Multiple choice

Mr. Ajay has been appointed as an agent by an importer Mr. Shanti Prakash to handle the goods at port and dispose off the same within a price range fixed by Mr. Shanti Prakash. But Mr. Ajay sells the goods at a price lower than the one indicated by Mr. Shanti Prakash. When this fact comes to the notice of Mr. Shanti Prakash, he cancels the sale contract. The payment is still to be received.

Which of the following is/are correct in this situation?

  1. Mr. Shanti Prakash has the right to do so since his direction has not been carried by the agent.

  2. Mr. Shanti Prakash can claim damages from the agent.

  3. Mr. Shanti Prakash has to honour the contract made by the agent as he cannot cancel it.

  4. Both (2) and (3)

  5. ;;
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Both (2) and (3) above are correct and are the rights of the principle. Mr. Shanti Prakash has to honour the contract made by the agent as the principle is always liable for the actions done by the agent. But yes, he can claim the damages from the agent as the agent's responsibility is to obey his principle's orders, but this did not happen in this case.

Keep practicing — related questions