Rohan Shah 2014D19

Pranay Pasricha 2014D37

Pratik Das 2014D38
Nikita Rastogi 2014D39
Section 182,
An agent is a person employed to do any act
for another or to represent another in dealing
with third persons. The person for whom such
act is done or who is so represented, is called
the principal

Chapter X of The Indian Contract Act 1872.
The person who delegates the authority is known
as principal.
To whom the power is delegated is known as
agent.
The relationship that is created is known as
agency.

Principal is answerable to third parties for the acts of
agent .
Consideration not necessary Section 185 of the act
clearly lays down, No consideration is necessary to
create an agency
Principal must be competent to employ an agent Only a
person who is competent to contract can employ an
agent. ( Major, Sound Mind ) Section 183

Agent may not have contractual capacity
A minor or a person of unsound mind may act as
an agent & bind the principal to the third persons.
Mahendra Pratap Singh v. Padam
Kumari Devi, AIR 1993 All 182 (Death of
Principal).
A person does not become an agent on behalf of
another merely because he gives him advice in
matters of business.
Every person who acts for another cannot be agent.
Cobbler mending shoes of a man, servant rendering
services for us are not agents.
The essential condition is that whether he is clothed
with a necessary authority by another ( principal ) to
bind him & make him ( principal ) answerable to the
third persons & thus establishing a privity contract
between that third person & the principal.
If this condition is satisfied then a person is considered
as an agent.
Special Agents who is employed to do some
particular act or represent his principal in some
particular transaction. As soon as the act is performed
the authority of agent comes to an end. E.g. An agent
engaged to sell a house.
General Agent who is employed to do all such acts
which are connected with the business of trade of his
employer. If principal limits authority secretly, he
himself will be bound
Universal Agent is one who is employed to all
such act which a principal can lawfully do & can
delegate. Agent has unlimited authority.
FROM THE POINT OF VIEW OF NATURE OF
WORK TO BE PERFORMED:
1. Factors is a mercantile agent to whom the
possession of goods are given for the purpose of
selling them. He usually sells the goods in own
name. He can exercise a general right of lien on
the goods delivered to him for balance of
payment if any.
2. Auctioneer is an agent who is appointed by
the principal to sell the goods on his behalf at a
public auction for a reward in form of commission.
E.g. reserve price
3. Broker is an agent appointed by the principal
for the purpose is selling or buying goods on his
behalf. He do not have possession of goods nor
he can contract in his own name. He bring seller
& buyer together to bargain. He gets commission
( brokerage ).
4. Commission Agent is a mercantile agent who
is employed to buy & sell goods for his principal
on best possible terms. He transact in his own
name. He is entitled to commission. He may or
may not have possession.
5. Del credere Agent is one who guarantees to
his principal, the performance of the financial
obligation by party with whom he enters into a
contract on principal behalf, in consideration of an
extra commission. He becomes surety & become
liable on the default of third party.
6. Banker act as a mercantile agent on behalf of
his customer when he collects cheques, drafts,
bills & pay insurance premium & buy or sell
securities.
By express agreement authority is given to
agent in written or by words of mouth. He can
bind the principal to the third parties by his acts to
the extent he is delegated with the authority.
By implied agreement
1. Agency by Estoppel Where a person permit
another to act on his behalf. Principal is stopped
from denying his agents authority.
E.g. A tell B in the presence of P that A is the agent of P. P
does not contradict the statement. B enter into the
contract with P on the belief that A is Ps agent. In such
case P would be bound by the contract.
He is not the agent
He ceases to be an agent
2. Agency by holding out Some positive conduct of the
principal indicates that a particular person is his agent.
P sends A to buy goods on credit from C.
A buys goods on credit for himself & refuses to pay. C sue
P. P cannot plead that A had no authority.
3. Agency by necessity When an agency is
created by the circumstances. The impossibility of
getting the instructions from the principal is the
basis of creation of agency by necessity.
E.G. X sent some horses to Y through a railway
company. But Y did not take the delivery of the
horses at the destination with the result the
railway company had to feed the horses. Held,
the railway co. was an agent of necessity & could
recover the amount spent on feeding the horses.
4. Agency by ratification Ratification
means subsequent adoption or acceptance by a
person of an unauthorized act done by another
on his behalf without any authority.
X buys 5 bags of wheat on behalf of Y without his
knowledge or authority. Y would be bound by the
contract, if he ratify or accept the same.
It can be expressed or implied
1. Act must have been done as agent on behalf of
principal identifiable Only the person on whose
behalf the act is done can ratify it. If the agent act
in his own name, his act cannot be ratified by any
other person.
Case: Keighley Maxeted & co. Duarnt X was
authorised by Y to buy wheat at certain price. X
exceeded his authority & purchased wheat from Z
at a higher price in his own name. He did not
profess to buy wheat on behalf of Y.
Subsequently Y ratified the act of X but later
refused to take delivery of the wheat. Z sue Y.
Held, the contract could not be ratified because X
did not purport to act as an agent of Y.
2. The principal must be in existence. Eg company
and promoters
3. The principal must be competent to ratify the act
must have contractual capacity. A minor cannot
ratify the contract a contract on attaining the age
of majority.
4. The principal must have the full knowledge of all
the material facts X bought certain goods for Y
at the price greater than the market value in the
name of Y. Y ratified the transaction without
knowing the same ( high price ) . The ratification
is invalid.
5. The principal must ratify the whole transaction.
6. Ratification must be made within reasonable
time.
7. Act to be ratified must not be void or illegal.
8. Ratification must be communicated.
To follow principals directions An agent must
act within the scope of the authority conferred on
him. An agent was instructed to insure goods. He
failed to do so. The goods were destroyed. He
was held liable to the extent of loss.
To follow the customs in the absence of
instructions B, a broker, in whose business, it is
not the custom to sell on credit, sell goods of A on
credit to C, whose credit at the time was very
high. C, before payment, becomes insolvent. B
must make good the loss to A.
To conduct business with reasonable care skill &
diligence A, an agent for the sale of goods,
having authority to sell on credit, sells to B on
credit, without making the proper & usual
enquires as to the solvency of B. B at the time of
such sale, is insolvent. A must make
compensation of his principal in respect of any
loss thereby sustained.
To keep & render accounts to principal when
demanded.
To communicate with principal.
Not to deal on his own account If an agent
wants to deal on his own account, he must seek
the consent of the principal first & must acquaint
him with all the material facts. ( Purchase )
Not to make secret profits ( Bribe ) Agency is a
fiduciary relation.
To pay sum received he can deduct his
remuneration & all expenses incurred in
conducting business.
Right of retainer (Sec 217) The agent has a
right to retain, out of any sums received, all
money due to him in respect of remuneration,
advance made, expenses incurred in
conducting business.
Right to receive remuneration if he has
completed his task. He is not entitled to any
remuneration for part transaction (Sec 219).
Right of lien (Sec-221) he has right to exercise
particular lien over the goods, paper, property
until the amount due to him for commission,
expenses has been paid.
Right of indemnity (Sec. 222):The employer of an
agent is bound to indemnify him against the
consequences of all lawful acts done by such
agent in exercise of the authority conferred upon
him.



Right to compensation for injury caused due to
negligence of the principal: The principal must make
compensation to his agent in respect of injury caused
to such agent by the principal's neglect or want of skill
Right of stoppage in transit: This right is available
under the Sale of Goods Act, An agent can exercise
this right in two cases:

1. Where the agent has incurred personal liability by
purchasing goods for the principal, he has a right to
stop the goods in transit, if the goods have been
delivered to a carrier.
2. Where the agent has sold the goods to a buyer and
the agent is personally liable for the price of the goods.
Right to appoint sub-agent or substituted
agent in certain cases: Where the agent has
express or implied authority to appoint a sub-
agent or substituted agent, he can appoint
another person to act for the principal.
Right to compensation for premature
revocation of agency (Sec. 205): In case there
is an express or implied contract, that agency
should be continued for any fixed period of
time, the principal is liable to pay
compensation to the agent for a premature
revocation.

To pay remuneration to agent
To recover compensation for breach of duty by
the agent
To forfeit agents remuneration where he is
guilty of misconduct
To receive any extra profit made by agent.
To enforce the various duties of the agent.
To receive all sums
By act of parties:
1. By agreement mutual consent
2. By revocation of authority by the principal
The principal can revoke the authority of an
agent at any time before the authority has
been exercised as to bind the principal.
3. By renunciation by the agent by giving
reasonable notice.
Termination by operation of law:
1. By performance of contract of agency.
2. By death of principal or agent.
3. By expiry of time where agency is for fixed
time period.
4. By insolvency of the principal.
5. By destruction of subject matter agency was
created to sell a house & house destroys.
6. By becoming alien enemy where principal &
agent are from different countries.
The agency which a principal cannot revoke is
known as irrevocable agency.
1. Where the agency is coupled with interest A
gives authority to B to sell As land & to pay
himself out of the proceeds, the debt due to
him from A. A cannot revoke this authority.
2. Where the agent has incurred personal liability
Where the agent has bought goods in his
own name principal cannot refuse to pay.
3. Where the authority has been exercised party
X authorizes Y to buy 10 bags of wheat on his
account. Y buys 10 bags of wheat in the name of
X. X cannot revoke the authority.





THANK YOU!