The true test of an agency relationship is whether the person can:
AEarn a commission
BSub-contract the work
CBind the principal and create privity of contract between the principal and third parties
DKeep the goods as his own
Answer & Solution
Correct answer: C. Bind the principal and create privity of contract between the principal and third parties
Agency exists where the person can bind the principal to third parties and establish privity of contract between them; representative capacity is the essence.
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