ACCA Applied Skills · Corporate and Business Law (Global) · Agency law
Nadine appoints Colm as agent for a fixed two-year term, but dismisses him after one year without good cause. The agency is not an agency coupled with an interest, and Colm has performed properly. Which statement is correct?
Nadine can terminate Colm's authority, but because she dismissed him early without good cause, she breaches the agency contract and may owe damages. Courts will not force a principal to keep an agent, so the remedy is compensation only.
- ANadine may terminate the agent's authority but may be liable to Colm for damages for breach of contractCorrect
- BNadine cannot terminate the authority until the term expires
- CTermination is ineffective unless Colm consents
- DColm may enforce specific performance to continue as agent
Explanation
A principal has the power to revoke an agent's authority at any time, even if doing so breaches the contract. The remedy for the agent is damages, not continuation of the agency. Insisting the principal cannot terminate confuses power with right.
Did you get it right without looking?
One question tells you little. A timed set on Agency law shows your real accuracy, how long you take and where you lose marks.
More Agency law questions
- Mara owns a boutique and asks Jonas, a friend, to buy some fabric on her behalf from Textile Co, telling Jonas to say he acts for her. Jonas…
- Ines appoints Jorge as agent to sell her goods. Jorge contracts with Kofi Ltd in his own name without revealing that he has a principal, and…
- Nadia ships perishable fruit through agent Hal, who is in a distant port. The buyer defaults and the fruit will rot within hours. Hal cannot…
- Hugo is appointed as agent by Selma by a document that is silent on how far his authority extends. Hugo is a manager responsible for running…
- Zora Ltd appoints Karim as its agent by a written deed to sell goods in Country X. Karim is told he may sell only to retail customers, but h…
- Quill Ltd's board lets Rex act openly as its purchasing manager for years, ordering supplies of all sizes. Rex is then told privately not to…