Question 4
Termination of agency and its modes
18.75 marks
- Time to write
- About 38 minutes
From an older CBCS paper
Question
Question 4 · 18.75 marksQ4. What is Termination of Agency? Explain the various ways in which agency can be terminated.
Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- What…?Explain…Two asks in one question: answer both.
What the paper leaves open
The paper prints no mark per question (any four of six, equal marks, 75 in all); each question is reckoned here at 18.75 marks.
Write it in this order
- Read; underline the asks; jot your points 2 min
- 1 Meaning and section 201 4 marks 7 min
- 2 Modes of termination, with examples 11.8 marks 21 min
- 3 Irrevocable agency 3 marks 6 min
- Check: every ask answered, key terms underlined 2 min
Easy marks
- Step 1 opens with the meaning: a one-line definition, the quickest mark in it.
Short on time? Trim steps 1–3 evenly rather than skip one: each is capped at its own marks.
Try it first. About 38 minutes for 18.75 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
Termination of agency. Termination of agency means ending the legal relationship between principal and agent. An agency is terminated by the principal revoking his authority, by the agent renouncing the business of the agency, by the business being completed, by the death or unsoundness of mind of either party, or by the principal being declared insolvent (s. 201).
Modes of termination (first the ways the law ends it, then those that end it by an act of either party):
- Completion of business: an agent appointed to sell goods loses his authority once the sale is completed.
- Expiry of time fixed for the agency.
- Death or insanity of the principal or the agent, and winding up of a company or dissolution of a firm.
- Insolvency of the principal.
- Revocation by the principal: at any time until the authority has been used in a way that binds the principal (s. 203), but not after it has been partly exercised, as regards acts already done (s. 204). Example (our own): Rohit authorises his broker to buy 500 shares and pay for them from Rohit's account; once the broker has bought them in his own name, so that he is personally liable, Rohit cannot revoke the authority to pay.
- Compensation and notice: a premature revocation without sufficient cause entitles the agent to compensation (s. 205), and reasonable notice must be given (s. 206). Revocation may be express or implied. Example (our own): Neha appoints an agent to sell her car and then sells it herself to a colleague; the agent's authority ends by implication (s. 207).
- Renunciation by the agent: in the same manner, with reasonable notice and compensation for premature renunciation of a fixed-term agency.
Irrevocable agency. Where the agent has himself an interest in the property forming the subject matter of the agency, the agency cannot, without an express contract, be terminated to the prejudice of that interest (s. 202). Example (our own): a company owes its selling agent ₹5 lakh in commission and appoints him to sell its Delhi stock and keep that sum out of the proceeds; the company cannot revoke this authority to the prejudice of the agent's interest.
Where the 18.75 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Meaning and section 201 | 4 |
| 2 | Modes of termination, with examples | 11.75 |
| 3 | Irrevocable agency | 3 |
| Total | 18.75 |
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