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

Which of the following events terminates an agency under the Indian Contract Act, 1872?

The principal being adjudicated an insolvent terminates the agency. Section 201 lists this alongside revocation, renunciation, completion of the business, and death or unsoundness of mind of either party; a holiday, a change of business place or high commission does not end an agency.

  1. AThe agent taking a holiday during the agency
  2. BThe principal being adjudicated an insolventCorrect
  3. CThe principal changing his place of business
  4. DThe agent earning a higher commission than expected

Explanation

Section 201 lists the modes of termination: revocation by the principal, renunciation by the agent, completion of the business, death or unsoundness of mind of either party, and the principal's adjudication as an insolvent. A holiday, a change of place or higher commission is not listed.

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