kle-bl-m12
TRANSCRIPT
-
7/27/2019 KLE-BL-M12
1/16
AGENCY
S 182 An agent is a person employed to do any act foranother 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 agentsrepresentative 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.
-
7/27/2019 KLE-BL-M12
2/16
ESSENTIALS
1. There must be a contract
2. Employing a person to act for another or torepresent 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
-
7/27/2019 KLE-BL-M12
3/16
Other features
Who may employ agent Any person who iscompetent to contract i.e. a major who is of soundmind may employ an agent. Whatever a person can dopersonally he can do through an agent.
Who may be an agent - Any person may be appointedas an agent. However where an agent is a minor or of
unsound mind, the principal shall be bound to the thirdpersons but the agent shall not be responsible to theprincipal. This is because a person who has nocapacity to enter into contract cannot bind himself.
No consideration- No consideration is necessary to
create a contract of agencyAgents are paid commission/ remuneration
only when they do acts for the principal or theyrepresent the principal.
-
7/27/2019 KLE-BL-M12
4/16
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 bea) 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 andmake 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.
-
7/27/2019 KLE-BL-M12
5/16
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.
-
7/27/2019 KLE-BL-M12
6/16
APPOINTMENT OF AN AGENT- The appointment of an
agent may be either express or implied. It is expresswhen he is appointed by a contract expressed either inwriting or orally
Ex: A gives a power of attorney to B to transact hisbusiness 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 theconduct or relationship of the parties . Thus whenever aa person places another in a situation in which that other
is understood to represent or to act for him he becomesan implied agent.
Ex: A meets with an accident and is injured. He is in needof medical assistance. B calls for the services of a
doctor. B acts as an agent of A impliedly .
-
7/27/2019 KLE-BL-M12
7/16
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 business3) the usual trade customs & usages.
If the agent exceeds his authority the
principal is not bound by the unauthorised work
done by agent.
-
7/27/2019 KLE-BL-M12
8/16
Sub-Agent - Ordinarily an agent cannot delegatehis authority i.e an agent cannot appoint a sub-agent to his principal because when a principalappoints a person as his agent he invests(reposes) trusts & confidences in the agent. Anagent may appoint a sub-agent if the principalpermits. 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 theappointment of a sub-agent is improper theprincipal is not bound by his acts.
The sub-agent is responsible for hisacts to the agent and the agent is responsible tothe principal for the acts of the sub-agent.
-
7/27/2019 KLE-BL-M12
9/16
DUTIES OF AGENT
1) TO FOLLOW INSTRUCTIONS- An agent isduty bound to carry out the instructions of hisprincipal in conducting his business. If theagent fails to do so and any loss is incurred hewill be held responsible for such loss to the
principal.
2) To exercise reasonable skill & diligence- Anagent must exercise reasonable skill &diligence in the conduct of business. He isexpected to act with as much skill as isgenerally possessed by persons engaged insimilar business. If any loss is caused to theprincipal due to neglect or want of skill on the
part of agent, then agent is responsible for it.
-
7/27/2019 KLE-BL-M12
10/16
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, hemust not make secret profits in the business of
agency. If he does so , the principal can claim
the secret profits from him.
-
7/27/2019 KLE-BL-M12
11/16
6) To remit sums- The agent is bound to pay to hisprincipal all sums received on his account. He
may however deduct his lawful charges.7) Not to delegate authority- An agent must notdelegate his authority to another person exceptthe consent of his principal or where the
delegation is permitted by ordinary custom oftrade .
8) To communicate in case of emergency- In caseof an emergency an agent must promptly
communicate with his principal and obtain hisinstructions.
-
7/27/2019 KLE-BL-M12
12/16
RIGHTS OF A AGENT
1) Right to retention An agent has a right to retain fromthe money received in the course of agency , thefollowing sums
a) all money due to him in respect of advances
made or expresses incurred by him in conductingagency business
b) remuneration payable to him for acting as agent.
2) Right to remuneration An agent is entitled to his
agreed remuneration or when there is no agreementas to remuneration, then to a reasonableremuneration. An agent gets this right only when hehas completed the business of agency.
-
7/27/2019 KLE-BL-M12
13/16
3) Right of lien- An agent may retain goods,
papers and other movable or immovableproperty 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 theconsequences of all lawful acts done by theagent in exercise of his authority.
5) Right to compensation Where an agent
suffers loss due to the principals neglect orwant of skill, he has a right to be compensatedby the principal.
-
7/27/2019 KLE-BL-M12
14/16
DUTIES OF PRINCIPAL
1) To indemnify or compensate his agent in
respect ofa) a lawful act done by agent within his authority.
b) an act done by agent in good faith, causing aninjury to the right of third person.
c) any injury suffered by agent due to theprincipals neglect or want of skill.
2) To compensate for revocation- Where agency iscreated for a fixed period and principal revokes
the agency before the expiry of the contractedperiod without sufficient cause, the principalmust compensate the agent for the same.
-
7/27/2019 KLE-BL-M12
15/16
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 thatperiod 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.
-
7/27/2019 KLE-BL-M12
16/16
TERMINATION OF AGENCY
1) COMPLETION OF AGENCY BUSINESS
2) DEATH OR INSAUITY OF PRINCIPAL OR AGENT
3) INSOLVENCY OF PRINCIPAL4) RENUNCIATION BY AGENT- NOTICE TO
PRINCIPAL
5) REVOCTION BY PRINCIPAL- NOTICE TO AGENT
COMPOSITION IF WITHOUT SUFFICIENT CAUSE.6) EXPIRY OF TIME- IF FOR FIXED TIME