If the law changes that the actions called for in an agency arrangement become illegal after the agency has been carried on legally for some period of time, what is the consequence?

a)Agency is terminated retroactively and the parties are left where they are.
b)Agency is terminated retroactively and the parties must each return any consideration received fro the other.
c)Agency is terminated effective upon the change in law taking effect.
d)Agency is not terminated, but the principal and agent will each become liable for his or her own illegal actions.
e)Agency is not terminated, but the principal and agent will each become liable for the illegal actions of the other.

is it d? both will be held liable for illegal actions for his or her own actions

Yes, in most jurisdictions, d would be the answer.

564

To arrive at the correct answer, let's break down the options:

a) Agency is terminated retroactively and the parties are left where they are.

This option suggests that the agency would be terminated but would have no further consequences for the parties involved. However, this is unlikely to be the case if the agency arrangement becomes illegal.

b) Agency is terminated retroactively and the parties must each return any consideration received from the other.

This option implies that the agency is ended retroactively, and both the principal and the agent have to return any benefits or compensation they received from each other. While this consequence may be possible in some cases, it is not the most common outcome in such a situation.

c) Agency is terminated effective upon the change in law taking effect.

This option suggests that the agency is terminated immediately when the legal change comes into effect. However, it does not address the consequences for the principal and agent.

d) Agency is not terminated, but the principal and agent will each become liable for his or her own illegal actions.

This option seems to be the most accurate and reasonable. It acknowledges that the agency continues despite the change in law, but both the principal and agent will be personally responsible and liable for their own illegal actions. This option recognizes the principle that individuals are responsible for their own actions, even if the actions were previously legal.

e) Agency is not terminated, but the principal and agent will each become liable for the illegal actions of the other.

This option suggests that both the principal and agent would be held accountable for each other's illegal actions. While this consequence could be possible in some specific cases, it is not typically the general rule.

Considering the information provided, option d) is the most appropriate answer. Both the principal and agent would become liable for their own illegal actions, but the agency itself would not be terminated.