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Test: Termination of Agency under Indian Contract Act, 1872 - Judiciary Exams MCQ


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10 Questions MCQ Test Civil Law for Judiciary Exams - Test: Termination of Agency under Indian Contract Act, 1872

Test: Termination of Agency under Indian Contract Act, 1872 for Judiciary Exams 2024 is part of Civil Law for Judiciary Exams preparation. The Test: Termination of Agency under Indian Contract Act, 1872 questions and answers have been prepared according to the Judiciary Exams exam syllabus.The Test: Termination of Agency under Indian Contract Act, 1872 MCQs are made for Judiciary Exams 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Termination of Agency under Indian Contract Act, 1872 below.
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Test: Termination of Agency under Indian Contract Act, 1872 - Question 1
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What leads to the termination of an agency when the relationship between a principal and an agent comes to an end based on the Indian Contract Act?

Detailed Solution for Test: Termination of Agency under Indian Contract Act, 1872 - Question 1
The termination of an agency can occur due to the death or insanity of either the principal or the agent. This means that if either the principal or agent passes away or becomes incapacitated, the agency relationship is terminated as outlined in the Indian Contract Act.
Test: Termination of Agency under Indian Contract Act, 1872 - Question 2
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When does an agency created for a specific period typically come to an end according to the Indian Contract Act?

Detailed Solution for Test: Termination of Agency under Indian Contract Act, 1872 - Question 2
An agency established for a specific period ends upon the expiration of that specified time frame as per the Indian Contract Act. This means that once the agreed-upon period for the agency relationship elapses, the agency naturally ceases to exist unless otherwise renewed or extended by mutual agreement.
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Test: Termination of Agency under Indian Contract Act, 1872 - Question 3
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What event leads to the termination of an agency if the subject matter is destroyed before the sale is completed?

Detailed Solution for Test: Termination of Agency under Indian Contract Act, 1872 - Question 3
The termination of an agency due to the destruction of the subject matter occurs when the object or property that the agency was established to deal with is destroyed before the intended transaction is completed. For instance, if an agency is set up to sell airplanes and the airplane is destroyed before the sale is finalized, the agency comes to an end. This highlights the significance of the subject matter in agency relationships and how its destruction can lead to the termination of the agency.
Test: Termination of Agency under Indian Contract Act, 1872 - Question 4
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In what scenario does the agency conclude upon the fulfillment of the purpose for which it was established?
Detailed Solution for Test: Termination of Agency under Indian Contract Act, 1872 - Question 4
The completion of an agency occurs when the purpose for which the agency was established is fulfilled. For example, if Mahesh appoints Sachin to sell his house in China, once the sale is successfully completed, the agency terminates. This highlights the temporary nature of agency relationships and how they are designed to achieve specific objectives within a defined scope of work.
Test: Termination of Agency under Indian Contract Act, 1872 - Question 5
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What is the principal's responsibility regarding the duty to reimburse an agent for expenses incurred during the performance of duties?
Detailed Solution for Test: Termination of Agency under Indian Contract Act, 1872 - Question 5
The principal is responsible for reimbursing the agent for reasonable expenses incurred during the performance of duties. This includes costs related to travel, meals, accommodation, incidental expenses, and similar expenditures. It is crucial for the principal to uphold this duty to ensure the agent can effectively carry out their responsibilities without facing financial burdens.
Test: Termination of Agency under Indian Contract Act, 1872 - Question 6
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When may a principal release an agent from indemnity for liabilities arising from the agent's actions?
Detailed Solution for Test: Termination of Agency under Indian Contract Act, 1872 - Question 6
A principal may release an agent from indemnity for liabilities arising from the agent's actions if the agent exceeds their authority or acts beyond their scope. In such cases, the principal may choose not to indemnify the agent against resulting liabilities. However, if the principal later approves or ratifies the agent's actions, they become obligated to indemnify the agent for any liabilities incurred as a consequence. This emphasizes the importance of clear communication and adherence to authorized actions within the scope of the agency relationship.
Test: Termination of Agency under Indian Contract Act, 1872 - Question 7
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What responsibility does a principal have towards an agent concerning indemnification in cases where the agent's actions are authorized but result in liabilities?
Detailed Solution for Test: Termination of Agency under Indian Contract Act, 1872 - Question 7
A principal is generally obligated to indemnify an agent against liabilities arising from authorized actions, unless the agent exceeds their authority or acts beyond their scope. If the principal later ratifies the agent's actions, they will be bound to indemnify the agent against any incurred liabilities. This indemnification duty is crucial for protecting agents in their roles and ensuring accountability within the principal-agent relationship.
Test: Termination of Agency under Indian Contract Act, 1872 - Question 8
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In the case of R. Sayani v. Bright Bros (P) Ltd., what was the specific compensation amount that the agent was entitled to per month?
Detailed Solution for Test: Termination of Agency under Indian Contract Act, 1872 - Question 8
In the case of R. Sayani v. Bright Bros (P) Ltd., the agent was entitled to Rs. 4000 per month as compensation. This ruling emphasizes the importance of compensating agents for premature termination if it is unjustified, ensuring fairness in agency relationships.
Test: Termination of Agency under Indian Contract Act, 1872 - Question 9
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What is a key characteristic of agency relationships in business law?
Detailed Solution for Test: Termination of Agency under Indian Contract Act, 1872 - Question 9
A key characteristic of agency relationships in business law is the act of delegating authority to another individual, assigning them specific tasks or particular areas of work. This delegation of authority forms the basis of the relationship between the principal and the agent, outlining their respective rights and duties. This ensures clarity in roles and responsibilities within the agency relationship, contributing to its effectiveness and smooth operation.
Test: Termination of Agency under Indian Contract Act, 1872 - Question 10
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Why is it important for both parties in an agency relationship to understand the methods for terminating the agreement?
Detailed Solution for Test: Termination of Agency under Indian Contract Act, 1872 - Question 10
Understanding the methods for terminating an agency relationship is crucial for both parties involved to ensure a smooth and clear end to the agreement. By being aware of the termination procedures, both the principal and the agent can navigate the conclusion of the relationship effectively, minimizing misunderstandings and potential conflicts. This knowledge promotes a structured and organized termination process, allowing both parties to part ways in a manner that upholds their rights and responsibilities, ultimately facilitating a more amicable transition.
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