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Flashcards: Agency 40 Flashcards 
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Card: 1 / 40 
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Agency is formed when one party delegates authority to another party to perform actions on behalf of the first party. True or False? |
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True. Agency is indeed formed through the delegation of authority.  |
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The relationship of agency can be either ___ or ___. |
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Express or implied.  |
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According to the Indian Contract Act, 1872, what governs the laws related to agency? |
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Chapter X of the Indian Contract Act, 1872 governs the laws related to agency. |
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In the principal-agent relationship, who are the three main parties involved? |
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The Principal, the Agent, and a Third Party.  |
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A acts on behalf of B, where A is the agent. True or False? |
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False. If A acts on behalf of B, then B is the principal and A is the agent. |
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Fill in the blank: An agent acts on behalf of the principal, either representing the principal in transactions with ___ or performing acts for the principal. |
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Third parties. |
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What is the significance of agency laws in business transactions? |
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Agency laws are significant because most business transactions globally are conducted through agency relationships.  |
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Illustration: If a businessman delegates someone to buy goods, what roles do the parties play? |
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The businessman is the Principal, the person he delegates is the Agent, and the seller is the Third Party.  |
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True or False: All corporations operate without any agency relationships. |
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False. All corporations operate through agency relationships.  |
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Who is legally capable of appointing an agent? |
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Any person who has reached the age of majority and possesses a sound mind can legally appoint an agent.  |
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True or False: A minor can appoint an agent. |
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False. Minors cannot appoint an agent. |
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What is the principal's liability regarding the actions of an agent? |
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The principal is responsible for all lawful actions taken by the agent within the scope of the agent's authority.  |
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True or False: An agent is liable to the principal even if they are a minor. |
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False. An agent is not liable to the principal if they are a minor or of unsound mind.  |
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What does Section 185 state about consideration in agency creation? |
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Section 185 states that no consideration is necessary for creating an agency. |
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Anyone who is of the age of majority and of sound mind can ___ an agent. |
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Employ |
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True or False: An agent can appoint a sub-agent without the principal's permission. |
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False. An agent can only appoint a sub-agent with the permission of the principal. |
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What happens if the agent is removed regarding the sub-agent? |
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If the agent is removed, the sub-agent is automatically terminated. |
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True or False: An agent can be a minor and still bind the principal in contracts with third parties. |
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False. A minor cannot be an agent in a way that makes them responsible to their principal. |
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What is the significance of power of attorney in relation to the principal's mental capacity? |
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If the principal becomes mentally incapacitated after granting power of attorney, the authority granted becomes worthless. |
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Consideration is required to establish an agency relationship. True or False? |
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Card: 40 / 40
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False. No consideration is required to establish an agency relationship. |
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 Completed! Keep practicing to master all of them. |
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