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  • Read the given passage very carefully and answer the question. An agency arrangement is a form of general contract. As such, except where the agency is irrevocable, an ag

Read the given passage very carefully and answer the question.

An agency arrangement is a form of general contract. As such, except where the agency is irrevocable, an agency can terminate in the same way as a contract is discharged. Only the act or consent of the parties to the agency or the enforcement of the law may terminate the relationship between the principal and the agent. “In the absence of anything to prove its termination, an agency, when proven to have existed, will be presumed to have continued, unless such a length of time has elapsed as destroys the presumption.” When an entity is dissolved, the obligation of the agent to work on behalf of the principal comes to an end. A government law or instrument may stipulate the timeline for the termination of an entity.

In such a case, if the instrument states in clear and unambiguous terms that after the expiry of the time stated in the instrument, an agency shall terminate without intervention on the part of the principal or administrator, the agency shall, in effect, terminate. If the parties maintain their partnership as principal and agent after the expiry of the duration given in the contract, a substantiated assumption is posed that their relationship is regulated by the original contract and that the contract is extended for a similar term. For example, where the parties entered into a contract for a year and proceeded to behave after one year under the contractual conditions, the court would conclude that the parties genuinely wanted to hold the contract alive for a period of time.

On the other hand, if no reasonable deadline has been set by the parties for the expiration of the contract, the contract is assumed to have been terminated after a reasonable period of time. “The nature of the act specifically authorised, the formality of the authorisation, the likelihood of changes in the purposes of the principal, and other factors shall determine what constitutes a reasonable period of time during which the authority continues.” In comparison, the burden of proving an agency’s termination or revocation lies with the agency.

Question

The parties entered into a contract for one decade and continued to act under the contractual terms after ten years. Here-

 

Option: 1

The court will presume that the parties in fact intended to keep the contract alive for another decade.

 


Option: 2

The court cannot automatically presume that the parties in fact intended to keep the contract alive for another decade.

 


Option: 3

 Once the period comes to an end the parties cannot re-enter into the original contract

 


Option: 4

Here, the clear intention of parties must be coupled with conduct for a valid presumption of the Court

 


Answers (1)

best_answer

If, after the expiration of the time so stipulated in the contract, the parties continue their relationship as principal and agent, a rebuttable presumption is raised that their relations are governed by the original contract and that the contract is renewed for a similar period. But, if the parties did not fix any appropriate time for the termination of the contract, the contract is deemed to be terminated after a reasonable time.

 

 

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