ACCA Applied Skills · Corporate and Business Law (Global) · Agency law
Wen appoints Basil as agent to sell her paintings in a gallery. Basil spends 600 of his own money on lawful transport costs that were necessary to carry out the instructions, and then Wen terminates the agency. Basil acted within his authority and without negligence. Which statement is correct?
Basil may recover the 600 from Wen as an indemnity for expenses properly incurred within his authority. The right is implied by law, needs no written term and does not depend on a sale taking place or on the agency continuing.
- ABasil may claim an indemnity from Wen for the 600, as expenses properly incurred in the agencyCorrect
- BBasil cannot claim the 600 unless the agency agreement states the right in writing
- CBasil may claim the 600 only if the paintings were actually sold
Explanation
An agent has an implied right to be reimbursed and indemnified for expenses and liabilities properly incurred while acting within authority. It does not need to be written, and it does not depend on a sale occurring, although the agreement can exclude it. Termination does not remove the right for costs already properly incurred.
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
- Kestrel Ltd's board has never given Dana, a sales manager, authority to sign property leases. Dana signs a ten-year lease of offices for Kes…
- Kiran runs a manufacturing company. He appoints Lena to negotiate and conclude all sales of his goods in one region, for a commission, and s…
- Lena appoints Mateo as her agent. Before Mateo makes any further contracts, Lena becomes mentally incapacitated and loses legal capacity. Ma…
- Dmitri, a shipping agent, is told by Karl, a cargo owner, to hold goods in storage. A storm threatens the warehouse and Karl cannot be conta…
- Amira appoints Boris as her agent to buy machinery up to a value of 50,000. Boris, acting within his actual authority, signs a contract with…
- Nadia appoints Omar as her agent to sell her car. Omar sells the car and receives a payment of 8,000 from the buyer. Which of the following …