Department of Finance

Master of Professional Finance

Semester: July –December, 2018
Midterm Examination
Course Title: Legal Environment of Business, Course Code: 502
Marks: 20; Time: 1:00 (hour)

Answer any two of the following questions. All questions are of equal value.

Q.1

a. How do you define an ‘Agent’ according to the Contract Act 1872 and who is capable of
being an agent?
b. Discuss about ‘Estopple’ as an implied mode of the creation of agency
c. Give an example of ‘Agency by Ratification’.

Q.2

a. What do you understand by the ‘Ostensible or Apparent authority’ of an agent?

b. Explain an agent’s ‘duty not delegate authority’.
c. Mr. X is the manager of a hotel and his assignment includes supervision of the activities
of other employees and organizing different amusing and recreational programmes at the
hotel premises. Under this assignment, is he allowed to purchase refreshment items for the
guests and audiences of any programme? Answer with relevant legal principle.
Q. 3

a. Explain the principles relating to the ‘delegation of agency’.

b. Mr. X , being an agent of a company contracts with the third party without disclosing the
company’s name and even upon a query he declines to give the identity of his principal
company. A misrepresentation is committed by Mr. X in the said contract. The third party sues
Mr. X. The advocate of Mr.X argues that the suit against Mr. X is not maintainable as he is the
agent of a company. The suit must be lodged against company as principal. What is your
opinion?

Q. 4

a. If an agent in the absence of any clear instruction from the principal does some acts in a
manner contrary to the prevailing custom and as a result, the principal sustains a monetary loss.
Who will make good the loss? Discuss the relevant principle.

b. It is one of the duties on the part an agent ‘not to deal on his own account’. Explain this duty
of an agent.

c. Under what circumstances, can an agent exercise his ‘right of lien’? Answer with an example.