CONTRACT OF AGENCY

4- 2DEFINITION OF AGENT AND PRINCIPAL

An ‘AGENT’ is a person employed to do any act for another or to represent another in dealings with third persons. The function of an agent is to bring his principal Into contractual relations with third persons.

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AGENT

PRINCIPAL A person for whom the above act is done or who is so represented is called the ‘PRINCIPAL’

WHO CAN EMPLOY AN AGENT

Acc. To sec 183 of ICA any person who is of age of majority according to law to which is a subject, and who is of sound mind may employ an agent.

4- 7DUTIES OF AGENT

1. To carry out the work undertaken according to the directions given by the principal. (Sec 211)

2. To carry out the work with reasonable care, skill and diligence. (Sec 212)

3. To communicate with the principal in the case of difficulty. (Sec 214)

4. To pay sums received for the principal. (Sec 217 & 218)

5. To protect and preserve the interests of the principal in the case of his death or insolvency. (Sec 209)

6. Not to make secret profit from agency . (Sec 216)

7. Not to set up an adverse title.8. Not to Delegate( Sec 190)

9. Not to use information obtained in the course of the agency against the principal.

4- 8DUTIES OF PRINCIPAL

To indemnify the agent against the consequences of all lawful acts (Sec 222)

1. To indemnify the agent against the consequences of acts done in good faith. (Sec 223)

2. To indemnify the agent for injury caused (Sec 225)

3. To pay the agent the commission other remuneration agreed. (Sec 217)

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CLASSIFICATION OF AGENTSClassification according to extent of authority

Special AgentsGeneral agents

Universal AgentsClassification according to nature of work performed by them

1) Commercial or Mercantile Agent

2) Non mercantile Agents

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A General agent is one who is appointed to represent the principal in all the matters concerning a particular business

General Agent

Special Agent

A Special agent is one who is appointed to do some particular act or enter into some particular contract

4- 19Mercantile Agents

• Factor• Auctioneer• Del Credere Agent • Pakka and Katcha adatias• Indentor• Broker• Commission Agent

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Possession of propertySell on credit and in his own nameGeneral lien Cannot BarterCannot Delegate

Factor

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Appointed to sell by auctionDeliver goods on receipt of priceRecover price from highest bidderCan file suit in his own nameParticular Lien

Auctioneer

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Del Credere Agent Agent as well as Guarantor

Pakka AdatiasGuarantees Principal and BrokerCan himself perform

4- 23Katcha Adatias

Guarantees on the part of the Principal

IndentorProcures a sale or purchase on behalf of the principal, with a merchant in the foreign country

4- 24Broker

Engage to buy or sell the propertyMemorandum book- Sold and Bought note

Commission AgentEmployed to buy or sell or to Transact BusinessNot Liable for third party , Particular lienMay or may not have possession

4- 25Non Mercantile Agent

1. Wife2. Insurance Agents3. Legal Duties by Lawyers4. Financial Duties by bankers5. Technical Duties by Engineers.

Rights of Agents

Rights of Retainer (Sec 217): An Agent may retain sums received on account of the principal in the business of agency.

An agent has to account for to his principal is the balance of money received by him as agent after the deduction of monies due to himself from the prinicipal

Right to remuneration: (Sec 219 & 220)

An agent is entitled to remuneration agreed upon for the performance of any act in the business of the agency.

When no specific remuneration has been fixed then the agent is entitled to be paid what is usual and customary in the business in which he has been employed.

But an agent who is guilty of misconduct in the business of the agency is not entitled to any remuneration in respect of that part of the business of the agency which he has mis conducted.

Right of Lien on Principal’s property (Sec 221)

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.

Right to indemnify against consequences of lawful acts:

For Ex : B is at singapore agent of A ,contracts with

C to deliver certain goods to him, A does not sent the goods to B and C sues B for breach of contract.

B informs A of the suit and A authorizes him to defend the suit.

B defends the suit and is compelled to pay damages and cost incurred

In this scenario, A is liable to B for such damages and cost

Right to Indemnify Against Consequences of Acts in Good Faith. (Sec 223)

When one person employs the another to do an act and the agent does in good faith the employer is liable to indemnify the agent.

Compensation for injury caused by principal (Sec 225)

Rights of principal

To Repudiate the contract (Sec 215) He may repudiate the transaction He may affirm the transaction and claim

the benefits He may claim damages

To Claim Benefit ( Sec 216) To Ratify or Disown Agent’s Act ( Sec 196) To revoke Agent’s Authority ( Sec 203) To Claim Loss of Profit ( Sec 211 & 212) To demand Accounts ( Sec 213) To Refuse remuneration when agent is

guilty of misconduct ( Sec 220)