Law of AgencyLaw of AgencyAgent:Agent: is a person employed to do any act for is a person employed to do any act for another or to represent another in dealings with another or to represent another in dealings with third personsthird personsPrincipal:Principal: the person for whom such act is done the person for whom such act is done or who is so represented is called the Principalor who is so represented is called the PrincipalFunction of a agentFunction of a agent: is to bring his principal into : is to bring his principal into contractual relations with third persons contractual relations with third persons Essentials of relationship of agencyEssentials of relationship of agency

1. Agreement between the principal and the agent1. Agreement between the principal and the agent

2. Intention of agent to act on behalf of the principal2. Intention of agent to act on behalf of the principal

Kinds of AgentsKinds of AgentsBased on Extent of authorityBased on Extent of authority

•Special agentSpecial agent•General agentGeneral agent•Universal agentUniversal agent

Nature of Work performedNature of Work performedCommercial or mercantile agentCommercial or mercantile agent

FactorFactor

AuctioneerAuctioneer

BrokerBroker

Commission agentCommission agent

Del credere agentDel credere agent

BankerBanker Non-mercantile agentsNon-mercantile agents

Duties of a AgentDuties of a AgentTo carry out the work undertaken according to the directions To carry out the work undertaken according to the directions given by the principalgiven by the principal

To carry out the work with reasonable care, skill and To carry out the work with reasonable care, skill and diligencediligence

To render proper accounts to his principalTo render proper accounts to his principal

To communicate with the principal in the case of difficultyTo communicate with the principal in the case of difficulty

Not to deal on his own accountNot to deal on his own account

To pay sums received for the principalTo pay sums received for the principal

Duties of a Agent Duties of a Agent (Contd..)(Contd..)

To protect and preserve the interests of principal in case of To protect and preserve the interests of principal in case of death or insolvencydeath or insolvency

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

Not to make secret profit from AgencyNot to make secret profit from Agency

Not to set up an adverse titleNot to set up an adverse title

Not to put himself in a position where interest and duty Not to put himself in a position where interest and duty conflictconflict

Not to delegate authority Not to delegate authority

Rights of AgentsRights of AgentsRight of “Retainer”Right of “Retainer”

Right to receive RemunerationRight to receive Remuneration

Right of lienRight of lien

Right to receive compensationRight to receive compensation

Duties of PrincipalDuties of PrincipalTo Indemnify the agent against the consequences of all lawful actsTo Indemnify the agent against the consequences of all lawful acts

To indemnify the agent against the consequences of acts done in good To indemnify the agent against the consequences of acts done in good faithfaith

To indemnify agent for injury caused by principal’s neglectTo indemnify agent for injury caused by principal’s neglect

To pay agent the commission or other remuneration agreedTo pay agent the commission or other remuneration agreed

Rights of PrincipalRights of PrincipalToTo recover damagesrecover damages

To obtain an account of secret profits and recover them and resist a To obtain an account of secret profits and recover them and resist a claim forclaim for remunerationremuneration

To resist agent’s claim for indemnity against liability incurredTo resist agent’s claim for indemnity against liability incurred

Creation of AgencyCreation of Agency

By Express agreementBy Express agreement By Implied agreementBy Implied agreement

• Agent by estoppelAgent by estoppel• Agency by holding outAgency by holding out• Agent by necessityAgent by necessity

By operation of LawBy operation of Law By RatificationBy Ratification

Requisites for valid ratificationRequisites for valid ratification Agent must propose and is identifiableAgent must propose and is identifiable Principal must be in existence at the time of contractPrincipal must be in existence at the time of contract Principal should have contractual capacityPrincipal should have contractual capacity Ratification must be with full knowledge of factsRatification must be with full knowledge of facts Must be done within reasonable time of act proposedMust be done within reasonable time of act proposed Act to be rectified must be lawfulAct to be rectified must be lawful Whole transaction must be ratifiedWhole transaction must be ratified Ratification must be communicatedRatification must be communicated Ratification must be of acts which the principal had the power Ratification must be of acts which the principal had the power

to doto do Should not put a third party to damageShould not put a third party to damage

Termination of AgencyTermination of Agency Act of PartiesAct of Parties

By mutual agreementBy mutual agreement By Revocation by the principalBy Revocation by the principal By Renunciation by the agentBy Renunciation by the agent

Operation of LawOperation of Law By PerformanceBy Performance By Death of partyBy Death of party By insolvency of either of the partyBy insolvency of either of the party By expiry of timeBy expiry of time By insanity of either partyBy insanity of either party By destruction of subject matterBy destruction of subject matter By Principal becoming an alien enemyBy Principal becoming an alien enemy By dissolution of the companyBy dissolution of the company By termination of sub agent’s authorityBy termination of sub agent’s authority

Bailment:Bailment:" A bailment is the delivery of goods by one person to " A bailment is the delivery of goods by one person to another person for some purpose, upon a contract that another person for some purpose, upon a contract that they shall, when the purpose is accomplished, be they shall, when the purpose is accomplished, be returned or otherwise disposed of , according to the returned or otherwise disposed of , according to the directions of the person delivering them.”directions of the person delivering them.”

The person delivering the goods is called the The person delivering the goods is called the BailorBailorThe person to whom they are delivered is called the The person to whom they are delivered is called the BaileeBailee

Essentials of BailmentEssentials of Bailment Contract for delivery of goods and taking back the goodsContract for delivery of goods and taking back the goods Delivery of goods by the Bailor to BaileeDelivery of goods by the Bailor to Bailee Entrustment of goods should be for some purposeEntrustment of goods should be for some purpose Bailment relates only to Bailment relates only to Chattels Chattels (i.e., movable property)(i.e., movable property)

ConsiderationConsideration In the form of money In the form of money In the form of benefit derived by each otherIn the form of benefit derived by each other

Classification of bailmentClassification of bailment For the exclusive benefit of Bailor (for safe custody of goods)For the exclusive benefit of Bailor (for safe custody of goods) For the exclusive benefit of Bailee (Lending without charge)For the exclusive benefit of Bailee (Lending without charge) For mutual benefit of both the parties (repairing)For mutual benefit of both the parties (repairing)

Types of bailmentTypes of bailment Gratuitous bailment Eg. lending book to a friend without chargeGratuitous bailment Eg. lending book to a friend without charge Non- Gratuitous bailment Eg.lending something for chargesNon- Gratuitous bailment Eg.lending something for charges

Duties of BailorDuties of Bailor Disclose known faults pertaining to the goodsDisclose known faults pertaining to the goods To bear extra ordinary expenses of bailmentTo bear extra ordinary expenses of bailment To indemnify the Bailee for any loss on account of premature To indemnify the Bailee for any loss on account of premature

termination of bailmenttermination of bailment To receive back the goods bailedTo receive back the goods bailed To indemnify the BaileeTo indemnify the Bailee

Rights of BailorRights of Bailor To enforce terms of contract and rights conferred under statuteTo enforce terms of contract and rights conferred under statute Right of avoidance of contractRight of avoidance of contract To demand the Bailee to return the goods lent gratuitouslyTo demand the Bailee to return the goods lent gratuitously Right to file a joint suit for compensation against a wrong-doerRight to file a joint suit for compensation against a wrong-doer

Duties of the BaileeDuties of the Bailee Proper care for goodsProper care for goods Not to make unauthorized use of goodsNot to make unauthorized use of goods Not to mix bailed goods with his own goodsNot to mix bailed goods with his own goods Paying compensation for the damages (in case of mixing of bailed goods Paying compensation for the damages (in case of mixing of bailed goods

with own goods)with own goods) Not to setup adverse titleNot to setup adverse title Duty to return accretion of goods eg.delivery of cow with calfDuty to return accretion of goods eg.delivery of cow with calf Bailee to return goodsBailee to return goods

Rights of the BaileeRights of the Bailee Deliver goods to one of the joint bailorsDeliver goods to one of the joint bailors To deliver goods to Bailor, even if the Bailor has no titleTo deliver goods to Bailor, even if the Bailor has no title Right to apply to the courtRight to apply to the court Right of action against trespassersRight of action against trespassers Right of Bailee’s lien or particular lienRight of Bailee’s lien or particular lien

Termination of Bailment

On the expiry of the periodOn the expiry of the period On the achievement of objectOn the achievement of object Inconsistent use of goodsInconsistent use of goods Destruction of subject matterDestruction of subject matter Gratuitous bailmentGratuitous bailment Death of bailor or baileeDeath of bailor or bailee

Pledge: The bailment of goods as security for payment of a debt or performance of promise

Bailor- pledger or pawnorBailee- pledgee or pawnee

Difference between Pledge & Bailment:PurposeRight to sell GoodsRight to use goods

Rights of PawneeRights of Pawnee Right of retainerRight of retainer Right of retainer for subsequent advancesRight of retainer for subsequent advances Right of extraordinary expensesRight of extraordinary expenses Right against true owner, when pawnor’s title is defectiveRight against true owner, when pawnor’s title is defective Rights where pawnor makes defaultRights where pawnor makes default

*file suit against pawnor*file suit against pawnor

* sell goods* sell goods

*Recover from pawnor (deficiency arising after sale)*Recover from pawnor (deficiency arising after sale) Right to sue for loan advancedRight to sue for loan advanced

Rights of pawnorRights of pawnor Right to get back goodsRight to get back goods Right to redeem debtRight to redeem debt Preservation and maintenance of goodsPreservation and maintenance of goods