CONTRACT OF AGENCY Chapter x (Secs. 182 to 238) of the Indian Contract Act, 1872

DEFINITION OF AGENT AND PRINCIPAL 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’

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

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 .

WHO CAN EMPLOY AN AGENT? WHO MAY BE 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.

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.

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.

CREATION OF AGENCY By express agreement By implied agreement Agency by ESTOPPLE. Agency by Holding out. Agency by necessity. 3. By ratification

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

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

Mercantile Agents Factor Auctioneer Del Credere Agent Pakka and Katcha adatias Indentor Broker Commission Agent

Possession of property Sell on credit and in his own name General lien Factor Possession of property Sell on credit and in his own name General lien Cannot Barter Cannot Delegate

Appointed to sell by auction Deliver goods on receipt of price 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

Del Credere Agent Pakka Adatias Agent as well as Guarantor Guarantees Principal and Broker Can himself perform

Katcha Adatias Indentor Guarantees on the part of the Principal Procures a sale or purchase on behalf of the principal, with a merchant in the foreign country

Broker Commission Agent 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

Non Mercantile Agent Wife as an Agent Husband is not Liable Living together and looking for necessaries Husband is not Liable Expressly forbidden credit Not necessary Given money Trader is told expressly

If they live apart:- No fault of wife, liable to pay for her maintenance Or Under no justifiable Circumstances, she is not her Husband’s agent

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.

DUTIES OF AGENT To carry out the work undertaken according to the directions given by the principal. To carry out the work with reasonable care, skill and diligence. To communicate with the principal in the case of difficulty. To pay sums received for the principal. To protect and preserve the interests of the principal in the case of his death or insolvency. Not to make secret profit from agency . Not to set up an adverse title. Not to use information obtained in the course of the agency against the

2. Right to receive remuneration. 3. Right of lien. RIGHTS OF AGENT 1. Right of retainer. 2. Right to receive remuneration. 3. Right of lien. 4. Right of indemnification. 5. Right of compensation.

DUTIES OF PRINCIPAL To indemnify the agent against the consequences of all lawful acts To indemnify the agent against the consequences of acts done in good faith To indemnify the agent for injury caused by principal’s neglect. To pay the agent the commission other remuneration agreed.

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.

TERMINATION OF AGENCY By act of the parties Agreement Revocation by the principal Revocation by the agent

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

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.