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A consigns 1,000 bales of cotton to B, who has made advances to him on such cotton, and desires B to…

Section 202 provides that where the agent has himself an interest in the property forming the subject-matter of the agency, the agency cannot, without an express contract,…

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A consigns 1,000 bales of cotton to B, who has made advances to him on such cotton, and desires B to sell the cotton and repay himself the advances out of the price. Before the sale, A becomes of unsound mind. What happens to B's authority to sell?

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Correct answer B

Section 202 provides that where the agent has himself an interest in the property forming the subject-matter of the agency, the agency cannot, without an express contract, "be terminated to the prejudice of such interest". Illustration (b) to section 202 says that A cannot revoke B's authority, nor is it terminated by A's insanity or death. The general rule in section 201 that unsoundness of mind ends an agency gives way to this exception.

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