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Contract of Agency (Section 182 - 238) - 20241215 - 004825 - 0000

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Lakshay Garg
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31 views17 pages

Contract of Agency (Section 182 - 238) - 20241215 - 004825 - 0000

Uploaded by

Lakshay Garg
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Contract of Agency

(Section 182 –238)

By:-
Lakshay (3055)
Contract of Agency
Introduction
In India, the agent and principle share a relationship that is contractual in nature,
and therefore it is governed by the terms and conditions of the contract between
them. Chapter X of the Indian Contract Act, 1872 provides the basic structure of
rules and regulations that basically govern the performance and formation of any
type of contract including the agency contract.
Definition:
Agency can be defined as the relationship between two persons,
wherein a person has the authority to act on behalf of another,
bind him/her into a legal relationship with the third party. There
are two parties in a contract of agency – principal and agent.
Who is a Principal?
Any person who employs another person to perform an act and who is

being represented by another person in dealing with the third party is

the Principal.

The person acting on behalf of the other is called an agent, and


the person from whom the agent derives authority to act is
called principal.
RIGHTS OF THE PRINCIPAL
1. The principal is entitled to enforce all the duties of the agent. This is because agent’s duties are the
principal’s right.
2. He may repudiate the transaction if it shows either that any material fact has been dishonestly concealed
from him by the agent or that the dealings of the agent have been disadvantageous to him (Sec. 215)
3. If an agent, without the knowledge of the principal, deals in the business of the agency on his own account
instead of an account of his principal, the principal is entitled to claim from the agent any benefit which may
have resulted to him from the transaction. (Sec. 216)
4. He is entitled to compensation for any loss or any profit accruing, owing to departure from instructions
(Sec. 211)
5. The principal is entitled to demand proper accounts from the agent. (Sec. 213)
6. The principal is entitled to compensation in respect of the direct consequences of the agent’s negligence,
want of skill or misconduct. (Sec. 212)
7. The principal has the right to refuse remuneration if the agent is guilty of misconduct. (Sec. 220)
8. The principal has the right to give instruction in cases of difficulty when contacted by the agent. (Sec. 214)
Who is an Agent?

A person employed by the Principal, to act on his behalf, represent


him in the dealings with the third party and also to bring him into a
contractual relationship with the third party, is called an Agent.
CREATION OF AN AGENCY

1. 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.
2. 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.
3. 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.
4. By Necessity- a person acts for another in an emergency situation without express
authority to do so.
DUTIES OF AN AGENT

 Duty to follow instructions


 Duty of reasonable care and skill
 Duty to Render Proper Accounts
 Duty to communicate with Principal
 Duty not to Deal on his own account
 Duty not to make secret Profits
 Duty not to delegate (Section 190)
RIGHTS OF AN AGENT
1. 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.
2. 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
theusiness of agency.
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.
LIABILITY OF THE PRINCIPAL FOR THE ACTS
OF THE AGENT TO THE THIRD PARTIES

The position of the principal in relation to third parties under contracts

made by agent may be discussed under the following heads:

1.Acting for a named principal.

2.Acting for an unnamed principal.


3.Acting for an undisclosed principal.
1. AGENT ACTING FOR A NAMED PRINCIPAL
1. Acts of an Agent within the Scope of his Authority

2. Acts of an Agent Exceeding his Authority


3.Where the work can be separated
4.Where the work cannot be separated
5.Notice Given to Agent

6. Liability by Estoppel
7. Liability for Misrepresentation or Fraud
2. AGENT ACTING FOR A UNNAMED PRINCIPAL

When an agent contracts, as an agent for a principal but does not disclose his name, the
principal is liable for the contract of the agent. But the unnamed principal should be in
existence at the time of the contract and the acts must be within the scope of agent’s
authority.
Example: A appointed B as his agent to purchase some goods. B entered into an
agreement with C for purchasing those goods. B signed the agreement as a broker “to
my principal” but did not disclose the name of the principal. Here, B is not personally
liable because he contracted in the capacity of an agent.
3. AGENT ACTING FOR AN UNDISCLOSED PRINCIPAL

1. Rights and Liabilities of Agent


2. Rights and Liabilities of Third Party
3. Rights and Liabilities of Principal
DISTINCTION BETWEEN
AN AGENT AND BAILEE

Agent Bailee

An agent may not have possession of any A bailee has possession of goods of the

goods or property of the principal. bailor.

An agent has authority to contract on behalf A bailee does not have such authority.

of his principal
DISTINCTION BETWEEN AN
AGENT AND A SUB-AGENT
Agent Sub-agent
An agent is appointed by a principal and is A sub-agent is appointed by an agent and as
under his control. such is under the control of the agent.
An agent acts under the principal. A sub-agent acts under an agent.

A privity of contract exists between a No privity of contract exists between a


principalandanagent. principalandasub-agent.
An agent can ask for remuneration from the A sub-agent cannot ask for remuneration
principal. from the principal.
TERMINATION OF AGENCY
❗ By the acts of parties ‼️Termination of Agency by
1. Mutual Agreement Operation of Law
2. Revocation of the Agent’s 1. Performance of the
Contract 2. Expiry of Time
Authority by the Principal
3. Death or Insanity of Either
3. Revocation by the Agent
Party
4. Insolvency of the Principal
5. Destruction of Subject-Matter
6. Principal becoming an Alien
Enemy
7. Dissolution of a Company

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