Upload
subramanyam-narasapuram
View
239
Download
0
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