Being modern Business becoming

competitive day by day one cannot carry on

all his business transactions on his own.

This impossibility necessitates
him to delegate some of his transactions to
another person.
Agent ---means a person employed to do
any act for another or to represent another in
dealing with third persons.

Principal ---means a person for whom such
act is done or who is so represented.

a) Principal should be competent to contract

b) Agent may not be competent to contract.

c) No consideration is necessary.


a) By Actual Authority being conferred on the agent . It may
be Express or Implied.

Express by words spoken or written(Sec.187)
(to sell or purchase of immovable property ,it must
be in writing Power of attorney)

Implied- by inference from the circumstances of the case
Ex- X who resides in Ahmadabad owns shop in Hyderabad. The
shop is managed by Y who orders goods from Z in the name
of X with Xs knowledge.
b) Agents authority in an emergency
eg. A consigns provision to B at Kolkata, with directions to
send them to C at Cuttak. B may sell the provisions at
Kolkata , if they cannot bear the journey without spoiling .

c) Principal bound by Estoppel
eg. A consigns goods to B for sale, and gives him
instructions not to sell under a fixed price. C, being ignorant
of Bs instructions, enters into a contract with B to buy the
goods at a price lower than the reserved price. A is bound
by the contract.

d) Principal bound by Ratification
i) The act should be done on behalf of another person(but
without knowledge or authority)
ii) The principal should be in existence, and competent to
contract
Eg. Promoters entered an agreement company not in
existence.
iii) Ratification may be express or implied
eg. A without authority , buys goods for B. Afterwards, B
sells them to C on his own account. Bs conduct implies a
ratification of the purchase made for him by A.


iv) Ratification would be of the whole transaction
The object of this provision is that no principal may
ratify only those parts of the transaction which are favourable
to him and disown others.

v) Ratified acts should not be injurious to third
person
A holds a lease from B, terminable on three months
notice . C an unauthorized person, gives notice of termination
to A. The notice cannot be ratified by B, so as to be binding
on A.
vi) Ratification should be with in a reasonable time.


i) Factor- Goods are delivered for sale with
wide discretionary powers. He has also power
to sell on credit.

ii) Commission Agentwho buys or sells goods
for his principal and receives commission.
(immaterial whether he posses goods or not)

iii) Del credere Agent
Generally , the function of an agent is over after a
contract is established between his principal and a third
person. He is not answerable to his principal for the failure of
a third person to perform the contract. But delcredre agent is
an exception for this general rule.
He is a mercantile agent, who, on the payment of
some extra commission , known as del credere commission,
guarantees the performance of the contract by the third
person. In case third person fails to pay the goods supplied
to him, the principal can bring an action against the del
creder agent. he occupies the position of a surety as well as
agent.

iv) Broker
He has neither control nor possession of goods. He
merely makes the two parties to enter into a contract. He gets
his commission whenever any transaction materializes.
v) Auctioneer
Entrusted with the possession of goods for sale to the
highest bidder i.e by open sale.

If the owner of the goods puts him in possession
of the goods, although the authority to sell has not been
conferred in him( i.e subject to a reserved price) , a buyer in
good faith(below the reserved price) from such auctioneer will
get a good title .


i) Duty not to delegate his duties

When an agent has undertaken to perform
certain duties personally, he is not allowed to
delegate his duties to another person. This rule
however is subject to certain exceptions.
(i.e agent can appoint sub-agent)


Circumstances in which a sub agent can be appointed.
i) When there is a custom of trade to that effect or
ii) When the nature of agency so requires eg. To file a suit
must engage a lawyer
iii) When act does not require personal skill. Eg. Transport
goods from one place to another.
iv) When the principal expressly or impliedly agrees
appointment of a sub-agent.
Is a person employed by and acting under the control of,
the original agent in the business of agency.

When the sub agent is properly appointed , for the
acts of such a sub-agent, the principal becomes bound
towards third persons. It means that the act of the sub-agent
would bind the principal in the same way as an act of any
duly appointed agent.

ii)Duty to follow principals directions--
Bound to conduct business according to the directions or if
there are no such directions agent should conduct the
business according to the custom ( commonly established
practice).
otherwise he will be liable to pay damages to the principal.

E.g. B, a broker , in whose business , it is not the custom to
sell on credit, sells 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.
iii) Duty to show proper skill and care
The agent is supposed to take due care and act
with reasonable diligence in the matter of agency. The
agent is liable to pay compensation for the loss cause to
the principal due to his neglect or misconduct.

Eg. A, an agent for the sale of goods, having authority to sell on
credit, sells to B on credit, without making the proper and
usual enquiries as to the solvency of B. B, at the time of such
sale, is insolvent. A must make compensation to his principal
in respect of any loss thereby sustained.

iv) Duty to render proper accounts
He should maintain proper accounts of the sums
belonging to the principal which are in his hands, he should
not misutilise and misappropriate them, and on demand
from the principal, he should render true accounts to his
principal.

v) Duty not to deal with his own account
An agent is under a duty not to deal on his own account
in the business of agency, unless the principal consents
thereto.
vi) Shouldnt set up an adverse title to the
goods which he receives from the principal as
an agent.

vii) Must not use confidential information for
his own benefit or against principal.
i ) Right to Remuneration
An agents remuneration does not
become due to him until the completion of the act
assigned to him. This rule is subject to any special
contract between the principal and the agent .

Eg. If the parties have agreed that the agent will be
entitled to commission when he finds a purchaser,
who is ready and willing to purchase the property ,
the agent becomes entitled to commission on
doing that.

ii) Right to retain sums
The agent has a duty to pay to his principal all
sums received on principals account.
But he has a right to retain, out of any sums received
on account of the principal in the business of the agency , all
money due to himself in respect of advances made or
expenses incurred by him in conducting such business and
also such remuneration as may be payable to him for as
agent.


iii) Right of lienof goods , papers and other
property.

In the absence of any contract to the contrary, an
agent is entitled to retain goods, papers, and other property
whether movable or immovable of the principal received by
him, until the amount due to himself for commission,
disbursements and services in respect of the same has been
paid or accounted for to him.
iv) Right to be indemnified
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.
eg. B, a broker at Calcutta by the order of A, a merchant
there, contracts with C for the purchase of 10 casks of oil for
A. After words , A refuses to receive the oil and C suesB. B
informs A, who repudiates the contract altogether. B defends,
but unsuccessfully and has to pay damages and costs and
incurs expenses. A is liable to B for such damages , costs and
expenses.

For contracts entered into through an agent, the
principal becomes bound towards a third person as
if he entered into the contract himself.
The principal is liable for such acts of the
agent for which the authority has been conferred
upon him. Such authority may be express or
implied.
i) Principals liability when agent exceeds
authority A Principal is bound only for such acts of
the agent which are within the authority of the agent. If it is
in excess of the authority , the principal is not liable.

ii) Principals liability for notice to the agent
Any notice given to or information obtained
by the agent, provided it be given or obtained in
the course of business, shall have the same legal
consequences as if it had been given to principal.

iii) Principals liability for agents fraud,
misrepresentation and torts-
when an agent acting in the course of the
principals business , makes misrepresentation or commits
fraud, it has same effect as if it has been made by
principal.

ii) By the agent renouncing the business of agency or

iii) By the business of agency being completed or

iv) By either principal or agent dying or becoming unsound
mind or

v) By the principal being adjudged as insolvent.




Revocation may be express or implied -

eg. A empowers B to let As house.
Afterwards, A lets it himself. This is an
implied revocation.

a) No revocation when agent has interest in the subject matter
eg. A gives authority to B to sell As land and to pay
himself out of the proceeds, the debts due to him from A.
A cannot revoke his authority , nor can it be terminated by
his insanity or death.
b) Revocation possible before the authority has been
exercised
Which means when the agent has already exercised
the authority conferred upon him by the principal , the
revocation of the same is not possible.
eg. A authorizes B to buy 1,000 bales of cotton on
account of A and to pay for it out of As money remaining
in Bs hands. B buys 1,000 bales of cotton in his own
name, so as to make himself personally liable for the price.
A cannot revoke Bs authority to pay for the cotton.

c) Principal should give reasonable notice of
revocation

otherwise he can be made liable to make good any
damage which may be caused to the agent.


Thank You