Skip to content

IAI Actuarial Core Principles · Business Management · Trusts and agency

Meera, a Pune-based property owner, tells her friend Arjun in conversation, 'Please negotiate the rent with my tenant on my behalf, and I will honour whatever you agree.' Arjun agrees and negotiates. Under the Indian law of agency, how has the agency been created?

The agency was created expressly. Meera clearly authorised Arjun in words, before he acted, to negotiate and bind her. Ratification needs approval after the act, necessity needs an emergency, and estoppel needs holding out to third parties, none of which is present here.

  1. ABy express appointment, since Meera authorised Arjun directly in wordsCorrect
  2. BBy ratification, since Meera approved the act after it was done
  3. CBy necessity, since Meera could not act herself
  4. DBy estoppel, since Meera allowed Arjun to appear as her agent
  5. By operation of law, since the two are friends

Explanation

Meera expressly authorised Arjun in words before he acted, so the agency arose by express agreement. No later approval, emergency or holding out is involved. Friendship alone does not create an agency by operation of law.

Did you get it right without looking?

One question tells you little. A timed set on Trusts and agency shows your real accuracy, how long you take and where you lose marks.

Practise Trusts and agencyFree diagnostic mock

More Trusts and agency questions