ACCA Applied Skills · Corporate and Business Law (Global) · Agency law
Priya owns a boutique and tells her friend Omar, in a signed document, that he may negotiate and sign contracts to buy stock for the boutique on her behalf. Omar accepts. Which method of creating agency does this illustrate?
This is express appointment. The principal clearly authorised the agent to make contracts for her and he accepted. No emergency exists, so necessity does not apply, and there was no earlier unauthorised act that she later adopted, so ratification does not apply.
- AExpress appointment by agreementCorrect
- BAgency by necessity
- CAgency by ratification
Explanation
Priya has expressly authorised Omar, and he has accepted, so the agency is created by express agreement. Necessity requires an emergency and inability to contact the principal. Ratification applies only where the principal later adopts an act done without prior authority.
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