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Shilpi Gupta

Agency
General It is not always possible for a person to do everything himself, hence it becomes necessary to delegate some of the acts to be performed by another person. Such other person is called an agent. Definitions of Agent and Principal II 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 represented, is called the principal" .85 The contract which creates the relationship of 'principal' and 'agent' is called an 'agency'. For example: X appoints Y to buy ten bags of wheat on his behalf, X is the principal, Y is the agent and the contract between the two is 'agency'.

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General rules of Agency

There are two important general rules regarding agency, viz: What one person can himself lawfully do, can as well get it done by any other person. This rule is of course, subject to some exceptions, e.g., in case, of acts required to be performed personally like marriage. What a person does by another, he does by himself. In other words the acts of the agent are, for all legal purposes, the acts of the principal.

Who may employ an Agent

Any person who is competent to contract may employ an agent. A minor or a person of unsound mind cannot employ an agent."

Who may be an Agent

The Act lays down that "as between the principal and third persons any person may become an agent";" Thus even a minor or a person of unsound mind can be appointed as agent, but in such a case the principal shall be liable.

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CREATION OF AGENCY ( Sec. 187)

1. By express agreement. 2. By implied agreement. 3. By ratification/approval. 4. By operation of law.

Course facilitator Ms. Shilpi Gupta

By express agreement
An agency express agreement or authority arises when

authority is conferred on an agent either by written or spoken words. Case A appoints b to manage his business by a written and stamped deed and B accepted it. It is an agency created by an express agreement between A & B.

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By Implied Agreement
Implied agency inferred from the conduct or relation of the

parties or the circumstances of the case. Case A lives in Kolkata. He owns a shop in jaipur and visit occasionally. The shop is managed by B. B is in the habit of buying goods from C in the name of A for the purpose of shop, and paying from them out of As funds with As knowledge. B has an implied authority from A to buy goods from C in the name of A for the purposes of the shop

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By Ratification
Agency by ratification arises when some act is done by a

person on behalf of another without his authority and act is ratified or affirmed by the other and unauthorised act become authorised

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By operating Law
Agency may also arise by operating of law. In such a case,

law presumes a person as an agent of another. For instance ever partner is an agent of the firm, for the purpose of the business of the firm

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DUTIES OF AGENT
1. 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. 2. 3. 4. 5.

6.
7. 8.

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 principal.
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RIGHTS OF AGENT
1.

Right of retainer. Right to receive remuneration. Right of lien. Right of indemnification. Right of compensation.

2. 3. 4. 5.

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TERMINATION OF AGENCY
By act of the parties
Agreement

By operation of law
Performance of the contract Expiry of the time Death of either party

Revocation by the principal

Insanity of either party Insolvency of either party

Revocation by the agent

Destruction of the subject matter

Principal becoming an alien enemy

Dissolution of a company

Course facilitator Ms. Shilpi Gupta