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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?
- a)Yes, because he has a duty to avoid a conflict of interest.
- b)Yes, because he has a duty to account.
- c)No, because he has sold Pranab the shares at market value.
- d)No, because he has acted according to Pranab’s instructions and she has the shares as she requested.
Correct answer is option 'A'. Can you explain this answer?
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Pranab asked his agent, Hari to purchase her 500 shares in X Ltd. Hari...
Even though the shares are sold at market, Hari is in breach of his agency duties, due to conflict of interest.
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Pranab asked his agent, Hari to purchase her 500 shares in X Ltd. Hari...
Understanding the Breach of Agency Duties
In the scenario presented, Hari's actions as an agent raise significant ethical concerns regarding his duties towards Pranab. Let's explore why the correct answer is option 'A'.
Conflict of Interest
- Hari, as an agent, holds a fiduciary duty to act in the best interests of Pranab.
- By selling his own shares to Pranab without disclosing his ownership, Hari creates a situation of conflict of interest.
- The law requires agents to be transparent about any personal interest that may affect their decisions, ensuring that the principal is not misled.
Duty to Account
- While it could be argued that Hari sold the shares at market value (option C), this does not mitigate the breach of duty.
- The duty to account involves the obligation to disclose all relevant information, including ownership of the shares.
Acting on Instructions
- Although Hari acted according to Pranab's instructions (option D), this does not absolve him of his obligation to disclose his conflict of interest.
- An agent must prioritize the principal's interests over their own, which was not the case here.
Conclusion
- Thus, Hari is in breach of his agency duties primarily because he failed to avoid a conflict of interest.
- Transparency and trust are fundamental principles in an agency relationship that Hari violated by not informing Pranab about the origin of the shares.
In summary, the ethical and legal expectations of an agent necessitate full disclosure to prevent conflicts of interest, confirming that option 'A' is indeed the correct choice.
In the scenario presented, Hari's actions as an agent raise significant ethical concerns regarding his duties towards Pranab. Let's explore why the correct answer is option 'A'.
Conflict of Interest
- Hari, as an agent, holds a fiduciary duty to act in the best interests of Pranab.
- By selling his own shares to Pranab without disclosing his ownership, Hari creates a situation of conflict of interest.
- The law requires agents to be transparent about any personal interest that may affect their decisions, ensuring that the principal is not misled.
Duty to Account
- While it could be argued that Hari sold the shares at market value (option C), this does not mitigate the breach of duty.
- The duty to account involves the obligation to disclose all relevant information, including ownership of the shares.
Acting on Instructions
- Although Hari acted according to Pranab's instructions (option D), this does not absolve him of his obligation to disclose his conflict of interest.
- An agent must prioritize the principal's interests over their own, which was not the case here.
Conclusion
- Thus, Hari is in breach of his agency duties primarily because he failed to avoid a conflict of interest.
- Transparency and trust are fundamental principles in an agency relationship that Hari violated by not informing Pranab about the origin of the shares.
In summary, the ethical and legal expectations of an agent necessitate full disclosure to prevent conflicts of interest, confirming that option 'A' is indeed the correct choice.
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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?a)Yes, because he has a duty to avoid a conflict of interest.b)Yes, because he has a duty to account.c)No, because he has sold Pranab the shares at market value.d)No, because he has acted according to Pranab’s instructions and she has the shares as she requested.Correct answer is option 'A'. Can you explain this answer?
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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?a)Yes, because he has a duty to avoid a conflict of interest.b)Yes, because he has a duty to account.c)No, because he has sold Pranab the shares at market value.d)No, because he has acted according to Pranab’s instructions and she has the shares as she requested.Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about 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?a)Yes, because he has a duty to avoid a conflict of interest.b)Yes, because he has a duty to account.c)No, because he has sold Pranab the shares at market value.d)No, because he has acted according to Pranab’s instructions and she has the shares as she requested.Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for 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?a)Yes, because he has a duty to avoid a conflict of interest.b)Yes, because he has a duty to account.c)No, because he has sold Pranab the shares at market value.d)No, because he has acted according to Pranab’s instructions and she has the shares as she requested.Correct answer is option 'A'. Can you explain this answer?.
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?a)Yes, because he has a duty to avoid a conflict of interest.b)Yes, because he has a duty to account.c)No, because he has sold Pranab the shares at market value.d)No, because he has acted according to Pranab’s instructions and she has the shares as she requested.Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about 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?a)Yes, because he has a duty to avoid a conflict of interest.b)Yes, because he has a duty to account.c)No, because he has sold Pranab the shares at market value.d)No, because he has acted according to Pranab’s instructions and she has the shares as she requested.Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for 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?a)Yes, because he has a duty to avoid a conflict of interest.b)Yes, because he has a duty to account.c)No, because he has sold Pranab the shares at market value.d)No, because he has acted according to Pranab’s instructions and she has the shares as she requested.Correct answer is option 'A'. Can you explain this answer?.
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ample number of questions to practice 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?a)Yes, because he has a duty to avoid a conflict of interest.b)Yes, because he has a duty to account.c)No, because he has sold Pranab the shares at market value.d)No, because he has acted according to Pranab’s instructions and she has the shares as she requested.Correct answer is option 'A'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
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