Chapter x (Secs. 182 to 238) of the Indian Contract Act, 1872

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DEFINITION 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.

.

AGENT

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

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ESSENTIALS OF RELATIONSHIP OF AGENCY

• AGGREMENT B/W PRINCIPAL AND AGENTAGGREMENT B/W PRINCIPAL AND AGENT-:-:

Agency depends on agreement but Agency depends on agreement but not necessarily on contract. Any person can not necessarily on contract. Any person can become an agent b/w a principal and the become an agent b/w a principal and the third person. third person.

• INTENTION OF AN AGENT TO ACT ON BEHALF INTENTION OF AN AGENT TO ACT ON BEHALF OF THE PRINCIPAL OF THE PRINCIPAL

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RULES OF AGENCYThere are two important rules of agency:

1.Whatever a person can do personally, he can do through an agent

2.He who does an act through another does it by himself .

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WHO CAN EMPLOY AN AGENT?

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

WHO MAY BE AN AGENT?Acc to sec 184 of ICA any person who is authorized to actsuch a person may be an agent. As the agent does not makecontracts on his own behalf it is not necessary that he shouldhave contractual capacity.

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DIFFERENCE B/W AGENT & SERVANT

An agent is employed to bring the principal into the legal relations with the third persons or to represent him in dealings with third persons. A servant does not ordinarily create legal relations b/w the third person and the employer.

An agent is bound to follow all the lawful instructions of the principal but he is not subject to the direct control and supervision of principal. A servant acts under the direct control and supervision of his employer and is bound to follow all the reasonable orders given to him in the course of his employment.

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Contnd...

An agent may work for several principals at the same time but servant usually serves only one master.

A principal is liable for the wrongs of his agent done within the scope of his authority. A master is liable for the wrongs of the servants if they are committed in the course of his employment.

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CREATION OF AGENCY

1. By express agreement

2. By implied agreement Agency by ESTOPPLE. Agency by Holding out. Agency by necessity.

3. By ratification

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CLASSIFICATION OF AGENTS

Classification according to extent of authoritySpecial Agents

General agents

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

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Mercantile Agents

• Factor

• Auctioneer

• Del Credere Agent

• Pakka and Katcha adatias

• Indentor

• Broker

• Commission Agent

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Possession of propertyPossession of property

Sell on credit and in his own nameSell on credit and in his own name

General lien General lien

Cannot BarterCannot Barter

Cannot DelegateCannot Delegate

Factor

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Appointed to sell by auctionAppointed to sell by auction

Deliver goods on receipt of priceDeliver goods on receipt of price

Recover price from highest bidderRecover price from highest bidder

Can file suit in his own nameCan file suit in his own name

Particular LienParticular Lien

Auctioneer

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Del Credere Agent

Agent as well as Guarantor

Pakka Adatias

Guarantees Principal and Broker

Can himself perform

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Katcha Adatias

Guarantees on the part of the Principal

Indentor

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

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Broker

Engage to buy or sell the property

Memorandum book- Sold and Bought note

Commission Agent

Employed to buy or sell or to Transact Business

Not Liable for third party , Particular lien

May or may not have possession

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Non Mercantile Agent

Wife as an Agent

•Living together and looking for necessaries Husband is not Liable

Expressly forbidden credit

Not necessary

Given money

Trader is told expressly

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If they live apart:-If they live apart:-

No fault of wife, liable to pay for her No fault of wife, liable to pay for her maintenancemaintenance

OrOr

If they live apart:-If they live apart:-

Under no justifiable Circumstances, Under no justifiable Circumstances, she is not her Husband’s agent she is not her Husband’s agent

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Sub agent and Substituted AgentsSec 191:- Sub agent is employed by, and acting under the control of the original agent in the business of the agency

Sec 194:- Where an agent, holding an expressed or implied authority to name another person has named another person, such person is agent of the principal for such part of the business of the agency as is entrusted to him.

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DUTIES OF AGENT

1. To carry out the work undertaken according to the directions given by the principal.

2. To carry out the work with reasonable care, skill and diligence.

3. To communicate with the principal in the case of difficulty.

4. To pay sums received for the principal.

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

6. Not to make secret profit from agency .

7. Not to set up an adverse title.

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

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RIGHTS OF AGENT

1. Right of retainer.

2. Right to receive remuneration.

3. Right of lien.

4. Right of indemnification.

5. Right of compensation.

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DUTIES OF PRINCIPAL

1. To indemnify the agent against the consequences of all lawful acts

2. To indemnify the agent against the consequences of acts done in good faith

3. To indemnify the agent for injury caused by principal’s neglect.

4. To pay the agent the commission other remuneration agreed.

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RIGHTS OF PRINCIPAL

1)To recover damages.

2)To obtain an account of secret profits and recover them and resist a

claim for remuneration.

3) To resist agent’s claim for indemnity against liability incurred.

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TERMINATION OF AGENCY

1. By act of the parties

Agreement

Revocation by the principal

Revocation by the agent

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TERMINATION OF AGENCY CON’T

2. By operation of law

Performance of the contract

Expiry of the time

Death of either party

Insanity of either party

Insolvency of either party

Destruction of the subject matter

Principal becoming an alien enemy

Dissolution of a company

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• Agency is coupled with interest when authority is Agency is coupled with interest when authority is given for the purpose of securing some benefits to given for the purpose of securing some benefits to the agent. the agent.

• The agency cannot, unless there is an express The agency cannot, unless there is an express contract, be terminated to the prejudice of such contract, be terminated to the prejudice of such interest (Sec 202). It becomes irrevocable to the interest (Sec 202). It becomes irrevocable to the extent of such interest and does not terminate even extent of such interest and does not terminate even by the insanity or death of the principal. by the insanity or death of the principal.

• In other words, where the agent himself has an In other words, where the agent himself has an interest in the subject matter of the agency, the interest in the subject matter of the agency, the agency is one coupled with interest.agency is one coupled with interest.

Agency Coupled with interest