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An agent holds the principal’s goods under section 221 of the Indian Contract Act, 1872. The agent is…

Section 221 gives the agent a right to retain the principal’s property for amounts due in respect of it. Unconditional surrender ends the possessory lien, and complete…

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An agent holds the principal’s goods under section 221 of the Indian Contract Act, 1872. The agent is owed commission in respect of the goods, and the parties have no contrary agreement. In one scenario, the agent voluntarily hands the goods back to the principal without reserving the lien. In another, an accident completely destroys the goods while the agent holds them. What happens to the lien on those goods?

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Answer and explanation

Correct answer A

Section 221 gives the agent a right to retain the principal’s property for amounts due in respect of it. Unconditional surrender ends the possessory lien, and complete destruction leaves no goods to retain. A separate claim for unpaid commission can survive the loss of the lien.

Option feedback

Option A

Unconditional surrender ends the relevant possession, and complete destruction removes the property to which the lien attached.

Option B

Destruction of the goods also ends the lien on them.

Option C

Unconditional return to the principal without reserving the lien also ends it.

Option D

In either scenario, there are no goods the agent can retain under the lien.

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