Agency MCQ Quiz in தமிழ் - Objective Question with Answer for Agency - இலவச PDF ஐப் பதிவிறக்கவும்

The correct answer is correct 

Key Points

• The statement "No consideration is necessary to create an agency" is correct, and it is explicitly laid down under Section 185 of the Indian Contract Act, 1872.
• This means that an agency relationship can be validly created without any consideration between the principal and the agent.
• Unlike normal contracts which require consideration under Section 10 of the Indian Contract Act, an agency is based on authority and representation, not necessarily on a contractual exchange.
• When a person (principal) authorizes another person (agent) to act on their behalf, that authorization itself is enough to form an agency whether or not money or other consideration is exchanged.

The correct answer is Agency by ratification

Key Points

• When A, without B’s authority, lends B’s money to C, he is not an agent at the time of the act. However, if B later accepts interest from C, this amounts to approval of the unauthorized act, and it becomes binding as if it was originally authorized. This is called:
• Agency by Ratification – As per Sections 196–200 of the Indian Contract Act, 1872.
• Key Conditions for Ratification:
  • The act must be done on behalf of the principal.
  • The principal must be in existence and competent at the time of the act.
  • Ratification must be express or implied (like accepting interest).
  • The entire transaction must be ratified, not partially.

Additional Information

• Option 1. Agency by necessity: Arises in emergency situations where prior approval is not possible — not applicable here.
• Option 2. Agency by holding out: Based on conduct of the principal over time that leads others to believe someone is their agent — not relevant here.
• Option 3. Agency by estoppel: Applies when the principal's conduct misleads a third party into believing someone is an agent — not the case here.

The correct answer is Option 4.

Key Points Section 182–238 of the Indian Contract Act, 1872:

These provisions govern the law of agency, which defines the relationship between a principal and an agent.

Creation of Agency:

1. Express Appointment:

   • An agency can be created explicitly through an agreement where one party (the principal) appoints another (the agent) to act on their behalf.
   • Example: A written or verbal agreement of appointment.

2. Implied Appointment or Conduct of Parties:

   • An agency may arise through the conduct or circumstances indicating the intention to create such a relationship.
   • Example: A person managing another's property without formal agreement but with implied consent.

3. Agency by Necessity:

   • In certain emergencies, an agency relationship may arise by necessity when one person acts on behalf of another to protect their interests.
   • Example: A shipmaster selling perishable goods to prevent loss when the owner is unreachable.

4. Agency by Ratification (Section 196–200):

   • An agency can be created retrospectively if the principal ratifies an act performed on their behalf without prior authority.
   • Example: If a person buys goods on behalf of another without authority, and the latter subsequently accepts the act, an agency relationship is created.

The correct answer is option 2

Key Points Agency and Consideration:

• As per Section 185 of the Indian Contract Act, 1872, consideration is not required for a contract of agency.
• A contract of agency is an exception to the general rule that a contract must be supported by consideration.

Agent’s Entitlement:

• Even though consideration is not necessary, an agent is entitled to reasonable remuneration, unless otherwise specified in the agreement.
• This ensures the agent is compensated for their services in the absence of specific terms.

Distinction from Other Contracts:

• Contracts such as bailment, partnership, and pledge generally require consideration as an essential element for validity.
• The lack of a consideration requirement makes the contract of agency unique compared to these contracts.
• A contract of agency is valid without consideration, making agency the correct answer.

The correct answer is Option 2

Key Points

•  According to Section 228, when an agent goes beyond their authorized scope, and it's impossible to separate the authorized actions from the unauthorized ones, the principal is not obligated to recognize the entire transaction.
• In such cases, the principal has the right to repudiate the entire transaction.
• illustration further clarifies that if :
  •  A authorized B to buy 500 sheep and B buys 500 sheep and 200 lambs without separation of the amounts, A has the right to repudiate the whole transaction. Therefore, option B is the correct answer.

The correct answer is Authority granted through spoken or written words

Key Points

• Section 187 of the Indian Contract Act defines two types of authority: express and implied. Express authority is granted explicitly through spoken or written words. In contrast, implied authority is derived from the circumstances of the case, and these circumstances include things spoken or written, as well as the customary course of dealing between the parties. Essentially, express authority is directly stated, while implied authority is inferred from the surrounding situation and can be based on various factors such as communication and customary practices.

The correct answer is Option 1.

Key Points

•  The General principle is agent is responsible to the principal for the acts of the sub-agent and sub-agent is responsible to the agent for his acts.
• As per Section 190 of Indian Contract Act, 1872, two exceptions has been made to the above general rule where sub-agent is directly responsible to the Principal, those exception are:
  • Fraud; or
  • Willful wrong.
  • Committed by the Sub-agent. 

The correct answer is Both 1 and 2

Key PointsSection 197. Ratification may be expressed or implied.

• Ratification may be expressed or may be implied in the conduct of the person on whose behalf the acts are done.
• Illustrations
  • (a) A, without authority, buys goods for B. Afterwards B sells them to C on his own account; B's conduct implies a ratification of the purchase made for him by A.

Key Points

• The Indian Contract Act, 1872 defines an ‘Agent’ in Section 182 as a person employed to do any act for another or to represent another in dealing with third persons.

Illustrations

• A, a businessman, delegates B to buy some goods on his behalf. Here, A is the principal and B is the agent, and the person from whom the goods are bought is the ‘Third Person’.

The correct answer is The agent is obligated to submit proper accounts to the principal upon request.

Key Points

• Section 213, concerning "Agent's accounts," establishes an important obligation for agents in their relationship with principals
  • Obligation to Render Accounts: According to Section 213, an agent is legally bound to provide proper accounts to their principal.
  • Nature of the Obligation: The obligation to render accounts is not automatic but arises when the principal makes a demand. This means that the agent is required to provide an account of their actions and financial transactions when requested by the principal.