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LAW Assignment

This document discusses the principal-agent relationship and the rights and duties of agents and sub-agents. It provides examples of how the principal-agent relationship works in different contexts like hiring a contractor or retaining an attorney. It outlines the rights of agents such as the right to remuneration and indemnity. It also describes the duties of agents including the duty to execute the mandate and avoid conflict of interest. The document then discusses what a sub-agent is and the circumstances under which an agent can appoint a sub-agent. It explains the relationship between the agent and sub-agent.

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Prasanna Kumar
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112 views

LAW Assignment

This document discusses the principal-agent relationship and the rights and duties of agents and sub-agents. It provides examples of how the principal-agent relationship works in different contexts like hiring a contractor or retaining an attorney. It outlines the rights of agents such as the right to remuneration and indemnity. It also describes the duties of agents including the duty to execute the mandate and avoid conflict of interest. The document then discusses what a sub-agent is and the circumstances under which an agent can appoint a sub-agent. It explains the relationship between the agent and sub-agent.

Uploaded by

Prasanna Kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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BUSINESS LAW AND ETHICS ASSIGNMENT

SUBMITTED BY:
PRASANNA KUMAR-181151
GOKUL TALLAM-181113
VIJAY KRISHNA -181249
JAGADEESH YELURI-181150
KARAN AGARWAL-181118
SUMER-181239
BUSINESS LAW ASSIGNMENT

Creation of Agency Contract:

By express or implied contract- A principal may implicitly or expressly


employ an agent. The appointment may be expressed in writing or it may be
oral. By conduct of party or situation– E.g. estoppel- Whereby a person allows
another to act for him to such an extent that a third party reasonably believes
that an agency relationship exists between the two. By ratification- assent is
given either to an act done by someone who had no previous authority to act or
to an act that exceeded the authority granted to an agent.

By Necessity- a person acts for another in an emergency situation without


express authority to do so.

What Is the Principal-Agent Relationship?


The principal-agent relationship is an arrangement in which one entity legally appoints
another to act on its behalf. In a principal-agent relationship, the agent acts on behalf of the
principal and should not have a conflict of interest in carrying out the act. The relationship
between the principal and the agent is called the "agency," and the law of agency establishes
guidelines for such a relationship.

How the Principal-Agent Relationship Works ?


A principal-agent relationship is often defined in formal terms described in a contract. For
example, when an investor buys shares of an index fund, he is the principal, and the fund
manager becomes his agent. As an agent, the index fund manager must manage the fund,
which consists of many principals' assets, in a way that will maximize returns for a given
level of risk in accordance with the fund's prospectus.

The principal-agent relationship can be entered into by any willing and able parties for the
purpose of any legal transaction. In simple cases, the principal within the relationship is a
sole individual who assigns an agent to carry out a task; however, other relationships under
this guise have a principal that is a corporation, a nonprofit organization, a government
agency or a partnership.

The agent is most often an individual capable of understanding and ultimately carrying out
the task assigned by the principal.

EXAMPLE: the principal-agent relationship include hiring a contractor to complete a repair


on a home, retaining an attorney to perform legal work, or asking an investment advisor to
diversify a portfolio of stocks. In each scenario, the principal is the individual seeking out the
service or advice of a professional, while the agent is the professional performing the work.

Rights and Duties of Agents


Rights of agents
1. Right to Remuneration
An agent is entitled to get an agreed remuneration as per the contract. If nothing is mentioned in
the contract about remuneration, then he is entitled to a reasonable remuneration. But an agent is
not entitled for any remuneration if he is guilty of misconduct in the business of agency.

2. Right of retainer
An agent has the right to hold his principal’s money till the time his claims, if any, of remuneration or
advances are made or expenses occurred during his ordinary course of business as agency are paid.

3. Right of lien
An agent has the right to hold back or retain goods or other property of the principal received by
him, till the time his dues or other payments are made.

4. Right to indemnity

An agent has the right to indemnity extending to all expenses and losses incurred while conducting
his course of business as agency.
5. Right to compensation

An agent has the right to be compensated for any injury suffered by him due to the negligence of the
principal or lack of skill.

Duties of agents
A principal has a right to sue his agent for damages in case of breach of duty by the agent. The
duties of agents are:

1. Duty to execute mandate


2. Duty to follow instructions or customs
3. Duty of reasonable care and skill
4. Duty to avoid conflict of interest
5. Duty not to make secret profit
6. Duty to remit sums
7. Duty to maintain accounts
8. Duty not to delegate

Sub agent: A person appointed by an agent to perform some duty, or the whole of
the business relating to his agency. Sub-agents may be considered in two points of view.

1. With regard to their rights and duties or obligations, towards their immediate employers.

2. As to their rights and obligations towards their superior or real principals.

Who is a Sub-agent?
A sub-agent is a person employed by and acting under the control of the original agent in the
business of the agency (Sec. 190). In simple words, a sub-agent is the agent of the agent.
Thus, an agent is the principal of the sub-agent. He really acts in the double capacity. He is an
agent of the principal and at the same time, is the principal of the sub-agent.

Appointment of sub agent:

As a general rule, an agent cannot appoint a subagent. However, in the following cases, agent
can appoint a sub agent

1. A subagent can be appointed if there is custom of the trade to appoint a subagent.


2. Again, a sub-agent may be appointed where the nature of the work is such that a sub-
agent is required.
3. Where the principal expressly or impliedly allows the appointment of sub-agent.
4. Where the work to be done is purely ministerial and does not depend upon personal
skills, experience. Etc. of the agent.
5. Where the principal is aware that the agent is will delegate his authority.
6. Where an emergency makes it necessary to appoint sub-agent.
Relationship between Agent and Sub-Agent.
A subagent is a person to whom the agent delegates as his/her agent. Through a subagent,
the agent can perform an act for the principal. If an agent feels that the appointment of
subagents are necessary to the proper transaction and carrying on of the business
committed to the agent, then the agent has an implied authority to make such
appointments. Generally, if an agent employs a subagent, then the agent is the employing
person and the principal is not a party to the contract of employment.
„It may be generally stated that, where agents employ sub
-agents in the business of the agency, the latter are clothed with precisely the same rights,
and incur precisely the same obligations, and are bound to the same duties, in regard to
their immediate employers, as if
they were the sole and real principals.‟
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The sub-agents look to, and is controlled by the agent who appointed him, and is not
under any contract with the principal, he must look to the agent for his remuneration and
indemnity. Thus, a sub-agent will not be liable to render an account to the principal.

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