Law of agency final
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The document outlines the law of agency in India, including definitions of agency, classifications of agents, rights and duties of principals and agents, creation and termination of agency relationships. It discusses the essential elements of an agency contract and covers implied and express authority, ratification, estoppel, and termination of agency by agreement, operation of law or acts of the parties.
Law of agency final
- 2. CONTENTS • Definition of agency • Essentials of contract of agency • Classification of agents • Rights and duties of agents and principal • Creation of agency • Termination of agency
- 3. Definition of Agency Law relating to Agency is contained in chapter 10 of the Indian Contract Act, 1872 (sections 182 to 238). “Agency is a contractual relation between two parties created by agreement express or implied”. The relationship of agency arises whenever one person called Agent has authority to act on behalf of another called Principal.
- 4. Essentials of contract of Agency 1. The relationship of an agency is based upon a contract. 2. The contract may be either express or implied. 3. There should be the appointment of an agent by the principal. 4. The person employing the agent must himself have legal capacity or to be competent to do the act for which he employs the agent. 5. The principal should confer authority on the agent to act for him. 6. Relationship of the agency is based on confidence between the principal and the agent. 7. A contract of agency requires no consideration(sec 185)
- 5. Classification of Agents 1. On the basis of authority Express or implied agents General, specific or universal agents Agent or Sub-Agent 2. On the basis of nature of work Mercantile agent Non-mercantile agent
- 6. Classification of agents on the basis of nature of work Mercantile agents Non-mercantile agents Banker Attorneys Factor Solicitors Broker Promoter Auctioneer Wife Commission agent Insurance agents Del-Credere Clearing and forwarding agents
- 7. RIGHTS,DUTIES AND LIABILITIES OF AN AGENT Rights of an Agent: 1. An agent is entitled to receive agreed remuneration. In the absence of any special contract, payment for the performance of any act is not due to the agent until the completion of such act (Sec.219). 2. A agent may retain out of any sums received on account of the principal in the business of agency, or all money due to himself respect of advance made or expenses properly incurred by him in conducting such business and also such remuneration as may be payable to him for acting as agent (Sec.217). 3. the absence of any contract to the contrary, the agent is entitled to particular lien i.e., right to retain goods, papers (documents) and other property, whether movable or immovable, of the principal received by him, until the amount due to himself for commission, disbursements and services in respect of the same has been paid or accounted for him (Sec.221). 4. Under certain circumstances, an agent can stop the goods in transit. 5. The employer of an agent is bound to idemnity him against the consequences of all lawful acts done by such agent in exercise of authority conferred upon him. (Sec.222). 6. The principal must pay compensation to his agent in respect of injury caused to such agent by the principal’s neglect or want of skill (Sec.225).
- 8. Duties of an Agent: 1. To follow the instructions of the principal. 2. To work with reasonable skill and diligence. 3. To render proper accounts. 4. To communicate with the principal in difficult situations. 5. Not to deal on his own account. 6. To pay all sums.
- 9. Duties conti.. • Not to set up adverse title. • Not to delegate his authority. • Not to use agency information against Principal. • Agent’s duty on termination of agency by principal’s death or insanity. • Not to put himself in position where interest and duty conflict.
- 10. PERSONAL LIABILITIES OF AN AGENT General Rule(Sec.230): In the absence of any contract to that effect, an agent cannot personally enforce contract entered into by him on behalf of his principal, nor is he personally bound by them. : Circumstances under which an Agent becomes personally liable In case of Foreign In case of In case of In case of Principal Undisclosed Principal Incompetent Principal Principal not in (Sec.230) (Sec.230) (Sec.230) existence In case of acts not In case of acts in In case of express In case of custom ratified (Sec.235) his own name agreement or usage of trade
- 11. Misrepresentation and fraud by Agents: Misrepresentation made or frauds committed, by agents acting in the course of their business for their principals have the same effect on agreements made by such agents as if such misrepresentations or frauds had been made or committed by the principals. But misrepresentation made, or frauds committed, by agents, in matters which do not fall within the scope of authority, do not affect their principal (Sec.238). Money received by agent by playing fraud on third person: Where an agent received the money from the third person by fraud and paid it to the principal, the third cannot sue the principal unless the latter aware of the fraud or had means of knowing that it was the third person’s money.
- 12. CREATION OF AGENCY MODES OF CREATING CONTRACT OF AGENCY By express By implied By By operation authority authority ratification of law By estoppel By holding out By necessity
- 13. Implied Agency: Includes A. Agency by estoppel: An agency may be implied from the conduct of the parties, though no express authority has been given. B. Agency by holding out: Where a person permits another by a long course of conduct to pledge his credit for certain purposes, he is bound by the act of such person in pledging his credit for similar purposes. C. Agency by necessity: sometimes extraordinary circumstances require that a person who is not really an agent should act as an agent of another.
- 14. AGENCY BY RATIFICATION • Ratification is a kind of affirmation or approval of a previous unauthorised act or acts relating to a contract.
- 15. TERMINATION OF AGENCY Agency may be terminated in the same manner as any other contract: • By the operation of law • By the acts of the parties
- 16. Termination of agency by acts of the parties 1. By agreement between principal and agent 2. By revocation of the agent’s authority by the principal 3. By renunciation of business by the agent
- 17. Termination of agency by operating of law 1. By performance of the contract of agency 2. By efflux of time 3. By death or insanity of the agent or principal 4. By the insolvency of the principal and in some cases that of the agent 5. By the destruction of the subject matter of agency 6. Where the principal or the agent is an incorporated company by its dissolution 7. By the principal becoming an alien enemy
- 18. Effect of Termination As between the principal and the agent, termination of agency is effective only when it becomes known to the agent, but so far as third parties are concerned, termination of agency takes effect when it is known to them
- 19. Irrevocable agency When a agency cannot be terminated is said to be an irrevocable agency Circumstances when the agency is irrevocable Where the agent When the agency Where the agent has partly is coupled with has incurred a exercised his interest personal liability authority
- 20. Power of Attorney A Power of Attorney is an instrument or a deed by which a person is empowered to act for and in the name of the person executing it. The person executing the deed is known as the Principal or donor and the one in whose favour it is executed is the agent, or the power agent or the power of attorney agent