Define agent and discuss the importance of agent in the market economy.

Also
discuss the grounds under which the agent can be created along with rights and
liabilities of agent.

Agent, in the simplest of terms, can be defined as a person who is authorized to act on
behalf of other person to create a legal relation with a third party.

http://legal-dictionary.thefreedictionary.com/agent defines agent as," a person who is

authorized to act for another (the agent's principal) through employment, by contract
or apparent authority. The importance is that the agent can bind the principal by
contract or create liability if he/she causes injury while in the scope of the agency."
Agent is the one who acts and principle is the one whom action is taken for. Agent
will act on behalf of principal and will be subject to principals' instructions.

Nepalese Contract Act Section 77(1) states that, "Except when the contract is required
to be performed by the person making it, he may have it performed by his agent or a
person appointed by him or any other person on his behalf but no contractual party
may transfer the contractual liabilities to any other person without the consent of the
others.”

For creation of an agency, the following conditions must be satisfied:

i. Mutual consent between agent and principal

ii. Agent must be subject to control by principal
iii. Some agreement that agent acts on behalf of principal

An agent can be created by the following ways:

1. By expressed agreement:

- Agreement grants authority to agent

- Principal has explicitly granted authority to agent

2. by implied agreement:

- Evidence shows that principal intended to grant authority to agent

- Agent would necessarily need such authority to perform duties

There are could be several forms for creation under implied agreement.

a. By holding out:
If a party has made the third party to believe that acts done by the party are done
with the authority, then the party is refrained from denying that their authority
was not still in existence. It requires positive act or conduct by the principal to
establish agency.
 b. By necessity:
In some cases, law provides authority to a person to act as an agent for another
party even if the concerned party hasn't given the authority to the person to act as
an agent. Such kinds of agency may be created at the time of emergency and for
the interest of the people. The following are the cases where agents can be created
by necessity.

I. Where the agency exceeds his authority in an emergency. For e.g. to

sell perishable goods.
II. Where the carrier of goods acting as a bailee does anything to protect
the goods in an emergency.
III. When a person voluntarily does something necessary for the
protection of other property.

c. By ratification:
When the principal ratifies the action of the person which is done on the
principal's behalf, an agency is created. The ratification can be made in an
expressed manner or the principal may accept the results with intent to ratify and
has full knowledge of all material facts.
d. By estoppels:
If a person claims fraudulently to be an agent of another person in an expressed or
an implied way, then if any transaction occurs between principal and a third party
via the agent, the agent cannot refute his claim of being the agent.

The rights of an agent are as follows:

1. One who is competent to do something himself, he may do it through an agent except for acts
involving one’s personal presence or personal skills. For e.g.: a person cannot marry through
an agent.
2. The acts of an agent are, for all legal purposes, the acts of principal.

The liabilities of agents are created if:

1. the agent expressly agrees to be personal liable on the contract

2. the agent works for an unnamed principal and he does not disclose his name
3. an agent works for a principal who cannot be sued (foreign ambassador, sovereign, minor,
monarch, etc)
4. an agent exceeds his authority, he shall be personally liable to the extent of such
excessiveness
5. The agent signs a negotiable instrument in his own name without specifying that he is signing
it only as an agent.
6. the agent acts in his own name

The importance of agent can be illustrated from the following:

i) an agent undertakes the task or tasks specified by the terms of the agency
ii) agents make it possible for two parties to collaborate together without the principals
meeting each other
 iii) an agent eases the pressure off the principal by saving time and giving professional advice
iv) a good agent avoids conflict of interest between the interests of the principal and his own
v) Having an agent is like delegating authority to those who're available and more
technically proficient on specific matters

In today's market economy, the importance of agent cannot be described in words well enough. But,
to put it simply, today's capitalistic market economy would simply cease to exist if it weren't for
agents.