If the Law Changes Such That the Actions Called for in an Agency

question 1

Multiple Choice

If the law changes such that the actions called for in an agency arrangement become illegal after the agency has been carried on legally for some period of time,what is the consequence?

• A) The agency is terminated retroactively and the parties are left where they are.
• B) The agency is terminated retroactively and the parties must each return any consideration received from the other.
• C) The agency is terminated effective upon the change in law taking effect.
• D) The agency is not terminated,but the principal and agent will each become liable for his or her own illegal actions.
• E) The agency is not terminated,but the principal and agent will each become liable for the illegal actions of the other.

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Definitions:

Expected Loss

The anticipated amount of loss a party faces in a financial transaction or investment, calculated based on probable scenarios.

Secure Neighborhood

An area with enhanced safety measures, possibly including gated access, security personnel, and surveillance systems, aimed at reducing crime.

Insurance Premium

The amount paid periodically to an insurance company by the insured for covering their risk.

Adverse Selection

A situation in which one party in a transaction has more or better information than the other, leading to an imbalance and potentially unfavorable outcomes.