Contract of Agency MCQs – Agency agreement

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An agent is a person employed to do any (lawful) act for another or to represent another in dealing with a third person.
Contract of Agency MCQs

Contract of Agency MCQs

An agent is a person employed to do any (lawful) act for another or to represent another in dealing with a third person. Here on MCQs.club we have prepared useful Multiple-Choice Questions (MCQs) on contract of agency that fully cover MCQs on agency agreement, contract of agency notes, agency Indian contract act MCQs, sub agent Indian contract act, principal agent agreement MCQs. These MCQS also define agent in contract law, principal agent contract, undisclosed agency agreement, co agent in contract. Our prepared mcq on contract of agency are useful for Professional Accountancy exams, Business management exams, Competitive exams.

  1. Agent – An agent is a person employed to do any (lawful) act for another or to represent another in dealing with a third person.
    1. The above definition is correct
    2. The above definition is incorrect
  1. Types of agent include:
    1. Commercial agent or mercantile agent
    2. Auctioneer
    3. Company directors and managers
    4. Partners in a business partnership
    5. All of the above
  1. A sub-agent is the person employed by the original agent to act under his control in the business of agency. The general rule is that an agent is not entitled to delegate his authority to another person without the consent of his principal. Under what circumstances an agent may appoint a sub-agent and delegate the work?
    1. The principal has expressly permitted delegation of such power.
    2. The ordinary custom of trade a sub-agent may be employed.
    3. The nature of work is such that a sub-agent is necessary
    4. All of the above
  1. Where a sub-agent is properly appointed by an agent to delegate the work:
    1. The principal is bound by the acts of the sub-agent as if the subagent was an agent originally appointed by the principal.
    2. The agent is responsible to the principal for the acts of the subagent.
    3. The sub-agent is responsible for his acts to the agent, but not to the principal, except in case of fraud or willful wrong.
    4. All of the above
  1. Where a sub-agent is not properly appointed by an agent to delegate the work:
    1. The agent stands as a principal towards such a sub-agent
    2. The principal is not represented by such sub-agent and hence he is not liable for the acts of the sub-agent.
    3. The agent is responsible for the acts of the sub-agent to the principal as well as to the third parties.
    4. All of the above
  1. Which of the following is correct for Co-agent or substituted agent?
    1. A co-agent works under the instructions of the principal.
    2. There is a contract between co-agent and the principal.
    3. Co-agent is not affected by the termination of the original agency.
    4. All of the above
  1. What are the ways in which an agency relationship, recognised in law, can be established?
    1. by express appointment (by agreement)
    2. by ratification
    3. by estoppel
    4. by necessity.
    5. All of the above

  1. An agency relationship may be created retrospectively, by ratification. This may happen when a person who does not actually have actual authority as an agent negotiates with a third party, claiming to be an agent of a named principal. The agent may negotiate a transaction between the third party and the so-called principal.
    1. True
    2. False
  1. Effect of ratification are:
    1. Ratification is established from the time of formation of contract between the ratifier of the act and the person who did of the act.
    2. A contractual relationship is established between the ratifier and the third party.
    3. Both A&B
    4. None
  1. What are the requisites for a valid ratification?
      1. An act to get ratified should be done on behalf of the person who wants to ratify it.
      2. Since ratification has a retrospective application it is necessary that the ratifier must be in existence at the time when the contract is entered into and also at the time of ratification.
      3. Since ratification has a retrospective application it is necessary that the ratifier must be competent to contract at the time when the contract is entered into and also at the time of ratification.
      4. Only lawful acts can be ratified.
      5. There cannot be ratification of partial transaction, for a ratification to be effective whole transaction must be ratified.
      6. The person ratifying the transaction must have complete knowledge of the transaction in question else ratification will not be valid.
      7. No act can be ratified which result in third party to damages.
      8. Ratification must be made within a reasonable time, what is the reasonable time is a question of facts.
    1. All of the above
    2. (I) (IV) (V) and (VII) only
    3. (II) (III) (VI) (VIII) only
    4. None
  1. Agency by necessity – Agency by necessity occurs in circumstances where there is no agreement between the parties, but an emergency requires that one party (the agent) has to take action to protect the interests of the other party (the principal).
    1. The above is correct
    2. The above is incorrect
  1. For agency by necessity to exist, what conditions must apply?
    1. There must be a real emergency.
    2. It must be impossible for the person acting as the agent to contact the owner of the property and obtain instructions.
    3. The person acting as agent by necessity must act as far as possible, in the best interests of the principal.
    4. All of the above
  1. The authority of an agent to act on behalf of the principal may be:
    1. Express authority
    2. Implied authority
    3. Ostensible authority (apparent authority)
    4. All of the above
  1. Ostensible authority, also called apparent authority, is an aspect of agency by estoppel. Ostensible authority arises in:
    1. Where a person makes a representation to third parties that another person has the authority to act as his agent, even though he has not actually been appointed as agent.
    2. Where a person has previously represented to a third party that another person has the authority to act as his agent and the authority was subsequently taken away/ended, but the third parties who previously dealt with the agent have not been informed of this fact
    3. Both A&B
    4. None

  1. Duties of agent include:
    1. It is the duty of the agent to follow all the lawful instructions of his principal.
    2. An agent should render true accounts to the principal when demanded.
    3. Duty not to deal personally
    4. Duty not to make secret profit
    5. All of the above
  1. Rights of agent include:
    1. Right to receive remuneration
    2. The agent has a right to be indemnified against the consequences of all lawful acts done by him in exercise of the authority conferred upon him.
    3. The agent has a right to be compensated for injuries caused by neglect or want of skill of the principal
    4. All of the above
  1. An agent has a right to retain his principal’s money in his hands for all money due to himself in respect of:
    1. Remuneration as may be payable to him for acting as agent
    2. Advances made
    3. Expenses properly incurred
    4. All of the above
  1. An agent has a right to stop the goods in transit to the principal just like an unpaid seller if:
    1. he has bought goods for his principal by incurring personal liability for the price
    2. the principal has become insolvent.
    3. Both A&B
    4. None
  1. Where an agent conducts the business of agency otherwise than the instructions of the principal than the principal:
    1. must be compensated by the agent for any loss sustained
    2. is entitled to profit (if any) that accrues from the transaction.
    3. Both A&B
    4. None
  1. The principal is entitled to compensation for any loss which is the direct consequence of agent’s:
    1. Neglect
    2. want of skill
    3. misconduct
    4. All of the above

Agency coupled with interest cannot be terminated by the___________ of the principal.

    1. Death
    2. Unsoundness of mind
    3. Insolvency
    4. All of the above

  1. Agency can be terminated by:
    1. Mutual agreement
    2. Revocation by the principal
    3. Renunciation by the agent
    4. Operation of law
    5. All of the above
  1. Where an agent while acting in the course of business of agency does not disclose at the time of formation of contract the existence of his principal or representative character and enters into the contract with third party in his own name this is called undisclosed agency.
    1. The above is correct
    2. The above is incorrect
  1. On discovering about the existence of agency, the third party contracting with the agent may seek his remedy against:
    1. the agent
    2. the principal
    3. both of above
    4. None
  1. Circumstances where agent is personally liable include:
    1. When an agent contracts for a principal resident abroad
    2. If an agent declines to disclose the identity of his principal
    3. Where an agent while acting in the course of business of agency exceeds his authority
    4. For the acts of an improperly appointed sub-agent
    5. All of the above

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