CONCEPT

1. Balthazar and son v. EM Abowath (whether contract between agent and another
principal or principal and principal)

Abowath were merchants who dealt in sugar and purchased it from Balthazar. Balthazar did
not grow sugar but got it from firm J. J offered a consignment to Balthazar and they in turn
approached Abowath as to whether they would take it for that price. Most of the
consignments were delivered but some not delivered due to war. Abowath filed suit for
damages due to non- delivery. Balthazar said they were only agents of J.
Held that mere mention of commission in the contract does not alter the position of the
parties. An acceptance of an offer to buy must infer an obligation to sell. The acceptors in this
case must either have sold as principals, in which case there is liability on their part to
perform, or they must have sold as agents for someone else. Where all the documents prima
facie say that it was a contract between principals, the mere fact that there was commission
doesn't mean the party is not a principal.

2. Southern Railways v. SM Krishna (termination = revocation of agency)

Plaintiff were transporters and appointed agents for this purpose. Defendant was one such
agent, and had to arrange a suitable godown and this godown was in his possession for the
purpose of carrying on business of the company. Company terminated agency. A notice was
sent to the agent saying that the company will take possession. Agent did not comply.
Held by SC said that under law, revocation results in termination of authority, unless a
situation of section 202 applies (where agent has vested interest). Also talked about how case
doesn't fall under section 205 or section 221 of ICA. Under section 221, lien could only be
exercised when there was no agreement inconsistent with it. Here, the agreement specifically
said that company shall occupy godown upon revocation. Regardless of this, the lien cannot
be exercised to hamper principal's business. Here, agent’s possession was on behalf of the
company and not on his own right therefore no right to remain in possession. So injunction
granted.

3. Ganesh Export and Import v. Mahadeolal Nathmal (Partnership case)

One partner alleged that he had been wrongfully terminated from the partnership. But a
notice to show cause had been duly given to the partner before he was terminated.
Held that without mala fides, it was not a condition precedent to the validity of the notice that
the partner serving the notice should disclose to his co-partner the causes of complaint against
him or give him an opportunity of being heard in his defence. The notice was valid. However,
it was apparent that after dissolution no accounting had been done as is required. The new
partnership business is carried on with the assets of the previous partnership and the plaintiff
is, therefore, entitled to a share of the profits or at his option to interest.
4. Gordon Woodroffe v. Sheikh Majid. (sale v. agency to sell)

Parties had entered into several contracts. Respondent (trader) filed a suit for rendering of
accounts on the premise that appellant (exporter) is their agent. Issue was whether the
relationship was one of sale or agency to sell.
Held that appellant was purchaser and that essence of sale is transfer of title to goods for
price paid, whereas essence of agency to sell is the delivery of the goods to a person is to sell
them, not as his own property but as the property of the principal who continues to be owner
of goods. So court says a/cs were settled b/w parties and respondent cannot be allowed to
reopen them because there was no fraud or mistake or any other ground.

5. Kuchwar Lime and Sons v. Dehri Railways (agency implied from relationship and
authority)

Some quantity of coal was booked by a colliery to the appellant’s carriage on defendant’s
railway line and freight for consignment was to be paid by appellant. Company declined to
take delivery of a part of the consignment because of inferior quality. Railway sold coal w/
public notice and then filed a suit claiming freight charges. Appellant argued that because the
company was the consignee of the goods, there was no privity and so no claim for
demurrage/freight was with railways.

Held that the colliery was acting as an agent of the appellant in entering into the contract of
consignment and the liability for payment of freight and of demurrage charges for failure to
take delivery of the goods was on the appellant. Railway was entitled to demurrage for the
detention of wagons for only one month and cannot claim the entire amount. The Railway
was a bailee of the company, and was bound to minimize the loss. It could have sold off the
coal under section 56 of the Railways Act. Even assuming that in view of the Colliery
Control Order, the Railway could not sell the coal without the Coal Commissioner’s sanction,
it could have unloaded the coal from the wagons and put the wagons to use. Hence, the
consignee could be liable only for wharfage.

Here, agency was implied from substance, not the form, they had implied authority to make
arrangements for transfer of coal on behalf of company, therefore acting as agents.

6. Shree Digvijay Cement v. State Trading Corporation (agency inferred from nature
of relationship)

DCC specially packed cement for STC in 'craft paper' after STC got permission from the
Govt. to import such paper. Subsequently, the Govt. banned the export of cement and
business of the STC (export of cement) stopped. Thus, demand from DCC stopped and DCC
suffered loss due to excess craft paper. DCC sued STC stating that DCC was the agent of the
STC in procuring the paper, and thus must be indemnified. (DCC could not have argued
breach of contract as there was frustration by act of third party.)

Agency inferred from nature of relationship, based on consent and authority, not
consideration. Control of STC over DCC is vital. Agreement between the two showed that
not much was left to DCC's discretion. What, where, how, when - all aspects were controlled
by STC. STC had a supervisory role. Thus, since STC was Principal, it had to indemnify the
DCC.

7. Lakshminarayan v. Government of Hyderabad (master, principal, IC)

Appellants claimed that they were servants and not agents. Thus, they were getting a salary
which was not income by way of business. Thus, the money was not taxable.

Master Servant: Every detail was dictated, total control and supervision.
Principal Agent: Supervisory Agent, agent acts voluntarily. Not told how to work, only what
work is to be done. A represents P. Bound to exercise authority.
Independent Contractor: No supervision or control. Only desired end results is expressed.
Ind. Contr. works as per own volition.

Main difference between the relations of master and servant and of principal and agent may
be said to be this: a principal has the right to direct what work the agent has to do, but a
master has the further right to direct how the work is to be done.

Facts showed App. has discretion to decide method of work, delegation of work, assignment
of benefits, powers of sub-delegation etc. Hence, agents and not IC.

8. LIC v. Rajiv Kumar Bhaskar (agency from nature of relationship and not from
form even if expressly to the contrary)

As per L.I.C salary saving scheme the employer was to deduct the premium from the salary
of the employee and deposit with L.I.C. All the related procedures were the responsibility of
the employer. Upon death of the concerned employee, the heirs found the employer had
defaulted in payment causing policy to lapse. L.I.C relied on a clause in the acceptance letter
by the employer which said he would act not as the agent of L.I.C but as an agent of his
employees.

ISSUE: Whether the employer can be treated as the agent of the L.I.C despite the express
agreement to the contrary?

Even though there was express term in the contract which said employers were not acting as
agents of LIC- Must look at substance not form- From course of dealings, were actually
agents. Employee was forced to transact only with employer and not LIC-They were unaware
of terms and conditions of the contract- Even though there was no consent-look at nature of
relationship. LIC liable.

9. Loon Karan Sohan Lal v. Firm John (revocation when interest of agent is there)

Principal(appellant) was judgement-creditor. The appellant owed a debt to the bank and
executed a power of attorney in favour of the bank or any person appointed by it “to do the
following acts, deeds, matters and things for me, on my behalf and in my name and to credit
to my account the sum or sums which may be realised in execution of or under the said
decrees...” The Principal later revoked the authority and objected to the execution of the
decree.
Can agency can be revoked when it is in the interest of the agent?
Section 202 of the Contract Act provides that where the agent has himself an interest in the
property which forms the subject-matter of the agency, the agency cannot, in the absence of
an express contract, be terminated to the prejudice of such interest. Where the agency is
created for valuable consideration and authority is given to effectuate a security or to secure
interest of the agent, the authority cannot be revoked. The document itself says that the power
given to the bank is irrevocable.

10. Himalayan Co-operative Housing Society v. Balwan Singh (lawyer made assertion
without authority)

Co-op society is suing the members for default of payment of certain expenses for allotment
of residential quarters. HC hears request of members- In the suit process the members asked
the high court for permission to build an additional quarter- HC asked permission of lawyers,
who assented to this building without asking permission.

Does this assertion by the lawyers fall within their scope of authority?

No, not even express or implied authority. This isn’t why lawyer was employed, doesn’t have
authority to make statement that would surrender client’s legal rights, unless specifically
employed for that. Lawyer should follow client’s instructions, rather than give judgement.

11. Borstock v. Jardine (not the contract that the principal wanted, not bound by it)

Plaintiff instructed def. to buy 50 bales of cotton for them. Def. bought 300 bales, 250 extra
for themselves. Some dispute arose and the Plaintiff sued for refund of the money advanced.
Should plaintiff be liable when agent acts in a manner they’re not authorised to?
Here, agents not authorised to do that. Though a contract was made, it was not the contract
which the plaintiff authorized the defendants to make; and therefore as the plaintiff paid his
money on the faith that a contract had been entered into, which turns out to have never
existed, he is entitled to have his money returned. Direct application of 215.

12. Patiram Banerjee v. Kankinarra Company Ltd (Broker or agent)

Plaintiff, a jute broker, entered into a contract with a third party, on behalf of his principal.
He sent a ‘sold and bought note’ to both of the parties.

Employment was to negotiate a sale and be an intermediary, not to sell on behalf of another.
Where broker makes a deal, and acts broker, and not a purchaser, signing himself simply as a
broker, he’s not the purchaser/seller of goods.

Agent is not making himself personally liable because he signs the letter as “sold for you to
my principals” which indicates that he is not selling as agent of an undisclosed principal but
he is facilitating a sales transaction for kankinara as their brokers for their principal JD saha-
thus he cannnot be held personally liable- the note is merely a letter acknowledging
employment if anything and not one where the buyer undertakes personal responsibility-
must look at intention of parties- doesn’t fall within Sec 230.

13. Mahendra Pratap Singh v Padam Kumari Devi (agent appointed by person with
mental incapacity)

Dispute regarding will of a deceased person between siblings and the mother. Mother is too
old to take active part in proceedings, so she is staking her claim through NarendraPratap
Singh.
Held that agency was invalid. General principles for appointment/authority of agent not diff
for power of attorney holder. As given in ICA, Principal who does not have capacity cannot
appoint agent. Capacity needed to establish legal relations. If incapable, by reasons of any
mental infirmity, interests must be protected. One of the prerequisites of being a guardian or
next of friend, in reference to the context, is that a person's interest must not be adverse to
that of a minor (or a person with mental incapacity.)
Thus, the apparent agent stretched the law too far, as it was shown that there were other
people who could have acted as agent for the principal.
14. Lachmandas Khandelwal v Raghumull (sub-agency revocation)

The contract of sub agency between the respondent and appellant depends on the contract
between the principal company and the respondent for its existence and continuance. The
termination of contract between the Principal and agent results in the termination of the
contract between the agent and sub agent.

POWER OF ATTORNEY
15. Seth Loon Karan Sethiya v. Ivan E John (power of attorney coupled with interest)

SLK got a decree for Rs 15 lacs against IEJ and others, but SLK was himself indebted to
State bank of Jaipur, which was pressing him to pay back the loan. As SLK not in a position
to do so, he executed Power of attorney in favour of the bank to execute decree, and to credit
amount to his account. i.e. Bank, instead of realising its debt from Sethiya, was to take it from
his judgement-debtor. Wanted to revoke it later.

SC was asked whether the PoA is a power coupled w/ interest, if so, is it revocable?

The power of attorney in question is a power coupled with interest, and hence the same
is not revocable. Definitely power coupled with interest here, both from the tenor of the
document as well as from its terms. Section 202 of the Contract Act provides that where the
agent has himself an interest in the property which forms the subject-matter of the agency, the
agency cannot, in the absence of an express contract, be terminated to the prejudice of such
interest. It is settled law that where the agency is created for valuable consideration and
authority is given to effectuate a security or to secure interest of the agent, the authority
cannot be revoked. The document itself says that the power given to the bank is irrevocable.

16. State of Rajasthan v. Basant Nahata (Defines Power of Attorney)

BN appointed attorney to look after lands etc via Power of Attorney. this case is only important
to define power of attorney. ICA basically talks about how by a PoA, an agent is formally
appointed to act for the principal in one transaction/series of transactions/ to manage affairs.
The person holding the PoA derives a right to use his name and all acts done by him shall be
the same as acts done by principal.

What Agent does in his own name, with his own signature, is equivalent to principal doing it.

17. Ram Asri v. Rakesh Chand and ors (Termination of Agency, notice to 3 rd party
necessary)

Def 1 and 2 were purchasers of property of the deceased. Appellant’s attorney Ram Gopal
sold property. Def also executed PoA with A authorizing him to manage and sell his
property. Case is filed by daughter of deceased for inheritance claim. She claimed that the
purchasers forcibly occupied the property on the basis of the sale deed executed. Also said
that Ram Gopal not attorney. Court says Def 1,2 had no notice of cancellation of deed of
PoA.

S 208 applies which says that agency is only terminated for agent when he knows of
termination and for 3rd parties when this termination is known to them. Therefore, plaintiff
had to prove that agent knew that PoA cancelled + 3rd party knew. Not able to prove,
therefore valid sale deed.

18. Kashi Ram v. Raj Kumar (Termination of Agency, notice to 3rd party necessary)

After purchase of land, P gave power of attorney to Respondent 6 for management of said
land. Even after termination of the authority, the Resp. executed a deed of the land in favour
of contesting Resp. P prayed that the deed was ineffective, inoperative and inconsequential.
Resp. were not aware of the termination of the authority bestowed on the Resp. 6. As no
notice of such termination had been served upon contesting respondents. They were not
aware of the revocation of authority of Resp. 6 through any other means.

For third parties, the termination of a contract or agency will take effect only from the time
the third party obtains knowledge of it. Policy of law in the interest of trade and commerce,
action should bind the principal even though principal might have cancelled agent’s
authority, unless the third person with whom the agent enters into contract, knew of the
termination of the agency. Here, termination of power of attorney, but deed still effective .

The Court repelled the contention that it was very unreasonable to expect that the principal
should inform the whole world that he has cancelled power-of- attorney given to his agent
and that she cannot be expected to approach everybody with whom the agent was likely to
enter into contract and inform them of the cancellation.

19. Prahlad v. Laddevi (agency is terminated due to death of principal)

Respondents are heirs of the deceased. Appellant 1 was POA of deceased and made a sale
deed in favour of wife, Appellant 2. Respondents sued for this.

Held that a power of attorney granted by the donor to the donee is only operative and
effective during the lifetime of the donor. Death of principal is equal to termination of
agency- no notice required, presumption that agent knows principal is dead.

WAGERING COLLATERAL CONTRACT

20. Bhagwandas Paraswan v. Burjorji Ruttonji Bomanji
The principal wanted the agent to sell the goods to 3rd party. Agent firm were pakka adatias
and were to transact like one. Principal had already transferred an amount for indemnity. At
time of performance, the principal failed to perform so agents had to do it. The agents
suffered loss. They sue the plaintiff for balance amount by way of compensation. Principal
contended that the original contract was one of wagering, therefore principal was not liable.
Here, only the principal had intention, and as for the agent, it was speculation (prices).

Held that it was not a wager and that plaintiff was responsible. Agents acted in conformity
with the terms of the contract and since they became liable for performance of contracts, they
were also entitled to indemnity.

ESTOPPEL
21. Harshad J Shah v. LIC (LIC rules were to the contrary, no agency)

LIC agent submitted cheque given by the deceased after the death of the deceased and after
the grace period granted by LIC. Rules stated that in case of default, all payments including
arrears must be paid within lifetime of the insured. Contended that the agent of LIC had
apparent authority to bind LIC due to general practice.
Held that there was explicit prohibition as per the rules of LIC. As per S. 186 and 187, there
could be no actual or apparent authority. Further, in case of express forbiddance, there can be
no implied authority. Sec 237 can’t be invoked, due to express forbiddance.
22. Drew v. Nunn (Lunacy)

If an insane principal who had appointed an agent during sanity has not given bona fide
notice to all third parties, then he is bound by any agreements that the agent enters into on
behalf of him even though the inter se right of the agent to bind the principal has ceased.

Details:
The defendant(principal) became lunatic and during his lunacy, his wife(agent) ordered goods
from the plaintiff on behalf the defendant. The plaintiff sued the principal for the price of
goods, after the latter gained his reason. During his lunacy, the plaintiff had revoked the
authority he had given to the agent to draw checks.
Held that the lunacy or insanity of the principal puts an end to the agent’s authority. Lunacy
here would mean something grave and not mere weakness of mind. If the principal at law is
incapable of doing an act for himself, the agent who represents him cannot do it for him.
Thus, the wife who is held to know of his husband’s lunacy no longer has an authority inter
se to bind the principal. However, a person who deals with the agent without knowledge
of the principal’s lunacy has the right to do so and that lunatic is bound by having held
out the authority of the agent. Here, the third party had no notice of lunacy (s. 237), the
continued representation of the principal and his failure to notify the third party that
authority was revoked or the third party having no notice of lunacy, provides ostensible
authority to the agent to bind the principal. It is because of a representation by a principal
when he was sane and could make it, to an innocent party, upon which the latter has the right
to act until he knows of his lunacy.

DUTIES OF AGENT
23. Shanti Lal v. Tara Chand (rights of a bailee/agent on emergency)

Bailee/Agent had possession of goods in a godown. Damage to goods due to flooding. Health
officer asked bailees to dispose certain goods. Bailees did so in a bona fide manner. Principal
sued bailees not only for thrown away goods, but also other damaged goods.
In an emergency, rights of bailee similar to that of agent under S. 189. in cases of difficulty
he is under the same duty as has been cast upon the agent under S. 214 of the Act which
makes it incumbent on the agent to use reasonable diligence in communicating with his
principal and in seeking to obtain his instructions. Here, agent held agent not liable because
he has satisfied the duties of a baliee. Case must be r/w China Pacific.

24. Kaluram Bholaram v. Chimniram Motilal (agent sold his own goods to principal,
held to be in breach of duty)

The principal asked agent to procure goods on his behalf. Agent sold his own goods to the
principal, unknown to the latter.

This was held to be in breach of agent’s duty as per the contract. Under Section 216 no loss
of the principal is required. Agents were plain commission agents and were not authorised to
sell their own goods and given the principal the impression that they had purchased them on
behalf of the defendant. Profit of the agent is calculated as difference between price at which
agent sells and market price and the principal is entitled to the same.

25. Richard Philip v. William Francis (agent did not fulfil obligation to communicate
with the principal)

Agent did not inform the principal about the losses occurring and failure of payment of the
brokers due to unexpected circumstances of the great depression of 1929.

There is a business obligation on the agent to give correct and timely information about the
affairs of the principal, failure of which would be breach of statutory duty of agency.
However not liable for damages except for costs and agent would not have acted differently
regardless of communication.

26. Pannalal Jankidas v. Mohanlal (agents failed to insure goods, goods burned in fire)

Plaintiffs, as agents of the defendants had stored the goods in Government go downs,
requiring permit to supply them to the defendants. In the meanwhile, due to the fire in
godown, the goods burned and plaintiffs got compensation of 50% of damage caused in
respect of the goods as they were uninsured. However, plaintiffs sued defendants to be
indemnified against the rest 50% of damages caused to the goods while handling those as
latter’s agent. The defendants pleaded, and it was found as a fact that plaintiffs had agreed to
insure the goods and even charged defendants, nevertheless omitted to insure the goods; they
further pleaded that they were entitled to set off or counter claim for the value of the goods
destroyed, as damages caused to them by the neglect or breach of duty of the plaintiffs.

What damages are plaintiffs liable to pay to the defendants for failure to insure the goods
which were destroyed?

Ordinance did not create any new liability but only quantified the damages such that failure
of plaintiffs to insure the goods must now be measured on new basis; and the fact that it did
not exist at the time of the explosion, and could not have been in the contemplation of the
parties, was irrelevant for deciding the question of liability. Therefore, plaintiffs must put
the defendants in the same position as they would have been had the goods been
insured. Ordinance not an intervening act.

SCOPE OF AUTHORITY
27. Jacob v. Morris (POA must be read strictly according to terms and everything needs
to have an explicit provision)

Power of Attorney was given to conduct business of Principal. A loan was taken by the agent
from Morris.
Is the Creditor liable to recover the loan money from the Principal? What was the scope of
the POA?
POA documents have to be read strictly according to terms. There has to be an explicit
provision. Creditor, in absence of express provisions, could have assumed implied authority
had he been able to show agent's power was to issue bills of exchange, apply for loans and
that the loan was necessary for conducting the business.
Court held otherwise (can’t be said to have implied authority). Creditor did not take
reasonable effort on his part to check documents (cautionary measure), or read power of
attorney. Implied authority has to be strictly under the ambit of terms of the documents.
Constructive notice regarding lack of authority thus estopped from claiming liability from
principal.

SPECIAL AGENTS
28. Morris v. Cleasby (Del Credere Agent)

Morris was the assignee of the buyer and Cleasby was del credere agent/broker. Broker, on
behalf of Principal, sells goods to third party buyers. Buyers became bankrupt after winning
the auction. Buyers did not know identity of the Principal during auction; got to know only
on day of delivery. After identity is revealed, buyers ask the broker to sell the goods on their
behalf. (There has been no payment by the buyer to the Principal). Goods are sold and
whatever is due from the sale proceeds is given to the Principal. After original principal is
paid off, the broker is left with balance amount and is claiming for del credere commission.
The assignee of the bankrupt buyer files a case against the brokers.
When the identity of the Principal is revealed, can the agent still apply for del credere
commission?
Held: Def. can't claim del credere commission because the defendant is no longer to be liable
to guarantee the solvency of the buyer, because once the identity of the principal is
revealed, then there is no role of agent under del credere commission as both principal
and third party can deal with each other. The third party can thus directly deal with the
principal.
DEL CREDERE AGENCY- It’s Principal- Agent relationship, where the agent acts not just
as a salesperson/broker for the principal, but also as a guarantor of credit extended to the
buyer. If the buyer is unable to pay the bill after the transaction is completed, a del credere
agent may become liable for the amount that was unable to be collected. A DC agent doesn't
reveal the 3rd party to P and vice versa (like a paaka adatia). DC agent alone is responsible to
the 3rd party. The DC agent receives a DC commission, no tripartite contract. Need not be in
writing. Assures the P of the credit worthiness of the other party. Specifically for sale of
good. Additional commission of risk.

29. Raghunath Prasad v. Firm Seva Ram Tikam Das (Pakka Adaita)

The defendant firm was a commission agent for plaintiff. Plaintiff said firm was pakka adatia
and therefore dealings between them were between two principals through the agency of
Amar Nath, therefore s. 226 applies. Defendant claimed that they were kutcha adatia and
their position was that of a sub agent, so they were not responsible to the principal/plaintiff,
so s 192 would apply.
An agent who acts as a principal while dealing with third parties is the principal for the third
party. He is liable to both the principal and the 3rd party. Agent does not reveal to the
principal who the third party is. In reality Pakka Adaita is an agent. The provision that the
defendant was to enter into transactions on behalf of its constituents, clearly indicates that the
relationship between the two was to be that of principal and agent and not that of principal
and principal. In case the defendant was to act as puccka arhtia i.e. as principal to principal,
there was no point in the agreement providing that the defendant was to act in accordance
with the instructions of the plaintiff. The terms and conditions on which the defendant had
been appointed as a commission agent as disclosed in the plaint, clearly indicate that the
position of the defendant could not be that of a puccka arhtia.

Court said here S192 will apply because kutcha adatia.

Difference between Kutcha and Pakka - A kutcha arhtia acts as an agent on behalf of his
constituent and never acts as a principal to him. The person with whom he enters, into a
transaction on behalf of his constituent is either brought into contact with the constituent or at
least the constituent is informed of the fact that the transaction has been entered into on his
behalf with such and such other person. Although the kutcha arhtia may not communicate the
name of his constituent to the third party, he informs the constituent of the name of the third
party, In the case of a puccka arhtia, the agent makes himself liable upon the contract not
only to the third party, but also to his constituent and he does not inform his constituent as to
the person with whom he has entered into a contract on his behalf.

REVOCATION BY PRINCIPAL
30. Boulton Brothers v. New Victoria Mills

Principal agreed to pay commission to agents during the period when the other such party is
acting as agent. Principal later alleged that the agent was not entitled to receive commission
as agent did not discharge his obligations properly.
Held that in cases of revocation of agency: the Principal must most importantly show
sufficient cause in order to revoke the agency. Harms or losses accruing to the Principal due
to continuation of the agency is a valid ground for revocation. If there is no sufficient cause,
it is a repudiatory breach. The agent cannot after revocation perform in a manner relying on
the principal's authority. This is contrary to S. 39 where the contract is 'voidable'. The
innocent party has the option of continuing or putting an end to the contract.
The Principal in this case was held liable to commission as under S. 39, the Principal's silence
amounted to acquiesence and condonement of the actions of the agent. The revocation was
invalid.
31. In re: Shaw Wallace and Company (reasonable notice, applicability of section 206)

Here, agents were given compensation for cessation of agency. The dispute here was not
about agency, but about whether compensation is taxable? Said compensation not taxable,
because no exchange of goods/services took place, and it was in the nature of compensation
which was legally due under Section 206.

206(Notice of revocation) is not only applicable to 205(compensation for revocation by

principal), but also applicable to other forms of agency. In England, no need to give notice to
the agent regarding revocation of authority.

32. Prickett v. Badger (Sec 201-210, agent found buyer for defendant, defendant said it
was for someone else and it was no longer necessary, whether agent is entitled to
compensation)

The plaintiff was an estate-agent. The defendant is lord of the manor of Highbury. The
defendant called upon the plaintiff, and, proposed to the plaintiff to look out for a purchaser.
The plaintiff agreed to do so, at the same time telling the defendant that his terms would be a
commission of 1½ per cent, upon the amount of purchase-money. The plaintiff made
preparations and found a buyer. The defendant then for the first time informed the plaintiff
that he had no interest in the land, but that it belonged to one W; and W declined to sell it to
the found purchaser, and that the plaintiff(agent) was desired by Wagstaffe, to take no further
steps in the matter.

Is agent liable to receive the commission as per the contract originally agreed upon?

Court says where an agent is employed to sell property, and his authority is revoked before
anything has been done under it, since was successful in discharge of his obligations, agent
should be entitled to sue for a reasonable renumeration. Here, proper measure of damages
would be entire amount of commission agreed upon. If the plaintiff attempted to rely on the
quantum meruit, he would probably be met by the implied understanding that the agent is
only to receive a commission if he succeeds in effecting a sale, but, if not, then he is to get
nothing. But no such answer was or could be set up here, because the plaintiff had actually
succeeded in finding a person who was willing to become a purchaser. Could clam quantum
meruit.

CLASS NOTES:
· She does not agree.
· This is not a case of quantum meruit, because the plaintiff has not conferred any benefit
upon the defendant. No purchase took place.
· S. 206 can be used, because no reasonable notice was given before termination, thus, agent
may sue.
· S. 222 does not apply as the agent has not exercised any authority. Looking for a buyer is
not exercise of authority.
· S. 205 may be used but dicey because contract specifies no duration. But S.201 may be used
along with S. 205, if it can be proved that the purpose of agency of an estate agent not having
been fulfilled, the revocation of agency was wrongful. An implied clause regarding the
duration needs to be proved, i.e, estate agent is to be employed for a fixed duration, that is ,
till the purpose has been fulfilled.

33. Ackroyd and Sons v. Hasan (whether find buyer or find buyer who would give final
assent, right to commission of agent)

Agent was supposed to find buyers for the principal. Issue regarding whether the agent only
had to find buyer or find buyer who would give final assent.
Held that first, when an agent claims that he has earned the right to commission, the test is
whether the event upon which commission is to be paid has happened. Secondly, there are no
special principles of construction applicable to commission contracts with estate agents.
Thirdly, contracts under which a principal is bound to pay commission for an introduction
that does not result in a sale must be expressed in clear language. Court held that assent of the
buyer to the contract proposed by the Principal was necessary and since Agent failed to look
for such a buyer, no commission was payable by the Principal.

34. Monindra Lal Chaterjee v. Hari Pada Ghose (Notice of revocation to third party)

Allegation of invalid sale of land as the agent (def.) sold the land after the power of attorney
(authority of agency) was terminated. Thus, sale of land to third party is invalid.

Third party is not bound by internal revocation unless such revocation is brought to their
notice. Sale held to be valid as the 'party causing mischief must be the one which suffers'.
Since no notice was given of the revocation to the third party, the revocation was ineffective.

TERMINATION
35. Kathoom Bivi v. Arulappa Nadar (Notice to third party)

Power of attorney enacted for some mortgages, later cancelled POA.

The agent's action should bind the principal, even if the principal might have cancelled the
agent’s authority, unless the third persons with whom the agent enters into contracts knew of
the termination of the agency.
Undisclosed principal - intention must be shown by agent during the transaction with third
party (not sure what this means).

RATIFICATION
36. Boulton Brothers v. Lambert (ratification of principal after inoperative revocation
by offeror)

Offer made by defendant to Agent of Plaintiff. Agent was not authorized to make any
contract for sale. Offer accepted by Agent on behalf of Plaintiff. Defendant withdrew the
offer and then the Plaintiff ratified the acceptance of the offer. Action for specific
performance raised by the Plaintiff.

Held that ratification by the Plaintiff related back to the acceptance by the agent, and
therefore withdrawal by the defendant was inoperative. The rule as to ratification by a
principal of acts done by an assumed agent is that the ratification is thrown back to the date of
the act done, and that the agent is put in the same position as if he had had authority to do the
act at the time the act was done by him.

37. Bird v. Brown

When a buyer becomes insolvent and goods are in transit and sellers are unpaid, the sellers
can stop transit. It must be stopped only in transit. Here, the order to stop the goods in transit
was ratified after the goods had reached the ports. Therefore ratification was held not to be
valid. Had it been during transit, it would have been valid.
You cannot ratify any act which was lawful at a point but at present is unlawful and without
any representation there is no ratification. Ratification cannot lead to hampering rights/
divesting interests.

UNDISCLOSED PRINCIPAL
38. Keighley, Maxtead and Co. v. Durant (Ratification by undisclosed principal)

Appellant authorised X to buy corn from Resp. under a joint account. X does so, but at a
higher price than authorised by the Appellant. While buying, X did not represent that he was
buying on a joint account, he rather showed that he bought it on his own account. The
intention that he was acting for K & Co. as well as himself was not disclosed by X to the
Respondent. Appellant later ratified the purchase but failed to complete it. Respondent had to
sell the goods at a loss and claimed compensation.
A person ratifying the act of another, who, without authority, has made a contract
openly and avowedly on his behalf, is deemed to be, though in fact he was not, a party to
the contract. The law seems to exclude the case of a person who may intend to act for
another, but at the same time does not disclose this intention and conducts himself in a
manner which leads people to believe that he is acting for himself. – Undisclosed principal
must exist at the time of the contract, and may not be brought into life as a principal after the
contract has been made without recognition of his existence.
Holding of the case: A contract made by a person intending to contract on behalf of a
third party (Principal in this case is third party to the contract between agent and the
buyer), but without his authority, cannot be ratified by the third party so as to render
him able to sue or liable to be sued on the contract, where the person who made the
contract did not profess at the time of making it to be acting on behalf of a principal.

PERSONAL
39. Said v. Butt (plaintiff could not contract with the defendant himself, contracted as
undisclosed principal through agent)

The plaintiff wanted to go to a play’s first night. He had fallen out with the management of
the theatre, and knew that he would not get a ticket in his own name. He got a friend to go to
the theatre and buy a ticket for him without disclosing that he was buying it on behalf of the
plaintiff.(undisclosed principal). When he turned up for the performance he was refused
admission. He brought a claim against Sir Alfred Butt, the managing director of the theatre.

It must be proven that there was a binding and subsisting contract between the Plaintiff and
the Defendant. The purchaser’s identity was a material element in the formation of the
contract and that the failure to disclose the fact that the ticket was bought on his behalf
prevented the plaintiff from asserting that he was the undisclosed principal.

Owing to the fact that the present contract had a personal element (the plaintiff would have
been denied a ticket had he personally applied), the Court held that Defendant was right in
refusing entry to the undisclosed principal. The basic exclusionary rule is that the
undisclosed principal cannot intervene where the terms of the contract, express or
implied, exclude his right to sue and his liability to be sued.

SUB-AGENCY
40. Agarwal Chamber of Commerce v. Ganpat Rai Hira Lal (there was a substituted
agent for a specific part of the business, entitled to payment from the principal)
Appellant(agent) entered into forward transactions on behalf of the respondent (principal) at
Hapur, in which there was a considerable profit. The Hapur firm (substituted agent) was
employed by the appellant(agent) for forward transaction business of the respondent, who
accepted the transactions entered into, as well as the amount of profit accruing under those
transactions. Principal is disputing the amount of income tax retained and deducted on those
profits. Under the Law, the Hapur firm is an agent of the respondent for that part of the
business of agency, as was entrusted to it, and privity of contract arises between the principal
and the substitute.

Principal is required to reimburse the substituted agent for any payments made by him in the
business of the agency, and the Liquidator was entitled to claim from the respondent the
amount of income-tax paid by the Hapur firm irrespective of the consideration whether its
income was taxable or not.

41. Nensukhdas Shivnaraen v. Birdichand Anraj (Sub- agent v Substituted agent, when
principal has right of action against sub-agent)

Plaintiffs were principal of defendant who were commission agents. Plaintiffs consigned 440
bales of cotton to the defendant, who transferred the goods to their Mucaddam, who stored
the goods in his godown. The Mucaddam was thoroughly fraudulent in his dealings. Principal
sued the defendant for the loss suffered.
Is the mucaddam a substituted or sub-agent?

Mucaddams were sub-agents and not substitute agents. The custom of trade gives authority to
the agent to appoint a sub-agent (as per S. 190). In absence of any sharp distinction in the
appointment of the Mucaddam, the Court looks at the nature of the appointment. It held that
if the third person is appointed by the principal and with his knowledge, it is a
substitute agent, if appointed by the agent, then he is a sub-agent. The concluding clause
of S. 192 gives the agent's principal a right of action against the sub-agent, only where in
performing “acts” of the nature contemplated in the section the sub-agent has committed
fraud or wilful wrong. In the event that the subagent committed a fraud or a wilful wrong for
an unauthorised act of act 'not within his authority', then the Principal will have recourse
only against the agent.
Held: But the facts showed that the subagent was indeed authorised to sell the goods, and he
did so fraudulently. Thus, as per S. 192, the Principal could sue both the def. and the
subagents. The particular act was not authorised, still, as the act was done in the course of
employment which was authorised, the master is liable for the act of his servant.

SUBSTITUTED AGENCY
42. De Bussche v. Alt (substituted agent bought ship from principal at lower price, sold
a at a higher price)

DB (principal) appointed G (agent) to sell a ship at a price not below 90K pounds. G
appointed Alt (substituted agent) in Japan with the knowledge of principal. Sub-agent bought
the ship himself for 90K and gave money to DB (Principal). Sub-agent later sold it at a higher
price and Principal sued him for profit.

From the conduct of parties to the original contract of agency, privity arises b/w
principal & sub agent and sub agent becomes responsible to the principal for the due
discharge of the duties which his employment casts upon him, as if he had been
appointed agent by the principal himself. Allegation of ratification by the principal could
not be sustained as there was no complete knowledge of the circumstances surrounding the
transaction done by substituted agent. Every agent must account for all profit which he makes
out of a transaction, and cannot put it into his own pocket, and profit was made by Alt, an
agent, and therefore it must be accounted for. There was no acquiescence by principal to
waive off rights to the profit made by substituted agent. Therefore, substituted agent must
pay.

AGENT OF NECESSITY
43. China Pacific v. Food Corporation of India (agent abandoned cargo of principal,
salvors became agent of necessity)

Defendant signed a charter agreement with managing agents of a ship for cargo from USA to
Bombay. Due to circumstances, the agents signed a salvage agreement with the salvors, who
stored the goods at their own expense. The agents (ship owners) abandoned the cargo, and
notified the cargo owners (def.). The cargo owners agreed to pay the salvors the charges only
from the day after which the agents abandoned the cargo, and not for the period before that.
Bailee entitled to reimbursement for the expenses he undertook, as agents of necessity, under
Sec 158.

(In India pre-existing relationship of agency is required for agency of necessity however
in English law any relationship is fine).
Even in absence of necessity, if bailee acts reasonably in discharge of his duty, he must be
reimbursed. As far as contract between bailee and salvors was not in violation of the contract
of bailment, it is valid. The salvors as bailees were under a duty to deliver goods to the cargo
owners upon completion of salvage services. wheat being a perishable cargo and the cargo
owner being unwilling to give instructions, it was clearly necessary for the salvors to take
reasonable steps to store and preserve the wheat that they had salved. salvors are entitled to
recover the agreed sum from the cargo owner (together with interest), subject to the lien.

PERSONAL LIABILITY OF AGENT

44. Patiram Banerjee v. Kankinarra Company

See no. 12.

Intermediary- CANT HOLD AGENT PERSONALLY LIABLE - Section 230 - the person is
not a broker.

AGENT’S LIEN
45. Ramprasad v. State of MP (when parting willingly with goods, agent must expressly
or impliedly reserve the right to lien in order to claim it later)

The principal who was a licence holder from the State for distribution of grain, appointed the
appellant as his commission agent for the sale of the grain. The agreement provided that the
agent should be in possession of the grain purchased and dispose it of in accordance with the
directions given by the principal. Later the State Government paid to principal the price of the
stock, which was then in the possession of the agent, and took over the stock. The agent,
while handing over the grain, informed the Government that the principal owed him money.
He filed a suit to recover the amount from the State Government and the son of the principal
(the father having died meanwhile). Agent claimed that he had lien over the goods.
Section 221 ICA. purchasing agent has a lien upon the principals goods in his possession
upon which he has paid money in purchasing. As a general rule, in order to have a lien an
agent must have some possession, custody or control or disposing power in or over the
subject-matter in which lien is claimed. The lien does not arise where the possession of
the property is acquired by the, 'agent under a contract which expressly or impliedly shows a
contrary intention or where it is delivered to him for a particular purpose inconsistent with
the existence of a lien. Further, the lien is lost by parting with the possession, unless at the
time of parting he expressly or impliedly reserved his right of lien, or the goods were
obtained from him by fraud or unlawful means.
In the present case, from the mere fact that the appellant informed the Government that his
principal owed him money, while voluntarily parting possession with the goods, it could not
be said that he reserved expressly or by implication his right of lien against the State, if any.

46. Kavita Trehan v. Balsara Hygiene Products (lien only extends to retention of
property, agent cannot sell, lien cannot exist when contract shows a contrary
intention)

Agent claims a lien on the goods of the principal on the ground that his commission was
outstanding. In the last agreement between the parties it is specifically provided that the
plaintiffs will not have any lien over the goods of the defendant.

Whether the right to sell goods is included under an Agent's right to lien?

Lien does not arise when the possession of the property is acquired by an agent, where a
contract expressly or impliedly shows a contrary intention. The lien of an agent extends
only to the retention of the property till his dues are paid (under s. 221), not to sale of
goods.
Lien over the principal's property is of a very limited nature and is confined to mere right of
retainer which may be used as a defence to any action for the recovery of the property
brought against him by the principal. Lien in the ordinary sense means a right to keep
possession of moveable and immoveable properties belonging to a person in debt until the
same has been paid off. Lien cannot give any right, interest or title in the goods or
immoveable property. The holder of the lien cannot sell the property.

AGENT’S INTEREST
47. Dunne v. English

The agent didn’t disclose all material facts regarding the agreement to the principal in order
to benefit from the transaction. The principal upon finding out about the agent’s true
intentions filed a suit and sued the agent for a breach of his duty to disclose such facts.

Held that an agent for sale who takes an interest in a purchase negotiated by himself is bound
to disclose to his principal the exact nature of his interest; and it is not enough merely to
disclose that he has an interest, or to make statements such as would put the principal on
inquiry. It is also not enough for the agent to tell the principal that he is going to have an
interest in the purchase, the agent must disclose to the principal all material facts i.e. full
disclosure.

FOREIGN PRINCIPAL
48. Cochin Frozen Food Exports v. Vanchinad Agencies (disclosure of identity of
foreign principal is immaterial, the mere fact that foreign principal is there is
enough to sue the agent directly)

Appellant contracted with Respondent. 1, who are acting as agents for foreign French
principals, whose identity was disclosed. The suit was for the price of goods alleged to have
been supplied by the Plaintiff to Defendant 2 through the shipping agents.
Can the agent can be held liable or not under S. 230?
S. 230 provides that as a general rule, an agent cannot be made liable for a contract entered
into by such agent for and on behalf of his principal. The first exception provides that if the
Principal is abroad, then the agent can be sued. It is immaterial whether identity of
Principal has been disclosed or not. The only requirement is that the Principal should be a
resident abroad. Disclosure of identity of foreign principal doesn’t take away from the
liability of the agent.

AGENT RIGHTS
49. Narandas Moradas v. S.P. Papammal (ICA is not exhaustive of rights of agents and
principals, rendering of accounts is an equitable right of the agent that arises under
certain circumstances)

NMG was a partnership firm, carrying on business in lace and silver thread at Surat had
dealings with another firm, Krishna and Company – who acted as their agents for selling their
goods on commission basis. The plaintiff, one of the partners of Krishna & Co. took over all
the assets and liabilities of the firm on dissolution of the firm, and in respect of their dealings,
Krishna & Co., became indebted. Soon after the plaintiff executed a promissory note in
favour of NMG. The plaintiff instituted a claim in the district court, praying for rendition of
accounts from April 1, 1951 till the date of the suit in order to ascertain the amount due and
payable to him. Commission to plaintiff was to be used as debt-repayment money to
principal. Principal refused to show the financial records stating such a duty is not mentioned
in the ICA.
Issue: Whether the plaintiff, being the agent, is entitled to sue the defendant-Surat firm for
accounts?

It was held that:

There is no provision in the Indian Contract Act that an agent can sue the principal for
the rendition of the account. The statute is not exhaustive and the right of the agent to
sue the principal for accounts is an equitable right arising under special circumstances
and is not a statutory right. Such special circumstances may arise where all the accounts are
in the possession of the principal and the agent does not possess accounts to enable him to
determine his claim for commission against his principal. The right of the agent may also
arise in an exceptional case where his remuneration depends on the extent of dealings which
are not known to him or where he cannot be aware of the extent of the amount due to him
unless the accounts of his principal are gone into.

The SC upheld the HC’s stand that the transactions in respect of which the plaintiff is entitled
to commission are peculiarly within the knowledge of the principal alone. Therefore the SC
held that in the special circumstances (remuneration depended on the volume of transactions)
of this case, the plaintiff is entitled to sue the Surat firm for accounts.

50. Collen v. Mary Wright (if anyone gives the false impression that they are an agent
when in reality they are not, and give warranty, they are personally liable for such
warranty)

Plaintiff applied for lease to Defendant believing the defendant to be agent of the property’
actual owner, whereas he was not so. Lease was signed by the plaintiff with the defendant in
good faith; after which the plaintiff took possession. Actual owner refused to be bound by the
contract and there was no ratification. Plaintiff instituted a suit for specific performance.

The false agent gave a promise and a warranty as he gave a representation to the plaintiff. If a
man describes himself as agent, when he is not so, he must pay for the damage occasioned by
the breach of warranty. Although there was on the facts a bona fide belief of the agent of such
authority, the fact that it was not so and this absence not being communicated to the plaintiff
makes the agent liable.

Section 235: agent is personally liable, believed him to be agent of actual owner.