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A, a merchant in Calcutta, has an agent B in London, to whom a sum of money is paid on A's account with…

Section 212 makes an agent compensate the principal for the direct consequences of his neglect, "but not in respect of loss or damage which are indirectly or remotely…

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A, a merchant in Calcutta, has an agent B in London, to whom a sum of money is paid on A's account with orders to remit. B retains the money for a considerable time, and A, not receiving it, becomes insolvent. For what is B liable?

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Correct answer B

Section 212 makes an agent compensate the principal for the direct consequences of his neglect, "but not in respect of loss or damage which are indirectly or remotely caused". Illustration (a) to section 212 holds B liable for the money and interest at the usual rate from the day it ought to have been paid, and for further direct loss such as a change in the rate of exchange, but not further. The losses of A's insolvency are too remote to be charged to B.

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