Multiple choice

Directions: Given below is a statement of principle, followed by a factual situation. Apply the principle to the facts and select the most appropriate answer among three alternatives given. Encircle your choice and explain why you think your answer is correct in not more than 3 to 4 lines. If it exceeds 4 lines, then penalty may be imposed.

Principle: In a contract of agency, no liability exists upon the agent towards his Principal (Master), if he acts with reasonable diligence in the matter of agency. Facts: Ganesh, the owner of an estate, instructed Dinesh, an estate agent to find a buyer for his estate. Dinesh, got an offer from Krishna Bhat to buy the estate for Rs. 9,50,000/- and the same was promptly communicated to Ganesh. Before the contract of sale was concluded, the agent got an offer of Rs. 10,25,000/- from Dayanand. Dinesh did not communicate this information to Ganesh. The latter brings an action over the former for not having performed his function as an agent.

  1. Dinesh is not liable to Ganesh as his job was only to find a buyer and no more.

  2. Dinesh is not liable to Ganesh as he got good price for the estate which, under the prevailing market conditions, was a bonanza.

  3. Dinesh is liable to Ganesh as he did not completely perform the function of an agent.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

(3) it is clear from the facts that in order to have performed his duties as an agent diligently, Dinesh should have informed Ganesh of the subsequent offer as well, especially,since the same was in terms more favourable to the principal.

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