Summer 2011, BBA-II Semester
Legal Regulatory Framework SMU Roll No. XXXXXXX
BB0008: Legal Regulatory FrameworkAssignment Set – II
Note: Each question carries 10 Marks. Answer all the questions.
Q1. How can an ‘agency’ be created?Answer:Creation of Agency
The principal – agent relationship can be created in any of the following ways – 1) By express agreement2) By implied agreement3) By ratification4) Operation of Law
1 By Express Agreement:
Any person who is competent to contract and is of sound mind may appoint an agent. Theprincipal gives an express authority to the agent. This enables him to bind the principal byacts done within authority. The appointment may be oral or by an agreement in writing.Usually a written contract of agency is the power of attorney on a stamp paper.
2 By Implied agency:
Arise from the conduct, situation or relationship of the parties.Whenever a person places another in a situation in which that other is understood torepresent to act for him he becomes an implied agent.Smit Vs. Moss – A woman allowed her son to drive a car for her, she paying all theexpenses of maintenance and operation. When he made a collision injuring his wife, the wifecould sue the mother for the fault of her agent.Implied agency includes following types:a) Agency by Estoppel: Where a person by his conduct or by words spoken or written leadswillfully another person to believe that a certain state of affair exists he is estopped fromdenying subsequently the fact of that state of affairs. Eg.-X tells Y within the hearing of Z thathe is the agent of Z. Z does not object. Later Y supplies some goods to X who pretends toact as agent of Z. Z is liable to pay the price to Y. By keeping quiet there arises an impliedagency.