Examkin

Question

Difficulty: HardLaw of Agency: Rights, Duties, Liabilities, and Termination

Nkechi was appointed by Bature Enterprises as a commercial agent to store and sell a consignment of agricultural machinery. In performing her duties, Nkechi incurred and paid 450,000450,000 Naira for necessary warehousing and freight out of her personal funds. Before any sale was executed, Bature Enterprises abruptly revoked her authority and demanded the immediate surrender of all machinery without reimbursing her expenses or paying her accrued commission. Under the Law of Agency, what legal right can Nkechi exercise regarding the machinery in her possession?

  1. She has a right of particular lien over the machinery, enabling her to retain possession until her lawful expenses and commission are paid.Answer
  2. B
    She automatically acquires full legal title to the machinery, allowing her to sell it as the owner to recover her out-of-pocket expenses.
  3. C
    She must surrender the machinery immediately upon revocation and can only sue for damages without holding the principal's property.
  4. D
    She can claim full financial restitution under the strict legal principles of life assurance indemnity.

Answer

Nkechi has a right of particular lien over the machinery, enabling her to retain possession until her lawful expenses and commission are paid by Bature Enterprises.
Under the Law of Agency, an agent who has lawfully incurred necessary expenses (such as freight and storage) and earned remuneration in handling the principal's goods is entitled to a right of particular lien. This right allows the agent to lawfully retain possession of the goods against the principal until all lawful claims for reimbursement and commission regarding those specific goods are satisfied.

Step-by-Step Solution

1
Identify the agent's rights when out-of-pocket expenses and commission are owed by the principal.
Under commercial agency law, an agent has a right to be indemnified for expenses reasonably incurred and to receive agreed remuneration.
Agents act on behalf of principals and should not suffer personal financial loss for authorized actions.
2
Determine the legal mechanism available to secure unpaid claims when the agent has possession of the principal's goods.
The agent possesses a possessory right of lien over the principal's goods currently in the agent's lawful custody.
A particular lien allows the agent to hold the specific goods in respect of which the debt (expenses and commission) was incurred until payment is made.
3
Evaluate the effect of the principal's abrupt revocation of agency.
While a principal can generally revoke an agent's authority, such revocation does not destroy existing accrued rights or possessory liens held by the agent.
Pre-existing possessory security rights remain intact despite revocation of future authority to act.

Key Concept

Agent's Right of Lien and Right to Indemnity
Estimated Time:2m 0s
Rate this question

Topics

Law of Agency: Rights, Duties, Liabilities, and Termination

More questions from this topic