Q.1 What is the primary role of an agent in agency law?
To act on behalf of the principal
To create laws
To judge legal disputes
To manage courts
Explanation - An agent is authorized to act on behalf of the principal to create legal relations with third parties.
Correct answer is: To act on behalf of the principal
Q.2 Which of the following creates an agency relationship?
Contract
Judgment
Statutory law
Custom alone
Explanation - An agency relationship is primarily created through a contract where the principal authorizes the agent to act on their behalf.
Correct answer is: Contract
Q.3 What is the liability of a principal for acts done by an agent within their authority?
Principal is always liable
Principal is liable only if acts are authorized
Agent is solely liable
No one is liable
Explanation - A principal is bound by the acts of an agent when the agent acts within the scope of the authority granted to them.
Correct answer is: Principal is liable only if acts are authorized
Q.4 Which of these is NOT a type of authority in agency law?
Actual authority
Apparent authority
Universal authority
Implicit immunity
Explanation - Agency law recognizes actual, apparent, and sometimes implied authority, but 'implicit immunity' is not a type of authority.
Correct answer is: Implicit immunity
Q.5 An agent who acts beyond their authority is said to be acting _____?
Ultra vires
Impliedly
Expressly
Legally
Explanation - Acts beyond the agent's authority are termed 'ultra vires', meaning outside the powers granted by the principal.
Correct answer is: Ultra vires
Q.6 Which duty is owed by the agent to the principal?
Duty of loyalty
Duty to evade taxes
Duty to sue the principal
Duty to act independently without instructions
Explanation - Agents owe a duty of loyalty and must act in the best interest of the principal, avoiding conflicts of interest.
Correct answer is: Duty of loyalty
Q.7 Who can terminate an agency relationship?
Principal only
Agent only
Both principal and agent
Third party only
Explanation - Agency can be terminated by mutual agreement, by the principal, or by the agent, depending on circumstances.
Correct answer is: Both principal and agent
Q.8 What is 'apparent authority' in agency law?
Authority the agent appears to have to third parties
Authority that is secret
Authority that is illegal
Authority granted by statute
Explanation - Apparent authority arises when a third party reasonably believes the agent has authority to act on behalf of the principal.
Correct answer is: Authority the agent appears to have to third parties
Q.9 If an agent contracts on behalf of a disclosed principal, who is liable?
Principal
Agent
Both principal and agent
Neither
Explanation - When the principal is disclosed, the principal is bound by the contract, and the agent is not personally liable.
Correct answer is: Principal
Q.10 An agency can be created by which of the following?
Contract, ratification, estoppel
Contract only
Court order only
Estoppel only
Explanation - An agency relationship can arise through agreement, ratification of unauthorized acts, or estoppel where principal allows a third party to rely on the agent's authority.
Correct answer is: Contract, ratification, estoppel
Q.11 Which duty is owed by the principal to the agent?
Duty to compensate
Duty to obey
Duty to spy
Duty to provide legal immunity
Explanation - Principals are generally required to compensate the agent for services rendered according to the terms of the agency agreement.
Correct answer is: Duty to compensate
Q.12 Which of these is an example of a special agent?
Agent hired for a single transaction
Agent managing all affairs
Agent running daily operations
Agent acting without instructions
Explanation - A special agent is appointed for a specific task or transaction and does not have general authority.
Correct answer is: Agent hired for a single transaction
Q.13 Which of the following terminates agency by operation of law?
Death of principal
Agent quits voluntarily
Mutual agreement
Contract expiration
Explanation - Certain events, like the death or insanity of the principal, automatically terminate the agency relationship by law.
Correct answer is: Death of principal
Q.14 An agent's act binds the principal if it is within _____?
Scope of authority
Moral duty
Personal benefit
Public opinion
Explanation - The principal is bound only by acts performed by the agent within the scope of the authority granted.
Correct answer is: Scope of authority
Q.15 Which of these is NOT a characteristic of an agency relationship?
Consent of both parties
Fiduciary relationship
Control by principal
Judicial review only
Explanation - Agency requires consent, fiduciary duties, and principal control; judicial review is not a defining characteristic.
Correct answer is: Judicial review only
Q.16 A ratification in agency law means:
Principal approves an act done without authority
Agent refuses to act
Third party cancels the contract
Principal removes authority
Explanation - Ratification occurs when a principal accepts and validates acts performed by an agent outside their authority.
Correct answer is: Principal approves an act done without authority
Q.17 If the agent breaches a duty to the principal, the principal can:
Sue for damages
Terminate contract immediately
Do nothing
Only inform the court
Explanation - A principal can take legal action against an agent for breach of duties such as loyalty, care, or obedience.
Correct answer is: Sue for damages
Q.18 Which agency is created when the principal's conduct leads a third party to believe the agent has authority?
Agency by estoppel
Agency by ratification
Express agency
Universal agency
Explanation - Agency by estoppel arises when the principal’s behavior prevents them from denying the agent’s authority to a third party.
Correct answer is: Agency by estoppel
Q.19 Who is liable for a contract made by an agent on behalf of an undisclosed principal?
Both principal and agent
Only principal
Only agent
Neither
Explanation - If the principal is undisclosed, the agent may be held personally liable, although the principal can also be bound once disclosed.
Correct answer is: Both principal and agent
Q.20 Which type of agent has continuous authority to act on all matters for the principal?
General agent
Special agent
Temporary agent
Sub-agent
Explanation - A general agent has ongoing authority to act on behalf of the principal in all matters related to a business or activity.
Correct answer is: General agent
Q.21 An agent cannot delegate their authority to another unless:
Principal consents or authority permits
Third party agrees
Law forbids
Agent decides independently
Explanation - Delegation is not allowed without principal’s consent unless the nature of authority inherently permits sub-agency.
Correct answer is: Principal consents or authority permits
Q.22 Which of the following is a fiduciary duty of an agent?
Confidentiality
Profit sharing
Ignoring instructions
Advertising independently
Explanation - Agents owe fiduciary duties, including confidentiality, loyalty, and avoiding conflicts of interest.
Correct answer is: Confidentiality
Q.23 Which of these actions by a principal can ratify an agent’s unauthorized act?
Accepting benefits from the act
Ignoring the act
Complaining publicly
Delegating to another agent
Explanation - Ratification may occur when a principal knowingly accepts the benefits of an act performed without prior authority.
Correct answer is: Accepting benefits from the act
Q.24 In agency law, an agent’s authority can be terminated by _____?
Mutual agreement, expiration of time, completion of purpose, operation of law
Only court order
Only principal’s decision
Only agent’s decision
Explanation - Agency can end through multiple ways including mutual agreement, achieving the agency’s purpose, time expiry, or legal events.
Correct answer is: Mutual agreement, expiration of time, completion of purpose, operation of law
Q.25 Sub-agent is:
Appointed by agent with principal’s authority
Always independent
Directly appointed by third party
Only honorary
Explanation - A sub-agent acts under the agent’s authority, with the principal’s consent, to perform agency duties.
Correct answer is: Appointed by agent with principal’s authority