Introduction:

In India, Section 182 of the Contract Act, 1872, defines “Agent is a person employed

to do any act for another in dealing with third parties”. An agent in commercial law
(also referred to as a manager) is a person who is authorized to act on behalf of
another (called the principal or client) to create a legal relationship with a third party.
The principal has to perform his/her own part of the agency in primarily two ways.
The principal has to pay or where necessary indemnify the agent for the services
rendered or expenses incurred respectively.

 The Indian Contract Act of 1872, Sec.183 and 184 deals with the appointment of
agent and who may be called as agent. There may be different kinds of agent such
as banker, factor, advocate etc. According to the extent of authority there may be
general, special, universal agent. There are various rights which are given to agent
and they can also be sued on certain grounds. There are certain duties of agents
such as execution of instructions, exercise of skill and care, act in good faith etc.
Likewise principal also has certain duties such as payment of agent, indemnification
of agent. Various case laws has been dealt to explain these matters .Agents owes
fiduciary duties to the principal such as loyalty, confidentiality. A real estate broker
who becomes an agent of a seller or buyer is deemed to be a fiduciary.

Agent is authorized to create a contract between his principal and third party. An
agent can-be sued on his personal liabilities and the authority of an agent can be
revoked.

Agent and Principal

An “agent” is a person employed to do any act for another,or to represent another in
dealing with the third person.

The person for whom such act is done, or who is represented,is called the principal.

Thus,what distinguishes an agent from a person appointed to do any act is the

agent’s representative capacity coupled with a power to affect the legal relationship
of the principal with the third person.It is only when he acts as a representative of the
other in business negotiations,that is to say,in the creation,modification or
termination of contractual obligations,between that other and third persons,that he is
an agent.Representative character and derivative authority may briefly be said to be
the distinguishing feature.

To know whether a person occupies the position of an agent or not,the law has to go
by his functions.The law has to see the substance of the transaction and not the
parties terminology.The relevance of the expression used is an agreement has often
been in connection with the hire purchase transactions.[i]

WHO MAY EMPLOY 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 employ an agent. In Shepherd
v.Cartwright[ii] it was observed:

“An infant cannot appoint an agent to act for hum neither by means of a power of
attorney,nor by any other means.If he purports to appoint an agent,not only is the
appointment itself void,but everything done by the agent on behalf of the infant is
also void and incapable of ratification.

Further “there is nothing in the act which prohibits the guardian of a minor from
appointing the agent for him”.

WHO MAY BE AN AGENT?

Sec.184 lays down the concept of who may be an agent. The agent may not be
competent to contract. As between the principal and the third person any person
may become an agent,but no person who is not of sound mind can become an
agent,so as to be responsible to his principal according to the provisions in that
behalf therein.

Ordinarily,an agent occupies no personal liability while contracting for his principal
and therefore, it is not necessary,that he should be competent to contract.

Thus, a person can contract with a minor agent but the minor agent will not be
responsible to the principal.

According to Section 185 of Indian Contract Act, Generally an agent is remunerated

by a way of  commission for services rendered,but no consideration is immediately
necessary at the time of appointment.[iii]

Kinds of Agent:
Following are kind of agent.

(I) Del-credere agent:

A del-credere agent is an agent, who guarantees to his principal that person to whom
he sells will pay for that, if he will not pay, he will be liable. It is a type of mercantile
agent.
(II) Factor:

A factor is an agent to whom goods are entrusted for sale.

(III) Mercantile agent:

A mercantile agent is the person who has authority to sell the goods or to buy goods
or to raise money on the security of goods.

(IV) Banker:

The relationship between banker and his customer is that of debtor and creditor.

(V) Auctioneer:

An auctioneer is an agent who is authorized to sell goods to the highest bidder at a

public sale for commission.

(VI) Sub-agent:

A sub-agent is a person employed by and acting under the control of the original
agent in the business of agency.

(VII) Broker:

A broker is an agent employed for buying or selling the goods or other property. He
simply acts between the two parties.

(VIII) Indenter:

He is an agent who, busy or sells on behalf of his principal.

(IX) Advocate:

An advocate also acts an agent. He appears on behalf of principal in the court.

(X) Co-agent:

Who acts jointly is called co-agent.[iv]

Types of Agents
1. General Agent

The general agent possesses the authority to carry out a broad range of transactions
in the name and on behalf of the principal. The general agent may be the manager of
a business or may have a more limited but nevertheless ongoing role—for example,
as a purchasing agent or as a life insurance agent authorized to sign up customers
for the home office.

2. Special Agent

The special agent is one who has authority to act only in a specifically designated
instance or in a specifically designated set of transactions. For example, a real
estate broker is usually a special agent hired to find a buyer for the principal’s land.

3. Agency Coupled with an Interest

An agent whose reimbursement depends on his continuing to have the authority to

act as an agent is said to have an agency coupled with an interest if he has a
property interest in the business.

DUTIES OF AGENT
An agent has a fiduciary duty to act loyally for the principal’s benefit in all matters
connected with the agency relationship. This duty supplements the duties created by
an agency contract. A fiduciary duty exists because agency is a relationship of trust
and confidence. The principal’s many remedies for an agent’s breach of her fiduciary
duty include termination of the agency and recovery of damages from the agent.

1. Duties to execute mandate:

2.Duties to follow Instructions or Customs:
3. Duty of reasonable care and skill
4. DUTY TO AVOID CONFLICT OF INTEREST
5. Duty not to make secret profit:
6. Duty to remit sums
7. Duty to maintain Accounts:
8.Duty not to delegate

Conclusion:
An agency is the creation of a contract entered into by mutual consent between a
principal and an agent. By agency, a principal grants authority to an agent to act on
behalf of and under the control of the principal. The relation between a principal and
an agent is fiduciary and an agent’s actions bind the principal. An agent is liable to a
principal when he/she acts without actual authority, but with apparent authority.
An agent is liable to indemnify a principal for loss or damage resulting from his/her
act principal owes certain contractual duties to his/her agent. Correlative with the
duties of an agent to serve a principal loyally and obediently, a principal’s primary
duties to his/her agent include:

To compensate the agent as agreed; and To indemnify and protect the agent against
claims, liabilities, and expenses incurred in discharging the duties assigned by the
principal.