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INTRODUCTION
The contract which creates the relationship of Principal and
Agent is known as Agency
The legal provisions relating to agency are contained in the
Sections from 182 to 238 of the Indian Contract Act, 1872

AGENT
An Agent is a person employed to do any act
for another or to represent another in
dealings with third person
The person to whom such an act is done, or
who is represented, is called the Principal
Any person who is of the age of majority,
and who is of sound mind, may employ an
agent
Any person may become an agent, but no
person who is not of the age of majority
and not of sound mind can become an
agent, so as to be responsible to his
principal*

RULES REGARDING
AGENCY

He who does through another, does by himself. This implies

that the acts of the agent shall for all legal purposes be
considered to be the acts of the principal
Whatever a person is competent to do by himself, shall also be
allowed to be done by an agent, except in case of contracts
involving personal services such as singing, marriage, etc.

CAN AN AGENT
DELEGATE HIS
AUTHORITY?
DELEGATUS
NON POTEST DELEGARE which
means that a delegate cannot further delegate
Exceptions to the rule
Where the custom of the trade permits
Where the nature of agency requires delegation
Where the principal permits delegation
Where the principal does not object to it
Where an emergency requires delegation
Where the duties of the agent does not require
any personal skill, confidence or discretion and
the work is of routine nature

CLASSIFICATION OF
AGENTS
ON THE BASIS
OF EXTENT OF
AUTHORITY

General
Agent

Special
Agent

Universal
Agent

CLASSIFICATION OF
AGENTS
ON THE BASIS OF
NATURE OF WORK

Mercantile Agent

Non-mercantile Agent

CLASSIFICATION OF
AGENTS
MERCANTILE
AGENT

Broker

Factor

Auctioneer

Del credere
Agent

Commission
Agent

C&F
Agent

CLASSIFICATION OF
AGENTS
NON-MERCANTILE
AGENT

Insurance
Agent

Wife

Solicitors

Election
Agent

SUB-AGENT
Sec.191: A Sub-agent is a person who is employed by the
original agent and who acts under the control of the original
agent in the business of agency.
Thus, a sub-agent is the agent of the original agent. As
between the original agent and the sub-agent, the
relationship is that of the principal and agent

SUBSTITUTED AGENT
Sec.194: A substituted agent is a person who is named by the
agent holding an express or implied authority to name
another person to act for the principal in the business of the
agency. Such person is an agent of the principal for such
part of the business of the agency as is entrusted to him

RIGHTS OF AN AGENT
1.
2.
3.
4.

Right of retainer
Right to receive remuneration
Right of lien
Right to be indemnified/reimbersed
against consequences of lawful acts
5. Right to be indemnified against
consequences of acts done in good faith
6. Right to receive compensation for injury
caused by principals negligence

DUTIES OF AN AGENT
1. Duty to act according to the directions or
custom of trade
2. Duty to act with reasonable care and skill
3. Duty to render accounts
4. Duty to communicate with principal
5. Duty to disclose all material circumstances
and to obtain principals consent in personal
dealings
6. Duty to pay sum received for principal
7. Duty to protect and preserve the interests
8. Duty not to delegate the authority

CREATION OF AGENCY
CREATION OF
AGENCY

By Express
Agreement

By Implied
Agreement

By Ratification

By
Estoppel

By
Holding out

By
Necessity

By Operation
of Law

AGENCY BY RATIFICATION
Sec.196: When the principal approves an act of the agent who
never had the authority to undertake such an act, it is called
Ratification. It is also known as ex-post facto agency i.e.,
agency arising after the event

ESSENTIALS OF VALID
RATIFICATION
1.
2.
3.
4.
5.
6.
7.
8.
9.

Full knowledge
Whole transaction
No damage to third party
Act on behalf of another person
Existence of principal
Contractual capacity of principal
Within reasonable time
Lawful acts
Acts within the principals power

TERMINATION OF AGENCY

TERMINATION
OF AGENCY

By the act
of the parties

By Mutual
Agreements

Revocation of
Principal

By operation
of law

Renunciation of
Agent

Expiry of
Fixed
Period

Insolvency of
Principal

Destruction
Of
Subject
Matter

Completion
Of business

Death of
The parties

Principal
Becoming
Alien enemy