AGENCY

S 182 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. The essence of a contract of agency is the agents representative capacity coupled with his power to effect legal relations of the principle with third persons. An agent has the authority to act on behalf of his principle & to create contractual relations between principle & a third party. Ex: A employs B to sell his house on his behalf. B is Said to be As agent for the transaction of sale of house. Ex: P employs Q to buy 10 TV sets for him. Q is said to be Ps agent for the transaction of purchase of TV sets.

ESSENTIALS 1. There must be a contract 2. Employing a person to act for another or to represent another 3. In dealings with third parties Parties 1. Principal one who employs another to act on his behalf or to represent him in dealings with third parties 2. Agent One who is so employed

Other features Who may employ agent Any person who is competent to contract i.e. a major who is of sound mind may employ an agent. Whatever a person can do personally he can do through an agent. Who may be an agent - Any person may be appointed as an agent. However where an agent is a minor or of unsound mind, the principal shall be bound to the third persons but the agent shall not be responsible to the principal. This is because a person who has no capacity to enter into contract cannot bind himself. No consideration- No consideration is necessary to create a contract of agency Agents are paid commission/ remuneration only when they do acts for the principal or they represent the principal.

KINDS OF AGENT- Agents are classified on the basis of their work & responsibilities. 1) Mercantile agent- He is an agent having authority to sell goods or buy goods or to raise money on the security of the goods in course of his business. Mercantile agents may be a) Factor- He is an agent whose ordinary business is to sell or dispose of goods which are in his control & possession b) Broker He is an agent appointed to negotiate and make contracts for sale or purchase of goods that the goods are in the possession & control of principal. c) Auctioneer- He is an agent who sells goods by public auction to the highest bidder.

d) Del credre agent- He is an agent who not only establishes contract between his principal and third party but also guarantees to his principal the due performance of contract by third party. For giving guarantee, he gets del credre commission. e) Commission agent. He is an agent who charges some commission for the work done by him for his principal. 2) Non- merchantile agent Agents who represent their principals in transactions other than those of sale or purchase of goods, are non-marchantile agents. Ex: A director of a company acts as an agent of company while dealing with third person.

APPOINTMENT OF AN AGENT- The appointment of an agent may be either express or implied. It is express when he is appointed by a contract expressed either in writing or orally Ex: A gives a power of attorney to B to transact his business on his behalf. A is said to have appointed B as his agent expressly. A contract of agency is implied when it is implied from the circumstances of the case and the conduct or relationship of the parties . Thus whenever a a person places another in a situation in which that other is understood to represent or to act for him he becomes an implied agent. Ex: A meets with an accident and is injured. He is in need of medical assistance. B calls for the services of a doctor. B acts as an agent of A impliedly .

Agents authority Authority of an agent means his capacity to bind the principal. The principal is bound by the acts of his agent only when the agent has acted within the scope of his authority.

The extent of an agents authority depends upon 1) The nature of the act or business he is to do 2) Things incidental to the business 3) the usual trade customs & usages. If the agent exceeds his authority the principal is not bound by the unauthorised work done by agent.

Sub-Agent - Ordinarily an agent cannot delegate his authority i.e an agent cannot appoint a subagent to his principal because when a principal appoints a person as his agent he invests (reposes) trusts & confidences in the agent. An agent may appoint a sub-agent if the principal permits. A sub-agent is under the control of the original agent. Where the sub-agent is properly appointed, the principal is bound by his acts. Where the appointment of a sub-agent is improper the principal is not bound by his acts. The sub-agent is responsible for his acts to the agent and the agent is responsible to the principal for the acts of the sub-agent.

DUTIES OF AGENT 1) TO FOLLOW INSTRUCTIONS- An agent is duty bound to carry out the instructions of his principal in conducting his business. If the agent fails to do so and any loss is incurred he will be held responsible for such loss to the principal. 2) To exercise reasonable skill & diligence- An agent must exercise reasonable skill & diligence in the conduct of business. He is expected to act with as much skill as is generally possessed by persons engaged in similar business. If any loss is caused to the principal due to neglect or want of skill on the part of agent, then agent is responsible for it.

3)To render proper accounts- An agent must render proper accounts to his principal. 4)To avoid conflict of interest An agent must not deal on his own A/c in the same business as that of principal, without obtaining his consent. If he does so, the principal may repudiate the agency. 5)Not to make secret profits- Since an agent is in a fiduciary relationship with his principal, he must not make secret profits in the business of agency. If he does so , the principal can claim the secret profits from him.

6) To remit sums- The agent is bound to pay to his principal all sums received on his account. He may however deduct his lawful charges. 7) Not to delegate authority- An agent must not delegate his authority to another person except the consent of his principal or where the delegation is permitted by ordinary custom of trade . 8) To communicate in case of emergency- In case of an emergency an agent must promptly communicate with his principal and obtain his instructions.

RIGHTS OF A AGENT 1) Right to retention An agent has a right to retain from the money received in the course of agency , the following sums a) all money due to him in respect of advances made or expresses incurred by him in conducting agency business b) remuneration payable to him for acting as agent. Right to remuneration An agent is entitled to his agreed remuneration or when there is no agreement as to remuneration, then to a reasonable remuneration. An agent gets this right only when he has completed the business of agency.

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3) Right of lien- An agent may retain goods, papers and other movable or immovable property of the principle, in his possession, until the amount due to him is paid. 4) Right to indemnity An agent has a right to be indemnified by the principal in respect of the consequences of all lawful acts done by the agent in exercise of his authority. 5) Right to compensation Where an agent suffers loss due to the principals neglect or want of skill, he has a right to be compensated by the principal.

DUTIES OF PRINCIPAL 1) To indemnify or compensate his agent in respect of a) a lawful act done by agent within his authority. b) an act done by agent in good faith, causing an injury to the right of third person. c) any injury suffered by agent due to the principals neglect or want of skill. 2) To compensate for revocation- Where agency is created for a fixed period and principal revokes the agency before the expiry of the contracted period without sufficient cause, the principal must compensate the agent for the same.

RIGHTS OF PRINCIPAL 1) Right to revoke agency- Where agency is created for a fixed period the principal may revoke the agency at any time before the expiry of that period even without sufficient cause, provided he gives reasonable notice and compensation to the agent 2) Right to repudiate- Where an agent deals on his own account in the business of agency without obtaining the principals consent, the principal has a right to repudiate the transaction. 3) Right to secret profits of the agent Where an agent earns any secret profit from the business of agency the principal is entitled to claim from the agent any such benefit.

TERMINATION OF AGENCY
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COMPLETION OF AGENCY BUSINESS DEATH OR INSAUITY OF PRINCIPAL OR AGENT INSOLVENCY OF PRINCIPAL RENUNCIATION BY AGENT- NOTICE TO PRINCIPAL REVOCTION BY PRINCIPAL- NOTICE TO AGENT COMPOSITION IF WITHOUT SUFFICIENT CAUSE. EXPIRY OF TIME- IF FOR FIXED TIME