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

Under the Indian Contract Act, 1872, an agency is terminated because the principal has died. What is the agent's duty in respect of the interests entrusted to him?

The agent must take, on behalf of the representatives of the deceased principal, all reasonable steps to protect and preserve the interests entrusted to him. The duty continues even though the agency has ended through the principal's death.

  1. AHe may abandon them immediately as the agency has ended
  2. BHe must take, on behalf of the late principal's representatives, all reasonable steps to protect and preserve those interestsCorrect
  3. CHe must complete every pending transaction in full at his own risk
  4. DHe may keep the property until his commission is paid

Explanation

When an agency ends by the principal's death or unsoundness of mind, the agent must take, for the representatives of the late principal, all reasonable steps for the protection and preservation of the interests entrusted to him. He cannot simply walk away. The duty is protection and preservation, not completing all business.

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