I. II. III.
Introduction5-9 Contract of agency Consequences of agents contract10-14 Actual Authority Extent Of Agents Authority
IV.
Rights and Liabilities of the principle for the contract entered into by the agent...........................................................................................................................15-17
Effect of ratification....18-19 Rights and Liabilities of an agent for a contract made by him.20-23 Rights , Liabilities and duties of third person for an agents contract..24-27 Conclusion28 Bibliography
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INTRODUCTION
Contract of Agency Agency is a special type of contract. The concept of agency was developed as one cannot possibly do every transaction himself. Hence, he should have opportunity or facility to transact business through others like an agent. Principles of contract of agency- (a) Expecting matters of a personal nature, what a person can do himself, he can also do it through agent (e.g. a person cannot marry through an agent, as it is a matter of personal nature). (b) A person acting through an agent is acting himself, i.e. act of agent is act of principal. Since agency is a contract, all usual requirements of a valid contract are applicable to agency contract also except to the extent excluded in the Act. One important distinction is that as per Sec. 185, no consideration is necessary to create an agency. Who may employee an agent- Any person who is of the age of majority according to the law to which he is subject, and who is of sound mind, may employee an agent (Sec. 183). Thus any person competent to contract can appoint an agent. Who may be an agent- As between the principal and third person any person can become an agent, but no person who is not of the age of majority and of sound mind can become an agent, so as to be responsible to his principal according to the provisions in that behalf herein contained (Sec. 184). The significance is that a principal can appoint a minor or person of unsound mind as agent. In such case, the principal is responsible to third parties.
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8) No consideration is necessary to create an agency. The fact that the principal has agreed to be represented by the agent is a sufficient detriment to the principal to support the contract the contract of agency. Though no consideration is necessary to support a contract of agency, an agent may be paid for. That means an agent may be paid for his services. 9) An agent is appointed with specific instructions and is authorized to act within the scope of the instructions (i.e. the authority). As such the agents within the scope of his authority are regarded as the acts of the principal and such acts bind the principal as if the principal has done them himself.
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http://www.vakilno1.com/bareacts/indiancontractact/s226.html Municipal Corporation Of Delhi v. Jagdish Lal, AIR 1970 SC 7 Sardar Gurcharan Singh v Mahendra Singh (2004) 1 MPLJ 252 (MP)
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Attwood v. Munnings (1827) 7 B&C 278 Ried v Rigby (1894) 2 QB 40 6 Raymond Woollen Mills Ltd v. Coal India Ltd1998 1 Cal HN 53. 7 Ferguson vUm Chand Boid(1905) 33 Cal 343.
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Sutton v. Tattham, (1839) 10 A&E 27 Harker v. Edwards, (1887) 57 LJ QB 147 Murugan V. G Ramamurthy, 2006 1 AIR Kant R 196
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CHANAKYA NATIONAL LAW UNIVERSITY Rights and liabilities of the principal for the contacts entered into by the agent
Rights 232. Performance of contract with agent supposed to be principal Where one man makes a contract with another, neither knowing nor having reasonable ground to suspect that the other is an agent, the principal, if he requires the performance of the contract, can only obtain such performance subject to the rights and obligations subsisting between the agent and the other party to the contract. Essentials A contract between an agent and an other person The agents identity is not disclosed and the other party has no reasonable to access the truth of his identity If both the above conditions are fulfilled, then the principal has the right to obtain the performance of the contract, so existing between the third party and the agent, subject to the rights and obligations of the third party and the agent10. Duties and liabilities 227. Principal how far bound, when agent exceeds authority When an agent does more than he is authorised to do, and when the part of what he does, which is within his authority, can be separated from the part which is beyond his authority, so much only of what he does as is within his authority is binding as between him and his principal. Essentials
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Greer V.Down Supply Co., (1927)2 KB 28 Montagu v Forwood (1893)2 QB 350 (CA).
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Then the principal would be held liable for the acts or the contracts entered into by the agent for which he was authorised and not for other acts.
228. Principal not bound when excess of agent's authority is not separable Where an agent does more than he is authorised to do, and what he does beyond the scope of his authority cannot be separated from what is within it, the principal is not bound to recognise the transaction. Essentials Acts of the agent swaying away from his authority Eg; may have entered into a contract which he is not authorised to do. Both the authorised and the unauthorised cannot be separated from each other
Then the principal is not bound to recognise the acts or the contracts entered into by the agent for which he was not authorised. So it can be concluded from both sections mentioned above that where an agent exceeds his authority, actual or apparent (discussed in the preceding issues), the principal is not bound by the excess work, but where it is separable from the authorised work the principal is bound to that extent.11 237. Liability of principal inducing belief that agent's unauthorized acts were authorized 11
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Wilson v. Turnman (1843) 6 M&G 236. Commercial banking Co. of Sydney v.Mann (1916) AC1 Bristow v. Whitmore, (1869) 9 HL cas 391 Bhavani Shankar v. Gordhanlal AIR 1943 PC 66.
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CHANAKYA NATIONAL LAW UNIVERSITY Rights liabilities and duties of an agent for a contract made by him
Rights 189. Agent's authority in an emergency An agent has authority, in an emergency, to do all such acts for the purpose of protecting his principal from loss and would be done by a person or ordinary prudence, in his own case, under similar circumstances. This section creates a special authority in emergency. It constitutes the agent into an agent of necessity to counteract the emergent situation. An act done in the exercise of this extended authority would bind the principal if the agent was not able to communicate with the principal and the course he took was necessary in the sense that it was the only reasonabke prudent course left open to him and that he acted in good faith and the interest of the parties concerned.14 230. Agent cannot personally enforce, nor be bound by, contracts on behalf of principal In the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them. Presumption Of Contract To The Contrary Such a contract shall be presumed to exist in the following cases :(1) where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad; (2) where the agent does not disclose the name of his principal; and (3) where the principal, though disclosed, cannot be sued.
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1. Foreign Principal When an agent contracts for a merchant residing abroad there is the presumption that the agent undertakes personal liability. By virtue of section 230 the presumption has statutory importance in India. A company registered in England, and having a place of business in India, has been held to be a foreign principal for the purposes of this presumption and the Indian agent acting for it was held personally liable.18 2. Principal Unnamed Where an agent contracts for an undisclosed principal, he definitely is personally liable being a party to the contract.19 The presumption may arise even when the agent discloses his representative character, but not the name of the principal. 3. Non-Existent Or Incompetent Principal
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Marine Container Services South Ltd V Go .Go Garments(1998) 3 SCC 247 Tropic Shipping Co. Ltd v. Kothari Global Co. Ltd(2002) 2 Bom CR 93 (Bom) 16 Lewis v. Nicholson, (1852) 18 QB 502 17 Jenkins V. Hutchinson, (1849) 13 QB 744. 18 Tutika Basavaraju v. Parry and Co., (1903) 27 Mad 315 Radhakrishna Sivadutta Rai v. Tayeballi Dawoodbai, AIR 1962 SC 538. 19 Castrol Ltd v. Admiral Shipping Ltd, (2005) 3 Bom. CR 507.
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Contract To the contrary Whether an agent, apart from the case specially mentioned, is to be taken to have contracted personally, or merely on behalf of the principal, depends on what appears to have been the intention of the parties, to be deduced from the nature and terms of the particular contractand surrounding circumstances.20 It is also settled law that when an agent has made a contract in the subject matter of which he has a special property he may, even though he contracted for an avowed principal, sue in his own name. such is the case of a factor21 and an auctioneer, who has a possession coupled with an interest in the goods which his is employed to sell, not a bare custody, and a specil property by reason of his line.22 The like rule is laid down by the Indian Courts there an agent enters into a contract as such, if he has interest in the contracts, he may sue in his own name.23 The agent in such a case is virtually a principal to the extent of his interest in the contract.
Duties and liabilities 235. Liability of pretended agent A person untruly representing himself to be the authorised agent of another, and
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See Bowstead on Agency, 10 ex, p 236 Fisher v. Marsh (1865) 6 B&S 411 22 Williams v. Millington(1788) 1 HBL 81, 2 RR 724. 23 Subramania v. Narayanan (1900) 24 Mad 130.
th
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233. Right of person dealing with agent personally liable In cases where the agent is personally liable, a person dealing with him may hold either him or his principal, or both of them, liable. It is at the discretion of the third party, in cases where the agent is personally liable, to choose amongst the principal and the agent and hold them liable. The third party can also make both principal and the agent liable jointly. Estoppel Of The Third Party 234. Consequence of Inducing agent or principal to act on belief that
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Said v. Butt (1920) 3 KB 497. TREITEL Law Of Contract, 540. 27 Humble v. Hunter (1848) 12 QB 310,317
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http://www.vakilno1.com/bareacts/indiancontractact/s227.html
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http://www.vakilno1.com/bareacts/indiancontractact/s229.html
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CONCLUSION
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http://www.vakilno1.com/bareacts/indiancontractact/s230.html
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BIBLIOGRAPHY
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Dr. Avatar Singh, Introduction to Law of Partnership, 8th edition, Lucknow, Eastern Book Company, 2005. M.R. Mallick, Goyles The Law of Partnership, 2nd edition, Kolkata, Eastern Law House, 2006. Dr. S.K. Kapoor, Contracts-II, 10th edition, Allahabad, Central Law Agency, 2005.
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