a) Explain four ways a contract can be terminated. b) State six duties of an agent to his principal.

Answer Details

(a) Four ways a contract can be terminated

1. By performance. The contract ends when both parties completely carry out (perform) their obligations as agreed.
2. By agreement. The parties may mutually agree to bring the contract to an end before it is fully performed.
3. By breach. When one party fails to perform his part or refuses to honour the terms, the injured party may treat the contract as discharged and sue for damages.
4. By frustration (impossibility of performance). The contract ends where an unforeseen event beyond the parties' control (such as destruction of the subject matter, death, or a change in the law) makes performance impossible or illegal.

(Also acceptable: by lapse of time, and by operation of law such as bankruptcy.)

(b) Six duties of an agent to his principal

1. To carry out the principal's lawful instructions faithfully and with due care and skill.
2. To act in good faith and in the best interest of the principal.
3. To render proper accounts of all money and transactions handled on the principal's behalf.
4. Not to make secret profit or take bribes from the transaction.
5. To avoid conflict of interest and not to disclose confidential information about the principal.
6. To perform the work personally and not delegate it without authority.

(Also acceptable: to hand over to the principal all money and property received on his behalf, and to keep the principal informed.)