Chapter x (Secs. 182 to 238) of the Indian Contract Act, 1872
DEFINITION OF AGENT AND PRINCIPAL
AGENT
An ‘AGENT’ is a person employed to do any act for another or to represent
another in dealings with third persons. The function of an agent is to bring
his principal Into contractual relations with third persons.
PRINCIPAL
A person for whom the above act is done or who is so represented is called
.the ‘PRINCIPAL’
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ESSENTIALS OF RELATIONSHIP OF
AGENCY
• AGGREMENT B/W PRINCIPAL AND AGENT-:
Agency depends on agreement but not
necessarily on contract. Any person can become an
agent b/w a principal and the third person.
• INTENTION OF AN AGENT TO ACT ON
BEHALF OF THE PRINCIPAL
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RULES OF AGENCY
There are two important rules of agency:
1.Whatever a person can do personally, he can do through
an agent
2.He who does an act through another does it by himself .
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WHO CAN EMPLOY AN AGENT?
Acc. To sec 183 of ICA any person who is of age of majority
according to law to which is a subject, and who is of sound mind
may employ an agent.
WHO MAY BE AN AGENT?
Acc to sec 184 of ICA any person who is authorized to act
such a person may be an agent. As the agent does not make
contracts on his own behalf it is not necessary that he should
have contractual capacity.
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DIFFERENCE B/W AGENT & SERVANT
An agent is employed to bring the principal into the legal relations
with the third persons or to represent him in dealings with third
persons.
A servant does not ordinarily create legal relations b/w
the third person and the employer.
An agent is bound to follow all the lawful instructions of the
principal but he is not subject to the direct control and
supervision of principal. A servant acts under the direct control
and supervision of his employer and is bound to follow all the
reasonable orders given to him in the course of his employment.
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Contnd...
An agent may work for several principals at the same time but
servant usually serves only one master.
A principal is liable for the wrongs of his agent done within the
scope of his authority. A master is liable for the wrongs of the
servants if they are committed in the course of his employment.
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CREATION OF AGENCY
1. By express agreement
2. By implied agreement
Agency by ESTOPPLE.
Agency by Holding out.
Agency by necessity.
3. By ratification
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CLASSIFICATION OF AGENTS
Classification according to extent of authority
Special Agents
General agents
Classification according to nature of work performed by them
1) Commercial or Mercantile Agent
2) Non mercantile Agents
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General Agent
A General agent is one who is
appointed to represent the
principal in all the matters
concerning a particular business
Special Agent
A Special agent is one who is appointed
to do some particular act or enter into
some particular contract
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Mercantile Agents
• Factor
• Auctioneer
• Del Credere Agent
• Pakka and Katcha adatias
• Indentor
• Broker
• Commission Agent
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Factor
Possession of property
Sell on credit and in his own name
General lien
Cannot Barter
Cannot Delegate
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Auctioneer
Appointed to sell by auction
Deliver goods on receipt of price
Recover price from highest bidder
Can file suit in his own name
Particular Lien
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Del Credere Agent
Agent as well as Guarantor
Pakka Adatias
Guarantees Principal and Broker
Can himself perform
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Katcha Adatias
Guarantees on the part of the Principal
Indentor
Procures a sale or purchase on behalf of the
principal, with a merchant in the foreign
country
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Broker
Engage to buy or sell the property
Memorandum book- Sold and Bought note
Commission Agent
Employed to buy or sell or to Transact Business
Not Liable for third party , Particular lien
May or may not have possession
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Non Mercantile Agent
Wife as an Agent
•Living together and looking for necessaries
Husband is not Liable
Expressly forbidden credit
Not necessary
Given money
Trader is told expressly
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If they live apart:-
No fault of wife, liable to pay for
her maintenance
Or
If they live apart:Under no justifiable Circumstances,
she is not her Husband’s agent
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Sub agent and Substituted Agents
Sec 191:- Sub agent is employed by, and acting
under the control of the original agent in the
business of the agency
Sec 194:- Where an agent, holding an expressed
or implied authority to name another person has
named another person, such person is agent of the
principal for such part of the business of the
agency as is entrusted to him.
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DUTIES OF AGENT
1.
To carry out the work undertaken according to the directions given by the
principal.
2.
To carry out the work with reasonable care, skill and diligence.
3.
To communicate with the principal in the case of difficulty.
4.
To pay sums received for the principal.
5.
To protect and preserve the interests of the principal in the case of his death
or insolvency.
6.
Not to make secret profit from agency .
7.
Not to set up an adverse title.
8.
Not to use information obtained in the course of the agency against the
principal.
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RIGHTS OF AGENT
1.
Right of retainer.
2.
Right to receive remuneration.
3.
Right of lien.
4.
Right of indemnification.
5.
Right of compensation.
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DUTIES OF PRINCIPAL
1.
To indemnify the agent against the consequences of all lawful acts
2.
To indemnify the agent against the consequences of acts done in good faith
3.
To indemnify the agent for injury caused by principal’s neglect.
4.
To pay the agent the commission other remuneration agreed.
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RIGHTS OF PRINCIPAL
1)To recover damages.
2)To obtain an account of secret profits and recover them and resist a
claim for remuneration.
3) To resist agent’s claim for indemnity against liability incurred.
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TERMINATION OF AGENCY
1. By act of the parties
 Agreement
 Revocation by the principal
Revocation by the agent
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TERMINATION OF AGENCY CON’T
2. By operation of law
 Performance of the contract
 Expiry of the time
 Death of either party
 Insanity of either party
 Insolvency of either party
 Destruction of the subject matter
 Principal becoming an alien enemy
 Dissolution of a company
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Agency Coupled with interest
• Agency is coupled with interest when authority is given
for the purpose of securing some benefits to the agent.
• The agency cannot, unless there is an express contract,
be terminated to the prejudice of such interest (Sec
202). It becomes irrevocable to the extent of such
interest and does not terminate even by the insanity or
death of the principal.
• In other words, where the agent himself has an interest
in the subject matter of the agency, the agency is one
coupled with interest.
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