Introduction:- According to sec.182 of the Indian Contract Act,1872 "an agent is a person employed to do any act for another or to present another in dealings with third person. The person for whom such act is done, or who is so represented, is called the Principal".
In an agency one person (principal) employs another person (agent) to represent him or to act on his behalf, in dealings with a third person. The act of the agent binds the Principal in the same manner in which he would be bound if he does that act himself.
In an agency one person (principal) employs another person (agent) to represent him or to act on his behalf, in dealings with a third person. The act of the agent binds the Principal in the same manner in which he would be bound if he does that act himself.
Rights and duties between principal and agent:
The act provides for the following mutual rights and duties between principal and agent.
Duties of Agent:
The act provides for the following mutual rights and duties between principal and agent.
Duties of Agent:
1.Duty not to delegate his duties (sec.190):- When an agent is undertaken to perform certain duties personally, he is not allowed to delegate his duties personally, he is not allowed to delegate his duties to another person. This rule is based on the Maxim "Delegatus non potest delegare" which means that an agent to whom some authority has been delegated can't further delegate that authority to another person. But however this rule has some exception where an agent can delegate his duty to another person i.e., sub-agent. That exceptions are like-
a. When there is a custom of trade to that effect the agent may employ a sub-agent.
b. When the nature of agency so requires, an agent must employ a sub-agent e.g, an agent authorized to recover engage a lawyer for the purpose.
c. When an act does require personal skill, the same may be get done through a sub-agent. For instance to transfer goods from one place to another, the agent may get the work done from a sub-agent.
d. When the Principal, expressly or impliedly, agrees to the appointment of a sub-agent for doing certain work, a sub-agent may be validly appointed.
2. Agent's duty to follow Principal's directions (sec.211):- According to Sec.211, an agent has a duty to follow the directions given to him by te principal. As stated in this section-
a. An agent is bound to conduct the business of his principal According to the direction given by the Principal, or
b. If there are no such directions, the agent should conduct the business according to the custom which prevails in doing business of the same kind at the place where the agent conducts such business.
When the agent doesn't act as stated above, if any loss is sustained by the Principal, he must make it good to his principal and if any profit accrues, he must account for it.
Than for e.g., Lily vs Doubleday, an agent was instructed to warehouse his principal's goods at a particular place. He placed a part of them at a different warehouse which was equally safe. But the good were destroyed without negligence.
The agent was held liable for the loss. Any disability, or departure from, the instructions make the angent absolutely liable for the loss.
a. When there is a custom of trade to that effect the agent may employ a sub-agent.
b. When the nature of agency so requires, an agent must employ a sub-agent e.g, an agent authorized to recover engage a lawyer for the purpose.
c. When an act does require personal skill, the same may be get done through a sub-agent. For instance to transfer goods from one place to another, the agent may get the work done from a sub-agent.
d. When the Principal, expressly or impliedly, agrees to the appointment of a sub-agent for doing certain work, a sub-agent may be validly appointed.
2. Agent's duty to follow Principal's directions (sec.211):- According to Sec.211, an agent has a duty to follow the directions given to him by te principal. As stated in this section-
a. An agent is bound to conduct the business of his principal According to the direction given by the Principal, or
b. If there are no such directions, the agent should conduct the business according to the custom which prevails in doing business of the same kind at the place where the agent conducts such business.
When the agent doesn't act as stated above, if any loss is sustained by the Principal, he must make it good to his principal and if any profit accrues, he must account for it.
Than for e.g., Lily vs Doubleday, an agent was instructed to warehouse his principal's goods at a particular place. He placed a part of them at a different warehouse which was equally safe. But the good were destroyed without negligence.
The agent was held liable for the loss. Any disability, or departure from, the instructions make the angent absolutely liable for the loss.
3. Duty to show proper skill and care (sec.212)- Sec.212 lays down the standard of care and skill required by an agent,
a. Common law requires an agent to act with due care and skill in performing his duties. Agent who fails to meet this standard are prima facie negligent.
b. Generally speaking, an agent in a certain profession, trade or calling who perform his duty with the degree of care and skill elected of a reasonable, average member of the relevant profession, trade and calling meeds the requisite standard.
The agent is bound to act with reasonable diligence, and such skill he possesses ; and to make compensation to his principal in respect of the direct consequences of his neglect, one of skill or misconduct, but not in respect of loss or damage which are indirectly or remotely caused by such neglect, want if skill, or misconduct.
In Keppel v. Wheeler, the Principal instructed and estate agent to find a buyer for his estate. The agent communicated an offer of a prospective purchaser who was willing to buy the estate for £6150 before the contract for sale was concluded, the agent get an offer of £6759 from another buyer. The agent didn't communicate about the second offer to the Principal. It was held that the agent didn't nit show proper skill and care in the matter and, therefore he was liable to pay damages to his principal for the loss suffered by him.
a. Common law requires an agent to act with due care and skill in performing his duties. Agent who fails to meet this standard are prima facie negligent.
b. Generally speaking, an agent in a certain profession, trade or calling who perform his duty with the degree of care and skill elected of a reasonable, average member of the relevant profession, trade and calling meeds the requisite standard.
The agent is bound to act with reasonable diligence, and such skill he possesses ; and to make compensation to his principal in respect of the direct consequences of his neglect, one of skill or misconduct, but not in respect of loss or damage which are indirectly or remotely caused by such neglect, want if skill, or misconduct.
In Keppel v. Wheeler, the Principal instructed and estate agent to find a buyer for his estate. The agent communicated an offer of a prospective purchaser who was willing to buy the estate for £6150 before the contract for sale was concluded, the agent get an offer of £6759 from another buyer. The agent didn't communicate about the second offer to the Principal. It was held that the agent didn't nit show proper skill and care in the matter and, therefore he was liable to pay damages to his principal for the loss suffered by him.
4. Duty to render proper account (Sec.213):- Another duty of the agent is to render proper accounts to his principal and demand. This means that he should maintain proper accounts of the sums belonging to the Principal which are in his hands, he should not misuse and misappropriate them, and on demand from the Principal, he should render true accounts to his principal.
6.Duty to communicate with principal (sec.214):- According to sec.214, it is the duty of angent, in case of difficulty to use all reasonable diligence in communicating with his principal and is seeking to obtain his instructions.
5. Duty not to deal in his own account (sec.215&216):- An agent is under a duty not to deal on his own account in the business of agency, unless the principal consents thereto. If any transaction, an agent deals on his own account without the principal's prior consent ,the Principal has the following two rights:-
a. To repudiate the transaction by showing either:
i. that any material fact has been dishonesty concealed from his agent, or
ii. that the dealings of the agent have been disadvantageous to him (sec.215).
b. To claim from the agent any benefit which Amy have resulted to him from the transaction (Sec.216)
a. To repudiate the transaction by showing either:
i. that any material fact has been dishonesty concealed from his agent, or
ii. that the dealings of the agent have been disadvantageous to him (sec.215).
b. To claim from the agent any benefit which Amy have resulted to him from the transaction (Sec.216)
7. Duty to pay sums received for principal:- Another duty of the agent is to pay to his principal all sums received by him on principal's account. Before making such payments to his principal, the agent is, however, entitled to make such deductions out of the same as are lawfully due to him (sec128). According to sec.217, an agent may retain, out of any sums received an account of the Principal in the business of the agency, all moneys due to himself in respect of advances made or expenses properly incurred by him in conducting such business and also such remuneration as may be payble to him for acting as agent.
Rights of agent and duties of principal:-
The Act confers a number of rights an agent and imposes some corresponding duties on the Principal. They are as follows:
1. Right to remuneration (sec.219):- It is basic rights of an agent that he should receive the remuneration of his services. In Saraswati Devi v. Matilal, Matilal, the plaintiff, who was an estate agent, had been engaged by the defendant Smt. Saraswati Devi and her husband, to find a purchaser for certain property. The plaintiff find find a customer, who was willing to pay Rs. 1,27,000 for the property and who also paid an advance of Rs. 30,000. Subsequently, the defendant refused to sell the property to that customer. The plaintiff brought an action against the defendants to recover ₹ 2500 as a remuneration for finding the Customer. It was held that according to nature of this agreement, the remuneration was payble to the plaintiff when he found a purchaser who was ready, willing and able to purchase the property and since he had done that, he was entitled to his commission.
The Act confers a number of rights an agent and imposes some corresponding duties on the Principal. They are as follows:
1. Right to remuneration (sec.219):- It is basic rights of an agent that he should receive the remuneration of his services. In Saraswati Devi v. Matilal, Matilal, the plaintiff, who was an estate agent, had been engaged by the defendant Smt. Saraswati Devi and her husband, to find a purchaser for certain property. The plaintiff find find a customer, who was willing to pay Rs. 1,27,000 for the property and who also paid an advance of Rs. 30,000. Subsequently, the defendant refused to sell the property to that customer. The plaintiff brought an action against the defendants to recover ₹ 2500 as a remuneration for finding the Customer. It was held that according to nature of this agreement, the remuneration was payble to the plaintiff when he found a purchaser who was ready, willing and able to purchase the property and since he had done that, he was entitled to his commission.
2. Right to retain sums (sec.217&218) :- in conducting the business if an agent advances or spends some money for the betterment of a business. He has also right to retain that amount from the total sum received by him an account of the Principal.
3.Right to lien on principal's property (sec.221):-An agent has right to retain the goods or property of a principal till the payment in due is received by him.
4.Right to compensation for damages due to principal's neglect (sec.225):- In case of injury caused to agent by the negligence or want of skill of the Principal may be compensated by the Principal.
For example, A employes B as a bricklayer in building a house and puts up the scaffolding himself. The scaffolding is unskillfully put up and B is in consequence hurt. A must make compensation to B.
For example, A employes B as a bricklayer in building a house and puts up the scaffolding himself. The scaffolding is unskillfully put up and B is in consequence hurt. A must make compensation to B.
5.Right to be indemnified (sec.222-224):- An agent had a right to be indemnified against the liabilities falls on him.
a. Indemnity for lawful acts sec.222:- According to this Section the employer of an agent is bound to indemnify him against the consequence of all lawful acts done by such agent in exercise of the authority conferred upon him.
c. Indemnity for civil wrong (sec.223):- The agent is entitled to indemnity against the consequence of an act done in good faith, even though the act causes an injury to the rights of third persons e.g., it is a tort.
d. No indemnity in case of criminal offences (sec224):- When the agent commits a crime at instance of the Principal, the agent can't claim indemnity from the Principal against the consequence of the crime, even though the Principal has expressly or impliedly promised to indemnify him.
a. Indemnity for lawful acts sec.222:- According to this Section the employer of an agent is bound to indemnify him against the consequence of all lawful acts done by such agent in exercise of the authority conferred upon him.
c. Indemnity for civil wrong (sec.223):- The agent is entitled to indemnity against the consequence of an act done in good faith, even though the act causes an injury to the rights of third persons e.g., it is a tort.
d. No indemnity in case of criminal offences (sec224):- When the agent commits a crime at instance of the Principal, the agent can't claim indemnity from the Principal against the consequence of the crime, even though the Principal has expressly or impliedly promised to indemnify him.
Conclusion:- At conclusion we can say that an agency is a creation of a contract entered into by mutual consent between a Principal and an agent. By agency Principal grant authority to an agent to act or his behalf of and under the control of the Principal. The relationship between a Principal and agent is fiduciary and an agent action bind the Principal. An is liable to a Principal when she/he acts without actual authority, but the apparent authority. Similarly the Principal is also liable for the loss caused to the agent due to his negligence.
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