This impossibility necessitates him to delegate some of his transactions to another person. Agent ---means a person employed to do any act for another or to represent another in dealing with third persons.
Principal ---means a person for whom such act is done or who is so represented.
a) Principal should be competent to contract
b) Agent may not be competent to contract.
c) No consideration is necessary.
a) By Actual Authority being conferred on the agent . It may be Express or Implied.
Express by words spoken or written(Sec.187) (to sell or purchase of immovable property ,it must be in writing Power of attorney)
Implied- by inference from the circumstances of the case Ex- X who resides in Ahmadabad owns shop in Hyderabad. The shop is managed by Y who orders goods from Z in the name of X with Xs knowledge. b) Agents authority in an emergency eg. A consigns provision to B at Kolkata, with directions to send them to C at Cuttak. B may sell the provisions at Kolkata , if they cannot bear the journey without spoiling .
c) Principal bound by Estoppel eg. A consigns goods to B for sale, and gives him instructions not to sell under a fixed price. C, being ignorant of Bs instructions, enters into a contract with B to buy the goods at a price lower than the reserved price. A is bound by the contract.
d) Principal bound by Ratification i) The act should be done on behalf of another person(but without knowledge or authority) ii) The principal should be in existence, and competent to contract Eg. Promoters entered an agreement company not in existence. iii) Ratification may be express or implied eg. A without authority , buys goods for B. Afterwards, B sells them to C on his own account. Bs conduct implies a ratification of the purchase made for him by A.
iv) Ratification would be of the whole transaction The object of this provision is that no principal may ratify only those parts of the transaction which are favourable to him and disown others.
v) Ratified acts should not be injurious to third person A holds a lease from B, terminable on three months notice . C an unauthorized person, gives notice of termination to A. The notice cannot be ratified by B, so as to be binding on A. vi) Ratification should be with in a reasonable time.
i) Factor- Goods are delivered for sale with wide discretionary powers. He has also power to sell on credit.
ii) Commission Agentwho buys or sells goods for his principal and receives commission. (immaterial whether he posses goods or not)
iii) Del credere Agent Generally , the function of an agent is over after a contract is established between his principal and a third person. He is not answerable to his principal for the failure of a third person to perform the contract. But delcredre agent is an exception for this general rule. He is a mercantile agent, who, on the payment of some extra commission , known as del credere commission, guarantees the performance of the contract by the third person. In case third person fails to pay the goods supplied to him, the principal can bring an action against the del creder agent. he occupies the position of a surety as well as agent.
iv) Broker He has neither control nor possession of goods. He merely makes the two parties to enter into a contract. He gets his commission whenever any transaction materializes. v) Auctioneer Entrusted with the possession of goods for sale to the highest bidder i.e by open sale.
If the owner of the goods puts him in possession of the goods, although the authority to sell has not been conferred in him( i.e subject to a reserved price) , a buyer in good faith(below the reserved price) from such auctioneer will get a good title .
i) Duty not to delegate his duties
When an agent has undertaken to perform certain duties personally, he is not allowed to delegate his duties to another person. This rule however is subject to certain exceptions. (i.e agent can appoint sub-agent)
Circumstances in which a sub agent can be appointed. i) When there is a custom of trade to that effect or ii) When the nature of agency so requires eg. To file a suit must engage a lawyer iii) When act does not require personal skill. Eg. Transport goods from one place to another. iv) When the principal expressly or impliedly agrees appointment of a sub-agent. Is a person employed by and acting under the control of, the original agent in the business of agency.
When the sub agent is properly appointed , for the acts of such a sub-agent, the principal becomes bound towards third persons. It means that the act of the sub-agent would bind the principal in the same way as an act of any duly appointed agent.
ii)Duty to follow principals directions-- Bound to conduct business according to the directions or if there are no such directions agent should conduct the business according to the custom ( commonly established practice). otherwise he will be liable to pay damages to the principal.
E.g. B, a broker , in whose business , it is not the custom to sell on credit, sells goods of A on credit to c, whose credit at the time was very high. C, before payment , becomes insolvent. B must make good the loss to A. iii) Duty to show proper skill and care The agent is supposed to take due care and act with reasonable diligence in the matter of agency. The agent is liable to pay compensation for the loss cause to the principal due to his neglect or misconduct.
Eg. A, an agent for the sale of goods, having authority to sell on credit, sells to B on credit, without making the proper and usual enquiries as to the solvency of B. B, at the time of such sale, is insolvent. A must make compensation to his principal in respect of any loss thereby sustained.
iv) Duty to render proper accounts He should maintain proper accounts of the sums belonging to the principal which are in his hands, he should not misutilise and misappropriate them, and on demand from the principal, he should render true accounts to his principal.
v) Duty not to deal with his own account An agent is under a duty not to deal on his own account in the business of agency, unless the principal consents thereto. vi) Shouldnt set up an adverse title to the goods which he receives from the principal as an agent.
vii) Must not use confidential information for his own benefit or against principal. i ) Right to Remuneration An agents remuneration does not become due to him until the completion of the act assigned to him. This rule is subject to any special contract between the principal and the agent .
Eg. If the parties have agreed that the agent will be entitled to commission when he finds a purchaser, who is ready and willing to purchase the property , the agent becomes entitled to commission on doing that.
ii) Right to retain sums The agent has a duty to pay to his principal all sums received on principals account. But he has a right to retain, out of any sums received on account of the principal in the business of the agency , all money due to himself in respect of advances made or expenses incurred by him in conducting such business and also such remuneration as may be payable to him for as agent.
iii) Right of lienof goods , papers and other property.
In the absence of any contract to the contrary, an agent is entitled to retain goods, papers, and other property whether movable or immovable of the principal received by him, until the amount due to himself for commission, disbursements and services in respect of the same has been paid or accounted for to him. iv) Right to be indemnified The employer of an agent is bound to indemnify him against the consequences of all lawful acts done by such agent in exercise of the authority conferred upon him. eg. B, a broker at Calcutta by the order of A, a merchant there, contracts with C for the purchase of 10 casks of oil for A. After words , A refuses to receive the oil and C suesB. B informs A, who repudiates the contract altogether. B defends, but unsuccessfully and has to pay damages and costs and incurs expenses. A is liable to B for such damages , costs and expenses.
For contracts entered into through an agent, the principal becomes bound towards a third person as if he entered into the contract himself. The principal is liable for such acts of the agent for which the authority has been conferred upon him. Such authority may be express or implied. i) Principals liability when agent exceeds authority A Principal is bound only for such acts of the agent which are within the authority of the agent. If it is in excess of the authority , the principal is not liable.
ii) Principals liability for notice to the agent Any notice given to or information obtained by the agent, provided it be given or obtained in the course of business, shall have the same legal consequences as if it had been given to principal.
iii) Principals liability for agents fraud, misrepresentation and torts- when an agent acting in the course of the principals business , makes misrepresentation or commits fraud, it has same effect as if it has been made by principal.
ii) By the agent renouncing the business of agency or
iii) By the business of agency being completed or
iv) By either principal or agent dying or becoming unsound mind or
v) By the principal being adjudged as insolvent.
Revocation may be express or implied -
eg. A empowers B to let As house. Afterwards, A lets it himself. This is an implied revocation.
a) No revocation when agent has interest in the subject matter eg. A gives authority to B to sell As land and to pay himself out of the proceeds, the debts due to him from A. A cannot revoke his authority , nor can it be terminated by his insanity or death. b) Revocation possible before the authority has been exercised Which means when the agent has already exercised the authority conferred upon him by the principal , the revocation of the same is not possible. eg. A authorizes B to buy 1,000 bales of cotton on account of A and to pay for it out of As money remaining in Bs hands. B buys 1,000 bales of cotton in his own name, so as to make himself personally liable for the price. A cannot revoke Bs authority to pay for the cotton.
c) Principal should give reasonable notice of revocation
otherwise he can be made liable to make good any damage which may be caused to the agent.
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