CONTRACT-II (ASSIGNMENT)

Discuss the duties and rights of an agent.

Who is an unpaid seller, explain his rights.
Discuss the different modes of dissolution of a partnership firm

KSLU TOPIC
Discuss the duties and rights of an agent.
INTRODUCTION

The relationship between an agent and a principal is a fundamental aspect of business

and legal transactions. Agents act on behalf of principals to carry out specific tasks,
make decisions, and represent their interests. This relationship is governed by both
rights and duties for both parties, which are critical for a smooth and lawful operation of
various business and legal activities. In this discussion, we will explore the rights and
duties of agents and principals.

Concurrently, they are bound by a set of duties that encompass loyalty, care, obedience,
accountability, and confidentiality toward their principals. Principals, in turn, possess
rights including the expectation of performance, access to information, the ability to
terminate the relationship, and seeking damages for breaches of duty. Their duties
encompass compensation, acting in good faith, cooperation, and honesty.

This intricate framework of rights and duties forms the bedrock of the agency
relationship, serving as a guiding compass for the actions and responsibilities of agents
and principals alike. The clarity and adherence to these rights and duties are essential
for the efficient and legally sound operation of their partnership. Neglecting these
fundamental principles can result in disputes, legal complications, and financial
repercussions for both agents and principals. Hence, understanding and respecting
these roles and obligations is paramount for all parties engaged in an agency
relationship, ensuring its success and adherence to legal standards. In this discussion,
we will delve into these rights and duties in greater detail, shedding light on their
significance and implications.

Types of Agents

1. Special Agent- Agent appointed to do a singular specific act.

2. General Agent- Agent appointed to do all acts relating to a specific job.

3. Sub-Agent-An agent appointed by an agent.

4. Co-Agent- Agents together appointed to do an act jointly.

5. Factor- An agent who is remunerated by a commission (one who looks like the
apparent owner of the things concerned)

6. Broker- An agent whose job is to create a contractual relationship between two

parties.

7. Auctioneer- An agent who acts a seller for the Principal in an auction.

8. Commission Agent- An appointed to buy and sell goods (make the best purchase) for
his Principal

9. Del Credere- An agent who acts as a salesperson, broker and guarantor for the
Principal. He guarantees the credit extended to the buyer.

In P. Krishna Bhatta v Mundila Ganpathi Bhatta J. Ramaswami explained the

concept as “where he said that in legal terms and phraseology, any person who acts for
another cannot be called an agent. If such a thing happens, a servant rendering his
services to his master; or a person tilling anothers field or a person working in
somebody elses shop or factory would be considered as their agent.”
In Syed Abdul Khader v Rami Reddy the Supreme Court held that “the expression
agency is used to connote the relation which exists where one person has an authority
or capacity to create legal relations between a person occupying the position of
principal and a third party”.

Test for determining the existence of agency

In Loon Karan Sohanlal v. John & Co. Dhawan J. put forward the test for determining
“whether there exists the relationship of agency. He explained that in American
Jurisprudence it is clearly mentioned that mere use of the words agent and agency does
not by itself create a relationship of agency and the same law is followed in India. He
added that it has been held in several decisions that just because the parties have
named their relationship as agency is not a conclusive proof unless the incidence of this
relationship, as disclosed by evidence, justifies a finding of agency. He also said that the
courts, while examining the evidence, must try to find out the true nature of the
relationship and the functions and powers assigned to the so-called agent.”
Authority of an Agent: Authority of an agent can be both express and implied.

Express authority: According to Section 187, the authority is said to be express when it
is given by words spoken or written.

Implied authority: According to Section 187, authority is said to be implied when it is

to be inferred from the facts and circumstances of the case. In carrying out the work of
the Principal, the agent can take any legal action. That is, the agent can do any lawful
thing necessary to carry out the work of the Principal.

Implied authority is of four main types:

1. Incidental authority- doing something that is incidental to the due performance of

express authority

2. Usual authority- doing that which is usually done by persons occupying the same
position

3. Customary authority- doing something according to the pre-established customs of a

place where the agent acts

4. Circumstantial authority- doing something according to the circumstances of the case

The rights and duties of an agent are corresponding to the duties.

Rights of agents
1. Right to Remuneration

As per section 219, an agent has a right to receive the agreed

remuneration or in absence of agreement, a reasonable remuneration for
rendering the services to the principal that are not voluntary or
gratuitous. He becomes eligible to receive the remuneration as soon as
he completes the work that he undertook.

2. Lien on Goods

Some agents who have the possession of goods, securities or properties

of their principal also have a lien on these goods, securities or properties
regarding their remuneration and also for any expenses or liabilities that
they incur. When he is an unpaid seller, he has a right to stop the goods
in transit.

3. Right to be indemnified

An agent represents his principal to the third parties. As per sections

222 and 223, an agent has a right to be indemnified by his principal for
all charges, expenses, and liabilities that he incurs during the course of
the agency.

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. As per section 211, an agent shall act within the scope of authority
that his principal confers upon him. Also, he shall strictly follow the
directions of his principal. However, in the absence of express
instructions from his principal, he shall follow the custom prevailing
at the place where he carries out his business, in a similar type of
business.
2. Section 212 states that he shall work with reasonable skill and
diligence. Also, where the nature of the agent’s profession requires
him to possess a special skill, he shall exercise the skill that a
member of that profession will exercise.
3. An agent shall disclose properly any material information to his
knowledge to the principal that can influence the making of
the contract.
4. As per section 213, an agent shall is under the duty not to disclose
any confidential information of his principal.
5. Section 215 states that an agent shall not compete with his principal.
In other words, his interest shall not conflict with his duty.
6. It is the duty of the agent to keep true and fair accounts and prepare
them on a reasonable notice to render them.
7. An agent shall not make any secret profit and shall disclose any extra
profit he makes to the principal. Where the principal finds that the
agent is making secret profits, he may dismiss the agent without
notice, recover the amount of profit and also refuse to pay him his
remuneration. He may also repudiate a contract where a third party
is also involved in the fraud and recover the damages.
8. He shall not appoint a sub-agent.

Exceptions to the principle of Delegates non-protest delegate

The above principle means that a delegate cannot further delegate.

Therefore, an agent cannot appoint a sub-agent. However, there are the
following exceptions to this principle:

1. When the principal allows delegation.

2. Where it is the custom or usage of trade to delegate.
3. When delegation is necessary for proper and efficient performance.
4. Where it becomes essential due to some emergency
5. When the principal knows that the agent’s intention is to delegate.
6. Where the work is ministerial.

CONCLUSION

From the above discussion it follows that an agent acting within the
scope of his authority confers rights and imposes liabilities of a contract
upon the principal. Where the agent makes a contract with a third
person, acting on behalf of his principal, normally, the agent incurs no
personal liability under the contract so entered into. Further, the agent
also does not acquire contractual rights. That is, the contracts entered
into through an agent and obligations arising from acts done by an
agent may be enforced in the same manner and will have the same
legal consequences, as if the contracts had been entered into and acts
done by the principal in person.

Bibliography

https://www.toppr.com/guides/business-laws-cs/indian-contract-act-1872/rights-and-duties-of-
agents/

https://lawbhoomi.com/rights-duties-of-agents/