Multiple Choice Questions:

1. The relationship of principal and agent may be created by -

(a) Express or implied offer (b) Ratification (c) Operation (d) Any of the above

Ans: (d) Any of the above

2. Implied agency includes -

(a) Agency by estoppel (b) Agency by holding out

(c) Agency by necessity (d) All of the above

Ans: (d) All of the above

3. The crucial test of agency is that

(a) A person possessing capacity to contract may lawfully do by himself or he may get it done by another

(b) He who acts through an agent is himself acting

(c) Acts of the agent bind the principal

(d) The principal is not responsible if the agent exceeds his authority

Ans: (c) Acts of the agent bind the principal

4. Agency is irrevocable

(a) Where the agent has an interest in the property that forms the subject matter of the agency

(b) Where the agent has partly exercised his authority

(c) Where the agent has incurred a personal liability

(d) In all the above cases

Ans: (d) In all the above cases

5. An agent can retain from any sums received on account of the principal for the following payments:

(a) All moneys due to himself in respect of advance made

(b) In respect of expenses properly incurred by him in conducting such business

(c) Such remuneration as may be payable to him for acting as agent

(d) All of the above

Ans: (d) All of the above

True or False Questions:

1. There can be an agency without agreement. [True]

2. The acts of the agent are the acts of the principal. [True]

3. A sub-agent does his work under the control of the agent in the business of the agency. [True]

4. An agency comes to an end by the destruction of the subject matter. [True]

5. There is no privity of contract between a substituted agent and the principal. [False]

[The doctrine of privity of contract is a common law principle which provides that a contract cannot confer rights or impose obligations upon any person who is not a party to the contract. The premise is that only parties to contracts should be able to sue to enforce their rights or claim damages as such.]

Fill in the Blanks Questions:

1. A ___________ acts under the control and supervision of principal. [substituted agent ]

2. Consideration is ________to create an agency. [immaterial]

3. The principal is ________ for all the acts of his agent. [not liable]

4. The doctrine of ‘holding out’ is based on the principle of ________ . [estoppel]

5. A minor ______ an agent. [may be]