly applies the principle of liability for failure to act diligently. So, this option is Incorrect.

So the Correct Option is: (c)
An agent must compensate the principal for any losses resulting from their failure to act in accordance with customary practices.

16. A, an agent for the sale of goods, having authority to sell on credit, sells to B on credit, without making the proper and usual inquires as to the solvency of B. B at the time of such sale is insolvent.

A. A need not make compensation to his principal in respect of any loss thereby sustained

B. A can partially make compensation to his principal in respect of any loss thereby sustained

C. A must make compensation to his principal in respect of any loss thereby sustained

D. None of these

You see that this question is about, if an agent sells on credit without due diligence and incurs losses, is he liable compensate the principal for the loss incurred?

(a) A need not make compensation to his principal in respect of any loss thereby sustained : The agent has a duty to exercise reasonable care, and failure to do so makes them liable. So, this option is Incorrect.

(b) A can partially make compensation to his principal in respect of any loss thereby sustained : Compensation is for the full loss caused by the agent’s negligence, not partial. So, this option is Incorrect.

(c) A must make compensation to his principal in respect of any loss thereby sustained : The agent’s negligence in assessing the buyer’s solvency makes them liable for the resulting losses. So, this option is Correct.

(d) None of these : Option (c) is the correct answer. So, this option is Incorrect.

So the Correct Option is: (c)
Agents must compensate for losses caused by their failure to conduct reasonable inquiries, especially, in matters involving credit sales.

17. Termination of an agency with public authority or a public body may attract judicial intervention in writ petition:

A. If the termination be unreasonable

B. If the termination be arbitrary

C. If the termination be unconscionable

D. All of them

You see that this question is about, when can termination of an agency with a public authority attract judicial intervention?

(a) If the termination be unreasonable : Unreasonable termination may invite judicial scrutiny under principles of natural justice. So, this option is Correct.

(b) If the termination be arbitrary : Arbitrary termination can be challenged as it violates fairness. So, this option is Correct.

(c) If the termination be unconscionable : Unconscionable acts are inherently unfair and may be reviewed by courts. So, this option is Correct.

(d) All of them : Each of the above scenarios can lead to judicial intervention. So, this option is Correct.

So the Correct Option is: (d)
Judicial intervention is warranted when the termination is unreasonable, arbitrary, or unconscionable.

18. The agency extends to receiving notice on behalf of his principal of whatever is material to be stated in the course of the proceedings. For this rule to operate:

I. the agent must be under a duty to communicate

II. the information must be material

III. it must have been obtained in the course of business for which the agent has been engaged

IV. the agent is not privy to a fraud on the principal

A. I, II

B. II, IV

C. Ill, IV

D. All of them

You see that this question is about, when does an agency extend to receiving notice on behalf of the principal?

(a) I, II : Only considering the first two conditions is insufficient; all criteria must be met. So, this option is Incorrect.

(b) II, IV : Excludes conditions I and III, which are essential for the rule to operate. So, this option is Incorrect.

(c) III, IV : Conditions I and II are also critical for completeness. So, this option is Incorrect.

(d) All of them : All conditions—duty to communicate, materiality of information, course of business, and absence of fraud—must be fulfilled for the rule to apply. So, this option is Correct.

So the Correct Option is: (d)
The rule operates when all four conditions are met, ensuring transparency and accountability in the agency relationship.

19. The extent of an agent’s authority, whether express or implied, depends upon:

A. The nature of act or business for which he has been appointed

B. Things which are incidental to the business or are usually done in carrying it out

C. The usual customs and usages of the trade

D. All of them

You see that this question is about, what determines the extent of an agent’s authority?

(a) The nature of act or business for which he has been appointed : The purpose of the agency defines the agent’s authority. So, this option is Correct.

(b) Things which are incidental to the business or are usually done in carrying it out : Incidental actions are part of implied authority. So, this option is Correct.

(c) The usual customs and usages of the trade : Customary practices can determine the scope of implied authority. So, this option is Correct.

(d) All of them : All these factors collectively determine the extent of authority. So, this option is Correct.

So the Correct Option is: (d)
The agent’s authority depends on the nature of the business, incidental requirements, and trade customs.

Click here to Play the MCQ Video 11-19 with full explanation & answer in English

20. The doctrine of apparent authority applies:

I. where a person allows another who is not his agent to appear as his agent

II. where a principal allows his agent to appear to possess more authority than he actually has

III. where the principal reserves or limits the authority of an agent which the agent would have in ordinary course of business, but does make this known to third parties

IV. where the principal allows it to appear that the agent has authority although his authority has been terminated

A. I, II

B. II, IV

C. Ill, IV

D. All of them

Central Intent : To test the understanding of situations where the doctrine of apparent authority is invoked.

Options Analysis:

I. Correct but incomplete. Apparent authority may involve someone who isn’t an actual agent but is made to appear as one by another.

II. Correct. This represents the core of apparent authority—allowing an agent to seem more empowered than they are.

III. Incorrect. Limiting an agent’s authority and informing third parties does not invoke apparent authority, as this negates deception.

IV. Correct. Apparent authority persists even if the agent’s actual authority has been terminated, provided the principal creates such an appearance.

Correct Answer: B (II, IV) : The doctrine centers on how a third party perceives the agent’s authority based on the principal’s actions, even if misleading.

21. The conditions which entitle an agent to exceed his authority under the doctrine of necessity are:

A. That he could not communicate with his principal

B. That the course he took was necessary in the sense that it was in the circumstances the only reasonable and prudent course to take

C. That he acted bona fide in the interest of the parties concerned

D. All of them

Central Intent: To assess knowledge of the criteria that allow an agent to exceed authority in emergencies.

Options Analysis:

A. Correct. Communication with the principal is impractical in emergencies.

B. Correct. The action must be necessary and reasonable under the circumstances.

C. Correct. The agent must act in good faith and in the interest of all parties.

D. Correct. This encapsulates all the above points.

Correct Answer: D : Each condition is a fundamental requirement for invoking the doctrine of necessity.

22. Which type of agency is created in relation of husband – wife ?
(a) Agency of implication
(b) Agency of estoppel
(c) Agency of necessity
(d) Agency of appointed

Central Intent: To identify the type of agency inferred from the marital relationship.

Options Analysis:

(a) Agency of implication. Incorrect. While implications arise in marital contexts, they don’t strictly create this agency.

(b) Agency of estoppel. Incorrect. This involves preventing denial of authority, not specific to marriage.

(c) Agency of necessity. Correct. If one spouse acts in a way necessary for the other (e.g., purchasing essentials), this applies.

(d) Agency of appointment. Incorrect. Explicitly appointing an agent is unrelated to the marital relationship.

Correct Answer: (c) : The relationship occasionally invokes agency of necessity, particularly in emergencies or essential needs.

23. When agent is liable to pay compensation to principal ?
(a) Negligence
(b) Misconduct
(c) Giants of skills
(d) All of the above

Central Intent: To examine scenarios where an agent’s actions result in liability.

Options Analysis:

(a) Negligence. Correct. Failure to perform duties competently causes liability.

(b) Misconduct. Correct. Any wrongful act incurs liability.

(c) Non-application of skills. Correct. Not exercising reasonable skill when expected creates liability.

(d) All of the above. Correct. Encompasses all the listed scenarios.

Correct Answer: (d) : All options describe circumstances where the agent breaches duties owed to the principal.

24. The liability of pretended agent is know as __
(a) liability by holding out
(b) liability created by law
(c) liability by rectification
(d) liability of relation

Central Intent: To identify the legal term for liability when someone acts as an agent without authority.

Options Analysis:

(a) Liability by holding out. Correct. This arises when someone falsely represents themselves as an agent.

(b) Liability created by law. Incorrect. Too vague for this context.

(c) Liability by rectification. Incorrect. Rectification concerns correcting a document, not liability.

(d) Liability of relation. Incorrect. This phrase lacks legal significance here.

Correct Answer: (a) : Liability arises because the pretended agent misled others into believing they had authority.

25. To create an agency ……….. is not required
(a) principal
(b) agent
(c) consideration
(d) None of the above

Central Intent: To identify non-essential elements for forming an agency relationship.

Options Analysis:

(a) Principal. Incorrect. A principal is essential for agency.

(b) Agent. Incorrect. An agent is integral to agency.

(c) Consideration. Correct. Agencies can exist without financial or material consideration.

(d) None of the above. Incorrect. One element (consideration) is non-essential.

Correct Answer: (c) : Agency relationships often exist informally, even without consideration.

26. To whom the agent is responsible ?
(a) Contractor
(b) Sub Agent
(c) Principal
(d) None of these

Central Intent: To determine the primary entity to owes duties to agent.

Options Analysis:

(a) Contractor. Incorrect. Agents may deal with contractors but owe no direct responsibility.

(b) Sub-agent. Incorrect. The agent isn’t directly responsible to a sub-agent.

(c) Principal. Correct. The agent acts for the principal, making them the primary responsibility.

(d) None of these. Incorrect. Agent is responsible to principal is the correct answer.

Correct Answer: (c) : The agent owes duties such as loyalty and diligence to the principal.

27. Who creates the contractual relation between two parties ?
(a) Principal
(b) Co-Agent
(c) Broker
(d) Agent

Central Intent: To identify the intermediary in contractual relationships.

Options Analysis:

(a) Principal. Incorrect. Principals are parties to the contract, not intermediaries.

(b) Co-Agent. Incorrect. Co-agents assist but don’t establish contracts.

(c) Broker. Correct. Brokers facilitate contracts between parties.

(d) Agent. Partially Correct. Agents may create relationships, but with broader roles.

Correct Answer: (c) : A broker specifically intermediates to create relation, often in financial or property dealings.

28. A person employed to do and represent is called ………..
(a) principal
(b) servant
(c) agent
(d) owner

Central Intent: To test knowledge of terminology describing agents.

Options Analysis:

(a) Principal. Incorrect. Principals are those represented.

(b) Servant. Incorrect. Servants perform duties without representing others.

(c) Agent. Correct. Agents represent principals in dealings.

(d) Owner. Incorrect. Owners are not representatives.

Correct Answer: (c) : Agents are legally authorized to act and represent another.

29. ……….. agents gets extra remuneration.
(a) General Agent
(b) Broker
(c) Sub Agent
(d) del credere

Central Intent: To identify agents compensated for assuming additional risks.

Options Analysis:

(a) General Agent. Incorrect. Their compensation doesn’t include risk premiums.

(b) Broker. Incorrect. Brokers earn commission, not extra remuneration for risks.

(c) Sub-agent. Incorrect. They receive standard remuneration.

(d) Del credere. Correct. These agents guarantee obligations and earn extra.

Correct Answer: (d) : Del credere agents assume financial risk, justifying additional compensation.

30. Who can become an agent ?
(a) Minor
(b) Both Minor & Adult
(c) Adult person
(d) Dead person

Options Analysis:

(a) Minor. Incorrect. Minors can act as agents but cannot incur liabilities.

(b) Both Minor & Adult. Incorrect. Minors can represent but not be held liable.

(c) Adult person. Correct. Adults can act as agents and may also incur liabilities

(d) Insolvent person. Incorrect. Insolvent person may not incur liability

Correct Option (c): Adults can act as agents and may also incur liabilities

31. Which acts can be ratified by principal ?
(a) Illegal acts
(b) Criminal acts
(c) Void acts
(d) None of the above

Intent of the Question is: To determine which types of acts can be ratified by a principal.

Options and Analysis:

(a) Illegal acts : Illegal acts cannot be ratified as they are against the law. So, this option is Incorrect.

(b) Criminal acts : Criminal acts cannot be ratified as they violate public policy. So, this option is Incorrect.

(c) Void acts :. Void acts cannot be ratified as they lack legal validity. So, this option is Incorrect

(d) None of the above : None of the given acts can be ratified by the principal. So, this option is Correct.

Correct Option is D : Ratification can only apply to lawful acts performed on behalf of a principal. Illegal, criminal, or void acts cannot be ratified.

32. How an agency may be created ?
(a) by ratification
(b) by necessity
(c) by implication
(d) all of the above
Intent of the Question is: To identify the ways an agency can be created.

Options and Analysis:

(a) By ratification : An agency can be created by approving acts done without prior authorization. So, this option is Correct.

(b) By necessity : Agency by necessity arises when circumstances compel action on behalf of another. So, this option is Correct.

(c) By implication : An implied agency arises from the conduct or relationship of the parties. So, this option is Correct.

(d) All of the above : All methods listed can create an agency. So, this option is Correct.

Suggested Answer: D
Correct option is D : An agency can be established through express agreement, necessity, implication, or ratification, as outlined in the Indian Contract Act, 1872.

33. Auctioneer agent gets ……….. lien.
(a) general
(b) particular
(c) special
(b) none of these

Intent of the Question is: To identify the type of lien an auctioneer agent has.

Options and Analysis:

(a) General : A general lien allows retaining goods for any debt, which auctioneers do not have. So, this option is Incorrect.

(b) Particular : Auctioneers have a particular lien, allowing them to retain goods for unpaid dues related to their services. So, this option is Correct.

(c) Special : The term “special lien” is not commonly used in this context. So, this option is Incorrect.

(d) None of these : Auctioneers have a particular lien. So, this option is Incorrect.

Correct Option is B : Auctioneers hold a particular lien over goods for charges related to their sale.

34. A Broker who only does the work of insurance is called __
(a) general agent
(b) del credere agent
(c) special agent
(d) commission agent

Intent of the Question is: To identify the type of agent who specializes in insurance work.

Options and Analysis:

(a) General agent : A general agent performs a variety of acts, not limited to insurance. So, this option is Incorrect.

(b) Del credere agent : A del credere agent guarantees solvency but does not specialize in insurance. So, this option is Incorrect.

(c) Special agent : A special agent is appointed for specific tasks, such as handling insurance. So, this option is Correct.

(d) Commission agent : Commission agents earn a fee for selling goods but are not limited to insurance. So, this option is Incorrect.

Correct Option is C : A special agent is appointed for a particular purpose, such as managing insurance-related transactions.

35. On whose insolvency the agency is terminated ?
(a) Sub agent
(b) Del credere
(c) Agent
(d) Principal
Intent of the Question is: To determine whose insolvency terminates an agency relationship.

Options and Analysis:

(a) Sub-agent : The insolvency of a sub-agent does not terminate the agency relationship. So, this option is Incorrect.

(b) Del credere : A del credere agent’s insolvency does not automatically terminate the agency. So, this option is Incorrect.

(c) Agent : While the agent’s insolvency may affect their duties, it does not necessarily terminate the agency. So, this option is Incorrect.

(d) Principal : The principal’s insolvency typically terminates the agency as it affects the authority granted. So, this option is Correct.

Correct Option is D : Insolvency of the principal terminates the agency as it impacts their capacity to act or contract.

36. For which transactions, agent become personally responsible ?
(a) fraudulent
(b) ultra virus
(c) fraud
(d) All of above

Intent of the Question is: To identify transactions where an agent is personally responsible.

Options and Analysis:

(a) Fraudulent : Agents are personally liable for fraud committed in the course of their duties. So, this option is Correct.

(b) Ultra vires : Agents acting beyond their authority can be held personally liable. So, this option is Correct.

(c) Fraud : Fraudulent acts by agents create personal liability. So, this option is Correct.

(d) All of the above : All listed circumstances make agents personally liable. So, this option is Correct.

Correct Option is D : Agents are personally responsible for fraudulent, ultra vires, or unauthorized actions causing harm.

37. To whom the acts of agent are binding ?
(a) Del – Credere
(b) Sub agent
(c) Third party
(d) Principal
Intent of the Question is: To identify who is bound by the lawful acts of an agent.

Options and Analysis:

(a) Del-Credere : Del credere agents are a specific type and do not bind general acts of an agent. So, this option is Incorrect.

(b) Sub-agent : Sub-agents act under the control of the main agent. So, this option is Incorrect.

(c) Third party : Third parties deal with agents but are not bound by their acts. So, this option is Incorrect.

(d) Principal : The principal is bound by the lawful acts of an authorized agent. So, this option is Correct.

Correct Option is: D : Under the law of agency, the principal is bound by the acts of an agent performed within their authority.

38. Which Guarantee is given by del credere agent ?
(a) Solvency of purchaser
(b) Solvency of Agent
(c) Own Solvency
(d) Solvency of seller
Intent of the Question is: To identify the guarantee given by a del credere agent.

Options and Analysis:

(a) Solvency of purchaser : Del credere agents guarantee the solvency and payment from purchasers. So, this option is Correct.

(b) Solvency of Agent : Agents do not guarantee their own solvency. So, this option is Incorrect.

(c) Own Solvency : This is irrelevant to the agent’s role. So, this option is Incorrect.

(d) Solvency of seller : Del credere agents guarantee the purchaser’s solvency, not the seller’s. So, this option is Incorrect.

Correct Option is A : Del credere agents provide guarantees to the principal regarding the solvency and payment of the purchaser.

39. A sub-agent is specially employed by the original agent to act under his control in the business of the agency. As per customary rule of trade, agent is not allowed to delegate his authority to another person without permission of his principal. Under what conditions an agent may hire or appoint a sub-agent and delegate the work?
(A). The principal has expressly allowed a delegation of such authority.
(B). The ordinary custom of trade a sub-agent may be employed.
(C). The nature of work is such that a sub-agent is essential
(D). All of these

Intent of the Question is: To determine the conditions under which an agent can appoint a sub-agent.

Options and Analysis:

(A) Principal has expressly allowed delegation. : Express permission allows the appointment of a sub-agent. So, this option is Correct.

(B) Ordinary custom of trade permits a sub-agent. : Trade customs can justify delegation. So, this option is Correct.

(C) Nature of work requires a sub-agent : When the task cannot be performed without delegation, appointing a sub-agent is valid. So, this option is Correct.

(D) All of these : All listed conditions allow delegation. So, this option is Correct.

Correct Option is D : An agent may appoint a sub-agent if expressly allowed, customary, or essential for the task.

40. By which methods, agency can be created?
(A). by agreement
(B). by ratification
(C). by estoppel
(D). All of these
Intent of the Question is: To identify methods by which an agency can be created.

Options and Analysis:

(A) By agreement : An agency can be created through mutual consent. So, this option is Correct.

(B) By ratification: Approving past acts establishes agency. So, this option is Correct.

(C) By estoppel : Conduct creating reasonable belief can establish an agency. So, this option is Correct.

(D) All of these : All listed methods create an agency. So, this option is Correct.

Correct Option is D : Agency can be created by agreement, ratification, or estoppel under the Indian Contract Act, 1872.

41. Where a sub-agent is appropriately selected and appointed by an agent, to delegate the work :
(A). The principal is bound by the acts of the sub-agent, as if the subagent was an agent, originally appointed by the principal.
(B). The agent is accountable and answerable to the principal, for the acts of the subagent.
(C). The sub-agent is accountable and answerable for his acts to the agent, but not to the principal, except in case of scam or fraud.
(D). All of these

Central Intent of the Question is :This question identifies various roles that can function as agents in a business context.

– (A) Auctioneer. (Correct) – An auctioneer acts on behalf of sellers to sell goods.

– (B) Company directors and managers. (Correct) – They represent the company and make decisions on its behalf.

– (C) Partners in a business partnership. (Correct) – Partners act as agents for each other in business dealings.

– (D) All of these. (Correct) – All listed roles can act as agents.

So, correct option is : (D)

42. Which of the following are considered as acting as agents?
(A). Auctioneer
(B). Company directors and managers
(C). Partners in a business partnership
(D). All of these

Central Intent of the Question is :This question identifies various roles that can function as agents in a business context.

– (A) Auctioneer. (Correct) – An auctioneer acts on behalf of sellers to sell goods.

– (B) Company directors and managers. (Correct) – They represent the company and make decisions on its behalf.

– (C) Partners in a business partnership. (Correct) – Partners act as agents for each other in business dealings.

– (D) All of these. (Correct) – All listed roles can act as agents.

So, correct option is : (D)

43. A _____________ authorizes the agent to do all acts on behalf of principal. It is
A. Special power of attorney
B. Particular Power of attorney
C. General power of attorney
D. All of the above

Central Intent of the Question is :This question seeks to identify the type of power of attorney that grants comprehensive authority to an agent.

– (A) Special power of attorney. (Incorrect) – This limits the agent’s authority to specific acts.

– (B) Particular Power of attorney. (Incorrect) – This also restricts the agent’s authority to particular tasks.

– (C) General power of attorney. (Correct) – This grants broad authority to the agent to act on behalf of the principal.

– (D) All of the above. (Incorrect) – Not all types grant full authority.

So, correct option is : (C)

44. The power of attorney is an example of agency by ________________________
A. Express Agreement
B. Implied agreement
C. Ratification
D. special agreements

Central Intent of the Question is :This question explores the nature of the agreement that establishes an agency relationship.

– (A) Express Agreement. (Correct) – A power of attorney is explicitly stated and agreed upon.

– (B) Implied agreement. (Incorrect) – This does not apply as the power of attorney is explicitly documented.

– (C) Ratification. (Incorrect) – Ratification occurs after the fact, not at the establishment of agency.

– (D) Special agreements. (Incorrect) – This term is too vague and does not specifically apply.

So, correct option is : (A)

45. Incase of ratification, the principal must ratify __________
A. Part transaction based on necessity
B. the agreement of agency
C. whole transaction
D. None of the above

Central Intent of the Question is :This question examines the conditions under which a principal can ratify an agent’s actions.

– (A) Part transaction based on necessity. (Incorrect) – Ratification typically requires the whole transaction.

– (B) the agreement of agency. (Incorrect) – This is not the focus of ratification.

– (C) whole transaction. (Correct) – Ratification must encompass the entire transaction for it to be valid.

– (D) None of the above. (Incorrect) – The correct answer is provided in option C.

So, correct option is : (C)

46. _______ means to give full consent or approval to an act which was originally done without authority
A. Estoppel
B. Ratification
C. Holding out
D. Express agency

Central Intent of the Question is :This question defines the concept of ratification in agency law.

– (A) Estoppel. (Incorrect) – Estoppel prevents a party from denying a fact due to previous actions.

– (B) Ratification. (Correct) – This is the process of approving an unauthorized act.

– (C) Holding out. (Incorrect) – This refers to representing oneself as an agent without authority.

– (D) Express agency. (Incorrect) – This refers to a clearly defined agency relationship.

So, correct option is : (B)

47. The consideration in case of Contract of Agency ______________
A. can be past, present, future
B. Need not be adequate
C. Need to be real
D. Not Essential
Answer B.

Central Intent of the Question is :This question addresses the nature of consideration in agency contracts.

– (A) can be past, present, future. (Incorrect) – Consideration must be present or future, not past.

– (B) Need not be adequate. (Correct) – The law does not require consideration to be equal in value.

– (C) Need to be real. (Incorrect) – Consideration must be lawful but not necessarily “real” in value.

– (D) Not Essential. (Incorrect) – Consideration is essential in contracts, including agency.

So, correct option is : (B)

48. An agent who is appointed to sell a house is ___________
A. General agent
B. Special agent
C. Mercantile agent
D. Non mercantile Agent

Central Intent of the Question is :This question categorizes the type of agent based on their specific role.

– (A) General agent. (Incorrect) – A general agent has broader authority than just selling a house.

– (B) Special agent. (Correct) – A special agent is appointed for a specific task, such as selling a house.

– (C) Mercantile agent. (Incorrect) – This term typically refers to agents dealing in goods and commerce.

– (D) Non mercantile Agent. (Incorrect) – This does not apply as the agent is involved in a commercial transaction.

So, correct option is : (B)

49. Advocates are classified as ______________
A. General agent
B. Special agent
C. Mercantile agent
D. Non mercantile Agent

Central Intent of the Question is :This question identifies the classification of advocates in agency law.

– (A) General agent. (Incorrect) – Advocates do not have general authority over all matters.

– (B) Special agent. (Incorrect) – They represent clients but are not limited to specific tasks.

– (C) Mercantile agent. (Incorrect) – Advocates do not primarily deal in goods or commerce.

– (D) Non mercantile Agent. (Correct) – Advocates provide legal services and do not engage in mercantile activities.

So, correct option is : (D)

50. In case of war between the principal’s and agent’s countries, the Contract of agency will be

A. Holding out

B. Terminated by agreement between parties

C. Termination by operation of Law

D. continued as anybody can become an agent.

Central Intent of the Question is :This question examines the impact of war on agency contracts.

– (A) Holding out. (Incorrect) – This term does not apply to the situation described.

– (B) Terminated by agreement between parties. (Incorrect) – War typically does not require mutual agreement to terminate.

– (C) Termination by operation of Law. (Correct) – War can legally terminate agency contracts due to impossibility of performance.

– (D) continued as anybody can become an agent. (Incorrect) – This is not a valid legal principle in the context of war.

So, correct option is : (C)

51. Irrevocable agency will be terminated when

A. death of agent/principal

B. Principal becomes incapable

C. Time lapses

D. agent’s obligations are performed

Central Intent of the Question is :This question explores the conditions under which an irrevocable agency can end.

– (A) death of agent/principal. (Correct) – The death of either party terminates the agency.

– (B) Principal becomes incapable. (Correct) – Incapacity of the principal also leads to termination.

– (C) Time lapses. (Incorrect) – An irrevocable agency does not terminate simply due to the passage of time.

– (D) agent’s obligations are performed. (Incorrect) – The obligations being fulfilled does not terminate an irrevocable agency.

So, correct option is : (D)

52. Agency may be terminated by Operation of Law, on :

A. Lapse of time

B. Death of Agent or Principal

C. Occurrence of a specified event

D. Purpose achieved

Central Intent of the Question is :This question identifies the circumstances under which agency can be terminated by law.

– (A) Lapse of time. (Incorrect) – This is not a legal operation but rather a condition.

– (B) Death of Agent or Principal. (Correct) – This is a legal reason for termination.

– (C) Occurrence of a specified event. (Correct) – Specific events can also lead to termination.

– (D) Purpose achieved. (Incorrect) – While achieving the purpose can end an agency, it is not strictly an operation of law.

So, correct option is : (B)

53. An agent can be appointed by —-
a) A minor of sound mind
b) Any person of sound mind
c) A major of sound mind
d) Any major of sound or unsound mind

Central Intent of the Question is : This question assesses the eligibility of individuals who can appoint an agent under the law.

– a) A minor of sound mind – Incorrect, as minors generally lack the legal capacity to appoint an agent.

– b) Any person of sound mind – Incorrect, as Minor of sound mind cannot appoint an agent.

– c) A major of sound mind – Correct, as adults of sound mind can appoint agents.

– d) Any major of sound or unsound mind – Incorrect, as individuals of unsound mind cannot appoint agents.

So, Most Correct Option is (B) – The law allows a Major of sound mind to appoint an agent, ensuring that the appointing party has the capacity to understand the implications of the agency relationship.

54. Who is Sub-agent?
a) Who works under the main agent
b) Who carries out the order and direction of a person under whom he works directly
c) Who works on behalf of the main agent
d) Employed by and acting under the control of the original agent in the business of agency

Central Intent of the Question is : This question clarifies the definition and role of a sub-agent in the agency relationship.

– a) Who works under the main agent – Correct, as this describes the hierarchical relationship.

– b) Who carries out the order and direction of a person under whom he works directly – Incorrect, as this does not specifically define a sub-agent.

– c) Who works on behalf of the main agent – Correct, as it captures the essence of a sub-agent’s role.

– d) Employed by and acting under the control of the original agent in the business of agency – Correct, as it accurately describes the sub-agent’s function.

So, the correct option is : (d) – A sub-agent is employed by the original agent and acts under their control, emphasizing the dependency of the sub-agent on the main agent.

55. For the acts of sub-agent lawfully appointed
a) The sub-agent is not responsible to the principal
b) The sub-agent is responsible to the principal directly
c) The agent is responsible to the principal
d) The agent is not responsible to the principal

Central Intent of the Question is : This question examines the liability of agents concerning the actions of their sub-agents.

– a) The sub-agent is not responsible to the principal – Incorrect, as sub-agents can be held accountable.

– b) The sub-agent is responsible to the principal directly – Incorrect, as the primary agent holds responsibility.

– c) The agent is responsible to the principal – Correct, as the main agent is liable for the actions of the sub-agent.

– d) The agent is not responsible to the principal – Incorrect, as agents are indeed responsible for their sub-agents.

So, the correct option is : (c) – The main agent retains responsibility for the actions of a lawfully appointed sub-agent, ensuring accountability in the agency relationship.

56. A person employed to do any act for another person is called.

a. Agent

b. Principal

c. Agency

d. Bailor

Central Intent of the Question is : This question identifies the terminology used in agency law.

– a. Agent – Correct, as this is the term for someone who acts on behalf of another.

– b. Principal – Incorrect, as this refers to the person for whom the agent acts.

– c. Agency – Incorrect, as this refers to the relationship itself, not the individual.

– d. Bailor – Incorrect, as this term pertains to a different legal context involving bailment.

So, the correct option is : (a) – An agent is defined as a person employed to perform acts on behalf of another, establishing the fundamental role in agency law.

57. Who has the primary responsibility in agency?

a. Principal

b. Agent

c. Sub Agent

d. Co-agent

Central Intent of the Question is : This question determines who holds the main responsibility in an agency relationship.

– a. Principal – Correct, as the principal is ultimately responsible for the agent’s actions.

– b. Agent – Incorrect, as the agent acts on behalf of the principal.

– c. Sub Agent – Incorrect, as the sub-agent’s responsibility is secondary to the main agent.

– d. Co-agent – Incorrect, as this term does not apply to primary responsibility.

So, the correct option is : (a) – The principal holds primary responsibility in the agency relationship, ensuring that they are accountable for the actions taken by their agents.

58. The contract which creates the relationship of an agent and principal is a contract of

a. Agency

b. Bailment

c. Pledge

d. Offer

Central Intent of the Question is : This question identifies the type of contract that establishes agency.

– a. Agency – Correct, as this is the specific contract that creates the agency relationship.

– b. Bailment – Incorrect, as this pertains to the transfer of possession of goods, not agency.

– c. Pledge – Incorrect, as this involves a security interest, not agency.

– d. Offer – Incorrect, as this is a preliminary step in contract formation, not the contract itself.

So, the correct option is : (a) – A contract of agency is the legal agreement that establishes the relationship between an agent and a principal.

59. An agent who is appointed to perform a particular act is called.

a. General agent

b. Universal agent

c. Special agent

d. Commercial agent

Central Intent of the Question is : This question distinguishes between different types of agents based on their scope of authority.

– a. General agent – Incorrect, as this refers to agents with broad authority.

– b. Universal agent – Incorrect, as this refers to agents with unlimited authority.

– c. Special agent – Correct, as this describes agents appointed for specific tasks.

– d. Commercial agent – Incorrect, as this term refers to agents involved in commercial transactions.

So, the correct option is : (c) – A special agent is appointed for a specific act, highlighting the limited scope of their authority.

60. An agent who has authority to do all acts connected with a particular trade, business or employment, is called

a. Commission agent

b. General agent

c. Del credere agent

d. Broker

Central Intent of the Question is : This question defines the type of agent based on their authority in a specific context.

– a. Commission agent – Incorrect, as this refers to agents who earn a commission on sales.

– b. General agent – Correct, as this describes agents with broad authority in a specific trade or business.

– c. Del credere agent – Incorrect, as this refers to agents who guarantee payment.

– d. Broker – Incorrect, as this term typically refers to intermediaries in transactions.

So, the correct option is : (b) – A general agent possesses the authority to conduct all acts related to a particular trade or business, emphasizing their comprehensive role within that context.

61. An agent whose authority to bind his principal is almost unlimited.

a. General agent

b. Universal agent

c. Auctioneer

d. Factor

Central Intent of the Question is : This question seeks to identify the type of agent with extensive authority.

– a. General agent – Incorrect: A general agent has broad authority but not unlimited.

– b. Universal agent – Correct: A universal agent has almost unlimited authority to act on behalf of the principal.

– c. Auctioneer – Incorrect: An auctioneer acts within specific limits related to selling goods.

– d. Factor – Incorrect: A factor has authority to sell goods but does not have unlimited authority.

So, the correct option is : (b). Universal agent – This option is correct as a universal agent can perform all acts that the principal can do, thus having almost unlimited authority.

62. When does the apparent authority of an agent arise?

a. When the Agent acts with the usual authority of the job

b. When the principal gives the agent implied authority to act

c. When the agent has actual authority to act

d. When the principal represents to a third party that an agent has the authority to act when in fact he doesn’t

Central Intent of the Question is : This question addresses the conditions under which an agent’s authority is perceived by third parties.

– a. When the Agent acts with the usual authority of the job – Incorrect: This describes actual authority, not apparent authority.

– b. When the principal gives the agent implied authority to act – Incorrect: Implied authority is not the same as apparent authority.

– c. When the agent has actual authority to act – Incorrect: This refers to the agent’s real authority, not how it appears to others.

– d. When the principal represents to a third party that an agent has the authority to act when in fact he doesn’t – Correct: This defines apparent authority, where the principal’s representation leads a third party to believe the agent has authority.

So, the correct option is : (d). When the principal represents to a third party that an agent has the authority to act when in fact he doesn’t – This option is correct as it highlights the misleading representation by the principal.

63. Which one of the following is not a duty of an agent?

a. Duty to exercise care and skill

b. Duty to take a commission

c. Duty to account

d. Duty to avoid conflict of interest

Central Intent of the Question is : This question identifies which responsibility does not fall under an agent’s duties.

– a. Duty to exercise care and skill – Incorrect: This is a fundamental duty of an agent.

– b. Duty to take a commission – Correct: An agent is not obligated to take a commission; it is contingent upon the agreement.

– c. Duty to account – Incorrect: Agents must account for their actions and transactions.

– d. Duty to avoid conflict of interest – Incorrect: This is a critical duty to maintain loyalty to the principal.

So, the correct option is : (b). Duty to take a commission – This option is correct as agents may work on a commission basis, but it is not a mandatory duty.

64. What is an undisclosed agency?

a. When a third party is not informed of the existence of the principal, and believes the agent is acting on his own behalf.

b. When the agent indicates through conduct he is acting as an agent.

c. When the principal is not in existence.

d. Where the third party knows there is a principal but doesn’t know his name.

Central Intent of the Question is : This question seeks to define the nature of an undisclosed agency.

– a. When a third party is not informed of the existence of the principal, and believes the agent is acting on his own behalf – Correct: This accurately describes an undisclosed agency.

– b. When the agent indicates through conduct he is acting as an agent – Incorrect: This describes a disclosed agency.

– c. When the principal is not in existence – Incorrect: This does not define an agency type.

– d. Where the third party knows there is a principal but doesn’t know his name – Incorrect: This describes a partially disclosed agency.

So, the correct option is : ( a). When a third party is not informed of the existence of the principal, and believes the agent is acting on his own behalf – This option is correct as it captures the essence of undisclosed agency.

65. Which of the following statements is incorrect?

a. An agency may be terminated by death of either party.

b. An agency may be terminated by express agreement.

c. An agency agreement can always be terminated by a principal.

d. Mental incapability of an agent will terminate the agency relationship.

Central Intent of the Question is : This question tests knowledge of the termination of agency relationships.

– a. An agency may be terminated by death of either party – Incorrect: This is a valid reason for termination.

– b. An agency may be terminated by express agreement – Incorrect: This is also a valid reason for termination.

– c. An agency agreement can always be terminated by a principal – Correct: This statement is misleading as there are conditions under which a principal cannot terminate an agency.

– d. Mental incapability of an agent will terminate the agency relationship – Incorrect: This is a valid reason for termination.

So, the correct option is : (c). An agency agreement can always be terminated by a principal – This option is correct as it suggests an absolute power that may not exist in all circumstances.

66. An agency relationship which is made retrospectively is known as an agency by:

a. Estoppel

b. Ratification

c. Necessity

d. Commerce

Central Intent of the Question is : This question identifies the type of agency established after the fact.

– a. Estoppel – Incorrect: This refers to preventing a party from denying a fact.

– b. Ratification – Correct: Ratification allows a principal to approve an act after it has been performed.

– c. Necessity – Incorrect: This refers to agency created in emergencies.

– d. Commerce – Incorrect: This does not define a type of agency.

So, the correct option is : (b). Ratification – This option is correct as it describes the retrospective approval of an agency relationship.

67. Which one of the following statements is incorrect?

a. An agent creates a loyal relationship between a third party and principal.

b. All agents are entitled to be paid for their services.

c. An agency relationship may be created through necessity

d. An agency relationship may be created through estoppel.

Central Intent of the Question is : This question evaluates understanding of agent duties and entitlements.

– a. An agent creates a loyal relationship between a third party and principal – Incorrect: This is a true statement about agency.

– b. All agents are entitled to be paid for their services – Correct: This statement is misleading as not all agents are entitled to payment unless specified in the agreement.

– c. An agency relationship may be created through necessity – Incorrect: This is a valid method of creating an agency.

– d. An agency relationship may be created through estoppel – Incorrect: This is also a valid method of creating an agency.

So, the correct option is : (b). All agents are entitled to be paid for their services – This option is correct as it implies a universal entitlement that may not apply in all cases.

68. …… is an agent who is appointed to sell goods at a public auction for reward.

a. Commission agent

b. Broker

c. Auctioneer

d. Factor

Central Intent of the Question is : This question identifies the type of agent involved in auction sales.

– a. Commission agent – Incorrect: This refers to agents who sell for a commission but not specifically at auctions.

– b. Broker – Incorrect: A broker facilitates transactions but is not specifically an auction agent.

– c. Auctioneer – Correct: An auctioneer is specifically appointed to conduct public auctions.

– d. Factor – Incorrect: A factor manages goods but is not specifically an auction agent.

So, the correct option is : (c). Auctioneer – This option is correct as it directly defines the role of an agent in auction settings.

69. ……. Agent acts the role of both a guarantor and an agent

a. Factor

b. Del credere agent

c. Special agent

d. General agent

Central Intent of the Question is : This question seeks to identify the type of agent who also guarantees transactions.

– a. Factor – Incorrect: A factor does not typically act as a guarantor.

– b. Del credere agent – Correct: A del credere agent guarantees payment to the principal.

– c. Special agent – Incorrect: A special agent acts within specific limits and does not guarantee.

– d. General agent – Incorrect: A general agent does not inherently act as a guarantor.

So, the correct option is : ( b). Del credere agent – This option is correct as it describes an agent who also provides a guarantee for transactions.

70. Where both the name and existence of the principal are not disclosed in the contract. Such principal is called

a. Undisclosed principal

b. Unnamed principal

c. Named principal

d. Prohibited principal

Central Intent of the Question is: This question defines the type of principal in an undisclosed agency.

– a. Undisclosed principal – Correct: This accurately describes a principal whose identity is not revealed.

– b. Unnamed principal – Incorrect: This term does not fully capture the essence of the situation.

– c. Named principal – Incorrect: This contradicts the premise of the question.

– d. Prohibited principal – Incorrect: This term does not apply in this context.

So, the correct option is : (a). Undisclosed principal – This option is correct as it defines a principal whose identity and existence are hidden from third parties.

71. Which one of the following is not a duty of an agent?

a. Right of retainer

b. Right of lien

c. Right to remuneration

d. Right to recover damage

Central Intent of the Question is : This question assesses the understanding of the duties that an agent is obligated to perform under the agency agreement.

– a. Right of retainer – Incorrect. This is a duty of an agent, allowing them to retain the principal’s property until payment is made.

– b. Right of lien – Incorrect. This is also a duty of an agent, giving them the right to hold onto property until debts are settled.

– c. Right to remuneration – Incorrect. This is a duty of an agent, as they are entitled to be compensated for their services.

– d. Right to recover damage – Correct. This is not a duty of an agent; rather, it is a right that may arise in certain circumstances.

So, the correct option is : (d). Right to recover damage is not a duty of an agent, as agents are primarily responsible for performing tasks on behalf of the principal rather than seeking damages.

72. A person employed by, and acting under the control of the original agent is called…….

a. Substitute agent

b. Co-agent

c. Sub agent

d. Universal agent

Central Intent of the Question is : This question evaluates the understanding of the hierarchy and roles within agency relationships.

– a. Substitute agent – Incorrect. A substitute agent acts in place of the original agent but is not necessarily under their control.

– b. Co-agent – Incorrect. A co-agent works alongside the original agent but is not under their control.

– c. Sub agent – Correct. A sub-agent is employed by the original agent and acts under their control.

– d. Universal agent – Incorrect. A universal agent has broad authority and is not specifically under the control of another agent.

So, the correct option is : (c). Sub agent is the correct term for a person employed by the original agent and acting under their control, reflecting the layered structure of agency.

73. Which of the following is not a terminator of agency by operation of law?

a. Expiry of time

b. Revocation by the principal

c. Insolvency

d. Death

Central Intent of the Question is : This question examines the factors that can legally terminate an agency relationship.

– a. Expiry of time – Incorrect. This is a valid terminator of agency, as it ends when the specified time period concludes.

– b. Revocation by the principal – Correct. This is not a terminator by operation of law; it is a voluntary act by the principal.

– c. Insolvency – Incorrect. Insolvency can terminate an agency as it affects the principal’s ability to fulfill obligations.

– d. Death – Incorrect. The death of either party typically terminates the agency relationship.

So, the correct option is : (b). Revocation by the principal is not a terminator by operation of law, as it requires an active decision by the principal rather than occurring automatically.

74. A …….. duty is to bring together the buyer and seller and make the sale happen.

a. Broker’s

b. Factor’s

c. Commission agent’s

d. Del credere agent

Central Intent of the Question is : This question identifies the specific role of an agent in facilitating transactions.

– a. Broker’s – Correct. A broker’s primary duty is to connect buyers and sellers to facilitate sales.

– b. Factor’s – Incorrect. A factor typically manages goods on behalf of the principal but does not primarily focus on bringing buyers and sellers together.

– c. Commission agent’s – Incorrect. While a commission agent may facilitate sales, their role is broader and includes selling goods on behalf of the principal.

– d. Del credere agent – Incorrect. A del credere agent guarantees payment from the buyer but is not specifically tasked with bringing parties together.

So, the correct option is : (a). Broker’s duty is to bring together the buyer and seller, highlighting their role as intermediaries in transactions.

Contract of Agency – Multiple Choice Questions (MCQ)

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