Skip to content

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

Anil appointed Bharat as agent to sell Anil's land and to repay himself out of the sale proceeds the debt Anil owes him. Anil later tries to revoke the authority. What is the position under the Act?

Anil cannot revoke the authority. Under Section 202, when the agent has his own interest in the property that is the subject-matter of the agency, the agency cannot, without an express contract, be terminated to the prejudice of that interest, and the debt recovery gives Bharat such an interest.

  1. AAnil can revoke it at any time by notice
  2. BAnil cannot revoke it, because Bharat has an interest in the subject-matterCorrect
  3. CAnil can revoke it only if the land is not sold within a year
  4. DAnil can revoke it, but must pay Bharat compensation

Explanation

Under Section 202, where the agent has an interest in the property forming the subject-matter of the agency, the agency cannot, absent an express contract, be terminated to the prejudice of that interest. Illustration (a) covers this very case. Revocation with compensation is not the rule stated there.

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