AGENCY

• Defined in Indian Contract Act 1872 .

• Agency is a special type of contract.
• It consists of
1. Agent
2. Principal
 CONTRACT OF AGENCY
• The principles of contract of agency are –
• (a) Excepting matters of a personal nature,
what a person can do himself, he can also do it
through agent
• (b) A person acting through an agent is acting
himself, i.e. act of agent is act of Principal.
 AGENT AND PRINCIPAL DEFINED [section 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”.
 WHO MAY EMPLOY AGENT
• Section 183
• Any person who is
1. of the age of majority according to the law to
which he is subject,
2. and who is of sound mind, may employ an
agent.
WHO MAY BE AN AGENT
 AUTHORITY OF AGENT

• Express
• Implied
• Apparent Authority:
• Emergency Powers
• Ratification
 AGENT’S DUTY TO PRINCIPAL

• OBEY THE INSTRUCTIONS

• SHOWING OF ACCOUTNS
• CONDUCTING BUSINESS
• RETURN OF UNDUE PROFIT
• USE OF SKILL AND KNOWLEDGE
• PAYMENT OF ALL SUMS
• SEPARATE ACCOUNTS
• DUTY IN CASE PRINCIPAL DIE OR BECOME INSANE
• NOT TO DELEGATE AUTHORITY
• DUTY TO COMMUNICATE WITH PRINCIPAL
• SHOULD NOT MAKE ANY SECRET PROFIT
• PERFORMANCE WITH HONESTY
 The Rights of the Agent

• RIGHT OF COMPENSATION
• RIGHT OF REMMUNERATION
• RIGHT OF COMMISSION
• RIGHT OF LIEN:
• RIGHT TO RETAIN
• RIGHT TO BE INDEMNEFIED
• RIGHT TO BE INDEMNIFIED AGIANST
CONSEQUENCES OF ACTS DONE IN GOOD FAITH
• RIGHT OF STOPAGE OF GOODS IN TRANSIT
 Types of Agency

• Sole selling agent

• Sub agent
• Mercantile agent
• Factor
• Forwarding or Clearing Agent
• Insurance Agent
• Director Agent
• Auctioneer
• Estate Agent
• Broker etc
 Agents under the Companies Act

• Sole Selling Agent

• Managing Director
• Manager
 Sub Agents:

• Sub agents are generally of three types

1. Those employed without the express or implied authority
of the principal and by whose acts the principal is not
bound;
2. Those employed with express or implied authority of the
principal but between whom and the principal there is no
privity of contract;
3. Those employed with the express authority of the
principal and between whom and the principal there is a
privity of contract and a direct relationship of principal
and agent is accordingly established.
 RIGHTS OF PRINCIPAL
• Recover damages from agent if he disregards
directions of Principal
• Obtain accounts from Agent
• Recover moneys collected by Agent on behalf of
Principal
• Obtain details of secret profit made by agent and
recover it from him
• Forfeit remuneration of Agent if he misconducts
the business.
 DUTIES OF PRINCIPAL
• Pay remuneration to agent as agreed
• Indemnify agent for lawful acts done by him as
agent
• Indemnify Agent for all acts done by him in
good faith
• Indemnify agent if he suffers loss due to
neglect or lack of skill of Principal.
 TERMINATION OF AGENCY
By the act of parties: An agency comes to an end by act of parties in the
following cases:
• Mutual agreement
• Principal revoking his authority
• The agent renouncing the business of the agency
Termination by operation of law: An agency comes to an end
automatically by operation of law in the following cases:
• The business of the agency being completed
• Expiry of time
• Either the principal or agent dying or becoming of unsound mind
• The principal being adjudicated an insolvent under the provisions of
any Act for the time being in force for the relief of insolvent debtors.
 REFERENCES:-

• Mercantile law by MC kuchhal

• http://legalservices.co.in
• http://business.gov.in
• http://www.helplinelaw.com
• http://www.nativecontractors.org
• http://www.docstoc.com