CA Foundation Exam  >  CA Foundation Questions  >  Which of the following statements is incorrec... Start Learning for Free
Which of the following statements is incorrect?
  • a)
    An agency may be terminated by death of either party.
  • b)
    An agency may be terminated by express agreement.
  • c)
    An agency agreement can always be terminated by a principal.
  • d)
    Mental incapacity of an agent will terminate the agency relationship.
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
Which of the following statements is incorrect?a)An agency may be term...
Understanding Agency Termination
In the context of agency law, it's crucial to understand how and when an agency relationship can be terminated. Here’s a detailed explanation of why option 'A' is incorrect.
Agency Termination by Death
- The statement claims that an agency may be terminated by the death of either party. This is incorrect because:
- If the agent dies, the agency relationship is automatically terminated.
- However, if the principal dies, the agency may not necessarily terminate if the agent has the authority to act on behalf of an estate (in cases of ongoing business).
- Certain agencies are created for specific transactions, and the death of the principal can lead to complications, but it does not universally terminate the agency.
Other Valid Methods of Termination
- Express Agreement: An agency can indeed be terminated by a mutual agreement between the principal and the agent, making option 'B' correct.
- Principal's Right to Terminate: The principal has the power to terminate the agency at any time, which supports option 'C' as accurate.
- Mental Incapacity of Agent: If an agent becomes mentally incapacitated, the agency relationship is terminated as the agent cannot fulfill their duties, validating option 'D'.
Conclusion
In summary, while the death of an agent terminates the agency, the death of the principal does not universally end the agency relationship, making option 'A' the incorrect statement. Understanding these nuances is essential in agency law for effective legal practice.
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Community Answer
Which of the following statements is incorrect?a)An agency may be term...
Some agency agreements such as a Lasting Power of Attorney cannot be revoked once registered with the Office of the Public Guardian and the principal no longer has his mental capacity.
Hence the Option A that an agency agreement can always be terminated by a principal is correct, as the Statement is incorrect. All other staements are correct.
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Which of the following statements is incorrect?a)An agency may be terminated by death of either party.b)An agency may be terminated by express agreement.c)An agency agreement can always be terminated by a principal.d)Mental incapacity of an agent will terminate the agency relationship.Correct answer is option 'A'. Can you explain this answer?
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Which of the following statements is incorrect?a)An agency may be terminated by death of either party.b)An agency may be terminated by express agreement.c)An agency agreement can always be terminated by a principal.d)Mental incapacity of an agent will terminate the agency relationship.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 Which of the following statements is incorrect?a)An agency may be terminated by death of either party.b)An agency may be terminated by express agreement.c)An agency agreement can always be terminated by a principal.d)Mental incapacity of an agent will terminate the agency relationship.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 Which of the following statements is incorrect?a)An agency may be terminated by death of either party.b)An agency may be terminated by express agreement.c)An agency agreement can always be terminated by a principal.d)Mental incapacity of an agent will terminate the agency relationship.Correct answer is option 'A'. Can you explain this answer?.
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