BLAW Contract of Agency

Embed Size (px)

Citation preview

  • 8/12/2019 BLAW Contract of Agency

    1/23

    Unit IV

    Contract of Agency

  • 8/12/2019 BLAW Contract of Agency

    2/23

    Introduction

    The Law relating to agency is contained in thechapter X (Sec. 182-238) of the Indian Contract

    Act, 1872. An agent is a person employed to do any act for

    another, or to represent another in dealings withthird persons (Sec.182)

    The person for whom such act is done, or who isso represented is called as the principal.

    An agent is merely a connecting link between thePrincipal and the third parties.

  • 8/12/2019 BLAW Contract of Agency

    3/23

    Who can employ an agent?

    Any person who is of the age of majorityaccording to the Law to which he is subject, andwho is of sound mind, may employ an agent(Sec. 183). A person such as a lunatic, minor ordrunken person cannot employ an agent.

  • 8/12/2019 BLAW Contract of Agency

    4/23

    Creation of Agency

    The relationship of Principal and Agent mayarise by:

    Express Agreement

    Implied Agreement

    Ratification

    Operation of Law.

  • 8/12/2019 BLAW Contract of Agency

    5/23

    Creation of Agency

    Agency by express agreement

    The usual form of a written contract of agency isthe power of attorney on a stamped paper as aformal instrument.

    Agency by implied agreement

    It arises from the conduct, situation, orrelationship of the parties and also may beaccounted as the circumstances of the case (Sec.187)

  • 8/12/2019 BLAW Contract of Agency

    6/23

    Creation of Agency

    Agency by implied agreement

    Agency by estoppel

    Agency by holding out

    Agency by necessity

    Agency by Ratification

    A person may act on behalf of another withouthis knowledge or consent if the agent is ratifiedby the principal.

  • 8/12/2019 BLAW Contract of Agency

    7/23

    Creation of Agency Requisites of Valid Ratification:

    The agent must purport to act as agent for a principal

    who is in contemplation and is identifiable at the timeof the contract.

    The principal must be in existence at the time of thecontract.

    The principal must have contractual capacity both at

    the time of contract and at the time of ratification. Ratification must be with full of knowledge of facts, in

    reasonable time. The act must be lawful and to be communicated to the

    party who is sought to do after ratification.

  • 8/12/2019 BLAW Contract of Agency

    8/23

    Creation of Agency

    Agency by Operation of Law

    When a company is formed, its promoters are itsagents by operation of Law.

  • 8/12/2019 BLAW Contract of Agency

    9/23

    Kinds of Agents

    Sub Agent: A Sub-Agent is a person employed byand acting under the control of the originalagent in the business of the agency. (Sec. 191)

    Co-Agent or Substituted Agent: He is the agent

    of the principal, though he is named at therequest of the principal, by the agents.

  • 8/12/2019 BLAW Contract of Agency

    10/23

    Relations of Principal and Agent

    Duties of an agent To carryout the work undertaken according to the

    directions given by the Principal (Sec.211). To carryout the work with reasonable care, skill

    and diligence (Sec.212) To render proper accounts to his Principal

    (Sec.213) To communicate with the principal in case of

    difficulty (Sec.214) Not to deal on his own account.

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

  • 8/12/2019 BLAW Contract of Agency

    11/23

    Relations of Principal and Agent

    Duties of an agent

    To protect & preserve the interests of the principalin case of his death and insolvency. (Sec. 209)

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

    Not to make secret profits from the agency.

    Not to set up an adverse title.

    Not to put himself in a position where interest andduty conflicts.

    Not to delegate authority. (Sec.190).

  • 8/12/2019 BLAW Contract of Agency

    12/23

    Relations of Principal and Agent

    Rights of an agent:

    Right of retainer (sec.217)

    Right to receive remuneration (Sec.219)/ formisconduct, no remuneration (Sec. 220)

    Right of Lien (Sec. 21)

    Right of indemnification (Sec. 222) Right of Compensation

    Right of stoppage in transit.

  • 8/12/2019 BLAW Contract of Agency

    13/23

    Relations of Principal and Agent

    Duties of Principal:

    To indemnify the agent against the consequencesof all lawful acts. (Sec. 222)

    To indemnify the agent against the consequencesof acts done in good faith (Sec. 223)

    To indemnify agent for injury caused byprincipals neglect.

    To pay the agent the commission or otherremuneration agreed.

  • 8/12/2019 BLAW Contract of Agency

    14/23

    Relations of Principal and Agent

    Rights of a Principal:

    To recover damages

    To obtain an account of secret profits and recoverthem & resist a claim for remuneration.

    To resist agents claim for indemnity againstliability incurred.

  • 8/12/2019 BLAW Contract of Agency

    15/23

    Relation of Principal with third parties

    According to Sec. 226, the acts of an agentwithin the scope of his authority bind the

    principal. The authority of the agent to bind theprincipal may be:

    Actual or real authority (Restricted)

    Ostensible or Apparent authority (Situational) Agents authority in an emergency.

  • 8/12/2019 BLAW Contract of Agency

    16/23

    Personal Liability of an agent

    An agent is personally liable when

    The contract expressly provides. The agent acts for a foreign principal.

    He acts for an undisclosed principal.

    He acts for a principal who cannot besued.

    Signs a contract in his own name.

    Acts for a principal not in existence.

  • 8/12/2019 BLAW Contract of Agency

    17/23

    An agent is personally liable when

    He is liable for breach of warranty ofauthority.

    He receives or pays money by mistake orfraud.

    His authority is coupled with interest.

    Where the trade usage or custom makeshim personally liable.

  • 8/12/2019 BLAW Contract of Agency

    18/23

    Termination of Contract of Agency

    An agency contract is similar to other contractsin that it can be termianted by:

    Acts of the parties

    Operation of Law

    Once an agency relationship is terminated, theagent can no longer represent the principal orbind the principal to contracts.

  • 8/12/2019 BLAW Contract of Agency

    19/23

    Termination of Contract of Agency

    Termination by Acts of the parties

    An agency may be terminated by the following acts

    of the parties:

    Mutual agreement

    Lapse of time

    Purpose achieved Occurrence of a specified event

  • 8/12/2019 BLAW Contract of Agency

    20/23

    Termination of Contract of Agency

    Termination by Operation of Law:

    An agency is terminated by operation of Law by

    Death of the principal or agent

    Insanity of the principal or agent

    Bankruptacy of the principal

    Impossibility of performance

    Changed circumstances

    War between the principals and agents countries

  • 8/12/2019 BLAW Contract of Agency

    21/23

    Termination of Contract of Agency

    Irrevocable Agency:

    An agency coupled with an interest of:

    Special type of agency relationship

    Not terminated by the death or incapacity of eitherthe principal or the agent

    Terminates only when the agents obligations are

    performed.

  • 8/12/2019 BLAW Contract of Agency

    22/23

    Termination of Contract of Agency

    Wrongful termination of an agency:

    The termination of an agency contract in violation

    of the terms of the agency contract.

    The non breaching party may recover damagesfrom the breaching party.

    The distinction between the power and the right toterminate an agency is critical.

  • 8/12/2019 BLAW Contract of Agency

    23/23

    THANK YOU