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Agency

Sujith

182.Agent and Principal defined .- An "agent" is a person employed to do any act for another or to represent another in dealings with third persons.The person for whom such act is done, or who is so represented, is called the "principal".

183.Who may employ 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 employ an agent. 184.Who may be an agent .- As between the principal and third persons any person may 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.

185.Consideration not necessary .- No consideration is necessary to create an agency. 186.Agents authority may be expressed or implied .- The authority of an agent may be expressed or implied

Agent v Servant
Principal has the right to direct an agent what to do. Master directs his servant what to do and how it is to be done Principal is liable for the wrong done if done within the scope of agency Master is liable for everything done during the course of employment

Principal exercises more direct control over an agent But an independent contractor is not under any such control. An agent is a representative with a power to contract on behalf of his principal, but a bailee has no such powers.

Raja Ram v Bishram AIR 1960


Supreme court held that post office is an agent, where the goods are despatched by the seller.

Fowler v Hollins 1872 AC


a broker is an agent employed to make a bargain for another and receives a commission on the transaction which is usually called brokerage. He neither possesses the custody nor the possession of the goods. It is his duty to establish privity of contract between the principal and the third party.

Visvanathan v tiffins Barytas Asbestos & Paints Ltd. 1953


A proxy appointed by a shareholder is an agent of that shareholder. The word proxy means some agent properly appointed.

Extent of agents authority Watteau v Fenwick (1893) 1 QB 346 the defendant was the owner of a hotel. M was their manager. The defendants instructed M not to purchase cigars on credit. Plaintiff was a cigars merchant. He approached the hotel for enhancing the business. He trusted M to be the real owner and offered cigars on credit. M purchased cigars on credit. But failed to pay. Latter the plaintiff came to know about the real owner and sued him. Defendant argued that he didnt place any orders and moreover already instructed M not to purchase cigars on credit. Held, the cigars were ordered in good faith for the business. Such cigars were used in the business. The defendants entertained such profits. After using the goods in the business he can not repudiate the contract. Principal is liable for all the acts of the agent which are within the authority usually confined to an agent of that character.

Personal liability of an agent


1. Undisclosed principal Alagappa Corporation v United brokers AIR 1948
Two brokers entered into a contract of sale of shares without disclosing their principals. The court held that they were liable to be tried in their own names.

Nizamuddin vs Mohammad &sons 1897


PC held in the case of undisclosed principal , the agent is personally liable for the result of any fraud or wrong committed . He has to refund so much of money as is necessary to compensate for the loss sustained thereby, despite the fact he had paid the amount to the principal.

2. 3. 4. 5.

In his personal name Agent acting for a foreign principal Agents authority coupled with interest mistakes

Creation of agency express contract


Oral written

Implied contract
Doctrine of estoppel Agency by holding out Agency by necessity
Matheson v smiley (1932) Medical necessity. Surgeon tried to save life and incured expenditure was held recoverable.

Great northern railway company v swafield 1874 LR 9 EX 132


The defendant sent a horse by plaintiffs railway. After reaching the destination, the consignee did not take delivery of the horse. The plaintiff handed over the horse to a livery stable keeper and incurred expenses for its feeding an safeguarding. After one month defendant asked for delivery but refused the payment of expenses incurred by the railway company. Court held it was agency of necessity.

By ratification
Act should be done on behalf of another On behalf of ratifier alone can be ratified Within reasonable time Competency of the rpincipal Full knowledge of all the facts The act should not be void or illegal Whole transaction

Kinds of agents
Public agents Private agents Home agents Foreign agents General agents Special agents Mercantile agents or commercial agents Non-commercial agents Co agents Sub-agents- delegatus non potest delegare Substituted agents Ostensible agency

Duties of agents
Duty to execute mandate s.211 Duty to follow instructions or customs ss.211 &214 Duty of reasonable care and skill s.212 Duty to avoid conflict of interest ss.215 &216 Duty not to make secret profit s.216 Duty to remit sums s.218 Duty to maintain accounts ss.213&214 Duty not to delegate s. 190

Rights of an agent
Right to remuneration ss.219&220 Right of retainer s 217 Right of lien s 221 Right to indemnity ss. 222, 223&224 Right to compensation s.225

Relations with third party


Enforcement and consequences of agents contracts s.226
Liable as if principal himself entered into the contract

Principals liability when agent exceeds authority s.227&228


If separable, only to that part to which he had authority. If not separable, not liable for the entire transaction.

Notice given to agent is notice given to principal himself s.229 Agent can not personally enforce, nor bound by contracts on behalf of principal s.230 Person falsely contracting as agent not entitled to performance s.236 Misrepresentation or fraud by agents
Principal liable if within the authority of the agent. Not liable if outside the scope of agency

Termination of agency
By termination of real authority
By act of parties, operation of law, end of the contact

Inference of termination by subsequent events


happening of specified event, loss of subject matter

Revocation by one party Death/insanity/insolvency of one party

End