Professional Documents
Culture Documents
Enrollment: 01-177152-022
LLB-IV
Department of Law
1
Contents
1. Introduction: .......................................................................................................................... 3
1.1. Agency:.................................................................................................................................... 3
3. Establishment of agency: .......................................................................................................... 4
3.1. Explicit choice of the principal: ............................................................................................ 4
3.2. Implicit choice of the principal: ............................................................................................ 4
EXAMPLE: ................................................................................................................................... 4
3.3. Agency by law: ....................................................................................................................... 5
3.4. Through necessity: ................................................................................................................. 5
For example: .................................................................................................................................. 6
3.5. By estoppel:............................................................................................................................. 6
3.6. Ratification: ............................................................................................................................ 6
3.7.Dissolution: .............................................................................................................................. 7
3.7.1. Through parties: ................................................................................................................. 7
3.7.2 Through Law:....................................................................................................................... 8
4. Vicarious Liability: ................................................................................................................... 8
5. Respondent Superior: ............................................................................................................... 9
6. Where principal is liable and not liable? ................................................................................ 9
7. Cases: ....................................................................................................................................... 10
7.1. Kedar Nath v L Manak Chand ........................................................................................... 10
7.2. Chairman L.I.C v. Rajiv Kumar Bhaskar ......................................................................... 11
8. Conclusion: .............................................................................................................................. 12
Bibliography: ............................................................................................................................... 12
2
1. Introduction:
1.1. Agency:
Agent and principal are two parties where agent works on behalf of its principal and make
contract with other party.2 Agent work is to establish relationship between principal and third
party through contracts .In other words agent is a representative which works under principal and
The relationship between principal and agent is called agency or agency is make when both
principal and agent mutually create an agreement where principal empower agent and then agent
Several and joint liability means that a third party can sue principal and agent both or anyone and
1
Law of Agency, Scribd.com https://www.scribd.com/doc/20874146/Agency-Indian-Contract-Act-1872(November
2, 2017).
2
Principal Agent Relationship, Investopedia.com https://www.investopedia.com/terms/p/principal-agent-
relationship.asp(November 2, 2017).
3
Principal Authorize Power to Agent
Uk.practicallaw.thomsonreuters.comhttps://uk.practicallaw.thomsonreuters.com/1-107-
6376?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1( November 4, 2017).
4
Agency: Contract Act 1872 Indian RulesLawctopus.com https://www.lawctopus.com/academike/agency-
contracts/(November 5, 2017).
5
Joint and Several Liabilities of Agent and Principal Legalamicus.com http://legalamicus.com/joint-and-several-
liability-of-the-principal-and-the-agent/(November 4, 2017).
3
2. How agency is construct:
3. Establishment of agency:
Agency can be construct through expressed form, where principal in written way or by his
words (through mouth) appoints an agent and give him powers to make contracts with third
party.6 The agent is bound to use his powers in limits, if he surpass the powers then he will be
responsible for his acts alone to the third party and principal would not liable for his acts.
In implied contracts if a person through his gestures and acts shows that he has powers to do
such particular act and principal admits that he was allowed to act consequently, then the law can
EXAMPLE:
If A allows B to order goods for him and B orders on his behalf and then pay for them,
agency is implicit there and A is bind to pay B because he expressly approves them.
6
Expressed Appointment by The Principal Worksmart.org.uk https://worksmart.org.uk/work-rights/pay-and-
contracts/contract-terminology/what-difference-between-implied-and-express-terms(November 4, 2017).
7
What is Implied Agency? Definition, Summary and History Shsu.com
https://www.shsu.edu/klett/agency%20et%20al.htm(November 8, 2017).
4
3.3. Agency by law:
In occasions the agency can be formulated through law. Law can honors an agent as having
Third party believes that a person is agent because principal make it believe them
that agent has powers to make contracts for principal through his speaking and
gestures.8
Where agents has powers earlier but then principal dismiss such powers later but
Where there are circumstances where agent have no connection with his principal and some
emergency came out and agent act is essential for the protection of principals property, then court
consider the agent as having essential powers to perform certain act for the safety of its principals
property. When necessity agency is formulated then agent is entitled to receive expenses from
principal which he suffered during the protection of principals property but there are few
conditions. The agency of necessity can be formulated only when agent does something which is
essential or required for the sake of protection of principals property, the agent was not in a contact
8
What is Agency by Operating Law? Definition, Summary Lawteacher.Com
https://www.lawteacher.net/free-law-essays/commercial-law/the-law-of-agency-commercial-law-
essay.php(November 10, 2017).
9
Principal Must Notify the Agent about Termination Law of Operation, Coursehero.com
https://www.coursehero.com/file/p7ji70o/An-agency-contract-is-terminated-by-operation-of-law-in-the-
following/(November 8, 2017).
5
with principal due to some technical issues or due to any other issues and agent perform the act
For example:
A sent his goats to B by Railway Company but B did not come to receive the goats from
Railway Company. It was essential or necessary for the railway company to feed the goats for the
survival of goats. Here the agency of necessity is formulate and Railway Company acts as an agent
of necessity and he can ask for his expenses which he suffered on feeding the goats.
3.5. By estoppel:
A person can only by an agreement where he gives power to another person or appoints an agent
to perform tasks for him and make contracts with the third party for him. A person is not bind
where he does not allow another person or give power to him but if a person through his gestures
and acts makes third party believe that another person is his agent and he is doing work on his
behalf when in actual he is not his agent, in this case a principal will be prohibited from repudiating
3.6. Ratification:
When an agent who was appointed by principal to work on his behalf surpasses his powers
10
Agency by Necessity Eaa.org.hk https://www.eaa.org.hk/en-us/Information-Centre/Publications/Agency-Law/-
3-Formation-of-agency(November 8, 2017).
11
What is Estoppel Doctrine of Estoppel, Legalservicesindia.com
http://www.legalservicesindia.com/article/article/agency-by-estoppel-88-1.html(November 11, 2017).
6
Or when a person who has no power to act upon but he acted as if he has power 12
In these two case it is up to principal whether he approves the contract or he discards it.
If the principal approves the contract then this approval will be called as ratification. Ratification
3.7.Dissolution:
Withdrawal by principal.
Denial by agent.
12
Agency by Ratification Creation of Agency, Legalservicesindia.com
http://www.legalservicesindia.com/article/article/contract-ratification-434-1.html(November 8, 2017).
13
Ratification Accountlearning.com https://accountlearning.com/agency-by-ratification-governing-rules-
effects/(November 12, 2017).
14
Termination of AgencyCoursehero.com https://www.coursehero.com/file/p7ji70o/An-agency-contract-is-
terminated-by-operation-of-law-in-the-following/(November 8, 2017).
15
Termination
Trianagents.comhttp://www.trainagents.com/DesktopModules/EngageCampus/CourseContent.aspx?ModuleType
=StudentMyCourses&CrsPageType=Topic&CourseRecordID=116&LessonRecordID=1438&TopicRecordID=26584&D
emo=True(November 8, 2017).
7
Through termination of the fixed time period.16
According to the section 168 when principal died then agent must take sensible steps to
If the agency is dismissed, the principal is not bind by the businesses which agent entered
4. Vicarious Liability:
Agent is the person which is appoint by another person called principal. An agent is fully
responsible for the negligence in his acts because he is given powers by principal. Principal has
full control agent. This is the form of vicarious liability where one person is responsible to
The employer is responsible for the acts of his employee because he has somehow give
employee the power to do acts and because of this power an employee can cause accidents
16
Termination of Fixed Time Period Agency.uslegal.com https://agency.uslegal.com/duration-and-termination-of-
agency/(November 15, 2017).
17
Termination by Law, How law can Terminate? Study.com http://study.com/academy/lesson/terminating-
agency-relationships.html(November 13, 2017).
8
5. Respondent Superior:
Its a doctrine which says that sometimes employer is equally responsible for the acts of
Principal is liable for everything which his agent do. Agent is appoint and empower by
principal therefore, principal is responsible and liable for every acts of agent.18
If agency is terminate because of some reason or revocation notice then principal will not
If agent do anything under employment then all the tortious acts of agent will bind
If the third party is aware of denial of agents power which is done by principal then there
18
Principal is liable Liabilities of principal https://accountlearning.com/rights-liabilities-principal-agent-third-
parties/.
19
Agent is Liable http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=4337&context=ilj.
20
Torts of an Agent Principal Liability http://thebusinessprofessor.com/knowledge-base/principal-liable-for-torts-
of-an-agent/.
21
Termination of authority Saylordotorg.github.io https://saylordotorg.github.io/text_business-law-and-the-
legal-environment-v1.0-a/s42-liability-of-principal-and-age.html(November 17, 2017).
9
If the agent is employed then tort committed by agent will bind principal and he would
be held responsible for the acts even if he does not give powers to agents ,does not take
An agent would be liable for his acts and if agent do something during employment then
Only principal is liable when contracts are make, agent is not liable there but agent can be liable
separately if agent
7. Cases:
In this case there was a plaintiff who was an advocate by profession and he file a case against
two defendants Ganesh Dass and Sanwall Dass (proprietors) for the retrieval of 1,700 a
professional dues which was not paid to him by defendants Ganesh and Sanwall who involved
plaintiff as counsel. The case was started in 1949-1950 and in 1952 Ganesh Dass died. The
request to bring his representatives was made after limitation of time period. Sanwall also died
22
Several and joint liabilityLegalservicesindia.comhttp://www.legalservicesindia.com/article/article/joint-&-
several-liability-167-1.html(November 17, 2017).
10
during the case. The question here arise whether just Sanwall or his representatives are
responsible and liable without involving Ganesh or both Sanwall and Ganesh are liable.
The court held that both Ganesh and Sanwall are liable jointly and severally.
2003 ACJ 86
(Implied Agency)
In this case the employer was to remove the finest from salary of the employee for depositing
according to L.I.C salary saving policy. The procedures related to this purpose was the duty of
employer. When the apprehensive employee died the heirs came to know that the scheme is
losing because employer evasion in sum. In the receiving of the letter by the employer which
Question here arise whether the employer can be treated as agent of LIC?
It was held that explicit agent is not mean to be the agent of LIC of India Agents. But can
consider an agent in ordinary mean. The word agent which is used is not definite to conclude the
23
L.I.C, Rajiv Kumar Bhaskar (2003) Indiancaselaws.wordpress.com
https://indiancaselaws.wordpress.com/2012/01/15/chairman-l-i-c-v-rajiv-kumar-bhaskar/(November 8, 2017).
11
8. Conclusion:
An agent is appointed by principal and all the powers which agent utilize is given by its
principal, therefore principal is equally responsible for the acts of its agent whether he knows or
There are many events where principal is liable severally and sometimes he is liable jointly with
its agent. Similarly there are some events where agent is held liable individually and not jointly
with its principal and sometime agent is held liable jointly with its principal.
Bibliography:
https://www.scribd.com/doc/20874146/Agency-Indian-Contract-Act-1872.
https://www.investopedia.com/terms/p/principal-agent-relationship.asp.
https://uk.practicallaw.thomsonreuters.com/1-107-
6376?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1
https://www.lawctopus.com/academike/agency-contracts/.
http://legalamicus.com/joint-and-several-liability-of-the-principal-and-the-agent/.
https://worksmart.org.uk/work-rights/pay-and-contracts/contract-terminology/what-
difference-between-implied-and-express-terms.
https://www.shsu.edu/klett/agency%20et%20al.htm.
https://www.lawteacher.net/free-law-essays/commercial-law/the-law-of-agency-commercial-
law-essay.php.
https://www.coursehero.com/file/p7ji70o/An-agency-contract-is-terminated-by-operation-of-
law-in-the-following/
12
https://www.eaa.org.hk/en-us/Information-Centre/Publications/Agency-Law/-3-Formation-of-
agency.
http://www.legalservicesindia.com/article/article/agency-by-estoppel-88-1.html.
http://www.legalservicesindia.com/article/article/contract-ratification-434-1.html.
https://accountlearning.com/agency-by-ratification-governing-rules-effects/.
https://www.coursehero.com/file/p7ji70o/An-agency-contract-is-terminated-by-operation-of-
law-in-the-following/.
http://www.trainagents.com/DesktopModules/EngageCampus/CourseContent.aspx?ModuleTy
pe=StudentMyCourses&CrsPageType=Topic&CourseRecordID=116&LessonRecordID=1438&Top
icRecordID=26584&Demo=True.
https://agency.uslegal.com/duration-and-termination-of-agency/.
http://study.com/academy/lesson/terminating-agency-relationships.html.
https://accountlearning.com/rights-liabilities-principal-agent-third-parties/.
http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=4337&context=ilj.
http://thebusinessprofessor.com/knowledge-base/principal-liable-for-torts-of-an-agent/.
https://saylordotorg.github.io/text_business-law-and-the-legal-environment-v1.0-a/s42-
liability-of-principal-and-age.html.
https://indiancaselaws.wordpress.com/2012/01/15/chairman-l-i-c-v-rajiv-kumar-bhaskar/
13
.
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