Skip to content

CMA Foundation · Fundamentals of Business Laws and Business Communication · Meaning of Indemnity, Guarantee, Pledge, Agent

Agent Rao appointed a sub-agent, Sen, to handle part of the agency work. The principal then revokes Rao's authority. What is the effect on Sen's authority, subject to the rules on termination of authority?

Sen's authority terminates along with Rao's. Under Section 210, when an agent's authority ends, the authority of all sub-agents appointed by that agent also ends. Sen does not become the principal's direct agent and his authority is not merely suspended.

  1. ASen becomes the direct agent of the principal
  2. BSen's authority continues until the sub-agency contract ends
  3. CSen's authority terminates along with Rao's authorityCorrect
  4. DSen's authority is suspended until Rao is reappointed

Explanation

Section 210 says termination of an agent's authority causes termination of the authority of all sub-agents appointed by him. Sen therefore loses authority when Rao's authority is revoked. Sen would be a direct agent only in the Section 194 case of a person named under authority to name another, which is not stated here.

Did you get it right without looking?

One question tells you little. A timed set on Meaning of Indemnity, Guarantee, Pledge, Agent shows your real accuracy, how long you take and where you lose marks.

Practise Meaning of Indemnity, Guarantee, Pledge, AgentFree diagnostic mock

More Meaning of Indemnity, Guarantee, Pledge, Agent questions