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

Mehta, a trader in Surat, appoints Nair as his agent to sell goods. Mehta dies suddenly while some of the goods entrusted to Nair remain unsold in his godown. What is Nair's duty?

Nair must take all reasonable steps on behalf of Mehta's representatives to protect and preserve the interests entrusted to him. Although the principal's death ends the agency, Section 209 imposes this continuing protective duty, so abandoning the goods or carrying on business as usual would be wrong.

  1. ATo take all reasonable steps, on behalf of Mehta's representatives, to protect and preserve the interests entrusted to himCorrect
  2. BTo continue selling the goods at his discretion as if the agency still existed
  3. CTo abandon the goods immediately since the agency has ended
  4. DTo hand the goods to the first buyer who offers a price

Explanation

Death of the principal terminates the agency under Section 201. Section 209 still binds the agent to take all reasonable steps for protection and preservation of the interests entrusted to him, on behalf of the late principal's representatives. Abandoning the goods would breach this duty, and continuing to sell as before is not what the section requires.

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