Question

Barnes agrees with Morgan to enter into the management of a new subdivision of residential housing. Morgan appoints Barnes as his manager for the duration of the development program. During the course of the construction, Barnes decides to use funds specified for the subdivision for an office space project that Barnes alone has been interested in completing. Morgan is very angry on learning of Barnes' actions and terminates the agency. Barnes insists that the agency cannot be terminated in this manner. Is Barnes correct?

Answer 1

Answer:

No

Explanation:

Morgan appointed Barnes to manage a new subdivision. Barnes has been permitted to transact all affairs in connection with the subdivision. Therefore, Barnes is a general agent. In some situations, either party to an agency relationship has the authority to end that relationship at any time. So, Morgan has the power to terminate the agency

Answer 2

Answer:

Barnes is correct

Explanation:

The agency can be terminated by mutual agreement prior to giving the other party notice, since the office is part of the project means that diverting funds to a complete a part of a project before it's scheduled time does not warrant termination of agency except stated in the legal binding contract.