Law of Agency PPT _ BEC DOMS

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					          Law of Agency
 Who is an Agent and a Principal? (Sec.
  An Agent is a person employed to do an
  act for another or to represent
  another in dealings with third persons.
  The person for whom such act is done,
  or who is so represented, is the
  The relationship between them is called
 Who can be appointed an Agent?
  Any major person and of sound mind
  may become an agent to be responsible
  to the Principal.
  There is no bar to the appointment of a
  minor as an Agent but a minor, however,
  cannot be held personally liable.
  The concept of a servant may, in a
  sense involve an element of agency but
  on that account a servant is not
  regarded as an agent and an agent is
 Who can employ an Agent?
  A person who is of the age of majority
  and is of sound mind may employ an
  Agent (Section 183). No consideration
  is necessary to create an agency
  (Section 185).
 Test of Agency: It is whether a person
  has the capacity to bind the Principal
  by acts done on his behalf.
  It is the power of an agent to make the
  principal answerable to third person
         Creation of Agency
 Agency by agreement (Section 186 &
 Agency by necessity.
 Agency by holding out (Section 237).
 Agency by operation of law.
 Agency by ratification
  Ratification is adopting or accepting subsequently
  a past act of an agent done on behalf of another
  w/o authority. It is subsequent confirmation of
  unauthorized acts.
 Rules Governing Ratification
 Act must be done by a person on behalf
  of another.
 Act must have been done w/o
  knowledge or authority of the person
  on whose behalf the act is done.
 Person must be legally in existence.
 May be expressed/implied by conduct
  of the person.
 Act to be ratified must not be void ab-
 Principal must be competent to ratify
  both at the time of contract and at
  time of ratification.
 It must be done within a reasonable
 It can be for whole contract and not
  part of it.
 It should not put a third party to
    Classification of Agents
 Specific or Particular Agent: Appointed
  to do a single act for the Principal. Also
  called a Special Agent.
 General Agent: Appointed to do all acts
  concerning a particular trade or
  business of the Principal.
 Mercantile Agents: Broker, Commission
  Agent, Factor (authority to sell to 3rd
  person), Auctioneer, Del-credere Agent
  (extra commission).
 Sub-agent: An agent appointed by the
  original agent.
 Co-agent: Two or more persons
  appointed as agents by the Principal to
  act as such jointly or severally.
 Substitute Agent: Where an agent
  holding an express/implied authority to
  name another person accordingly, as
  part of the business of the agency as is
  entrusted to him. He is an agent of the
         Agent’s Authority
 Agent’s capacity to bind the Principal is
  his authority.
 Agent does certain acts on behalf of
  the principal.
 His authority extends to such acts
 The authority of an agent may be
  express or implied (Section 186).
 Revocation of Agent’s Authority
 Revocation by Principal: Can at anytime
  before the authority has been
  exercised so as to bind the Principal
  (Section 203).
 Notice must be given before revoking
  the authority, otherwise Agent will be
  entitled to damages (Section 206).
 A empowers B to let A’s house.
  Afterwards A lets it to himself. This is
  revocation of B’s authority and is
    When Agency cannot be
 Agent has exercised authority partly.
 Agency coupled with interest: A gives
  authority to B to sell A’s land, and to
  pay himself, out of the proceeds (to
  the debt due to him from A). A cannot
  revoke this authority, nor can it be
  terminated by his insanity or death.
 When Agent is personally liable.
           Duties of an Agent
   To conduct Principal’s business.
   Conduct the business with skill & diligence.
   To render proper accounts.
   To pay sums received to the Principal.
   To communicate with Principal.
   On Principal’s death or insanity.
   Not to deal on his own account.
   Use of information not against Principal.
   No secret profit.
   Not to delegate.
   Naming another agent for principal.
   Liable for acts of sub-agents.
   Liable for misrepresentations or fraud.
           Agent’s Rights
 Right to retain all moneys due to him.
 Right to claim remuneration.
 Right to lien.
 Right to indemnity.
 Right to be compensated.
 In emergency: to do such act as to
  protect Principal from loss.
 To appoint substitute agent.
 To renounce agency.
 Compensation for premature
 Principal’s Duties & Liabilities
 To indemnify the agent. (i) Against
  consequences of lawful act, and (ii) Against
  consequences of the acts done in good faith.
 Compensate for injury caused.
 To pay remuneration and dues.
 Misrepresentation or fraud by Agent: Is not
  liable if act falls beyond Agent’s authority.
 Liable for contracts entered into by Agent
  with third persons.
 Notice to the Agent is imputed notice to
         Principal’s Rights
 To Repudiate contract (Section 215).
 To claim benefits (Section 216).
 To ratify or disown agent’s acts
  (Section 196).
 To revoke Agent’s authority (Section
 To claim on loss or profit (Section 211
  & 212).
 To demand accounts (Section 213).
 To refuse remuneration when agent is
     Termination of Agency
 By act of parties: By agreement; By
  revocation and renunciation; By
  completion of performance.
 By operation of law: By death or
  insanity; By insolvency of the principal.
 Other modes of termination: By efflux
  of time (fixed period); By destruction
  of the subject-matter; By incapacity of
  Principal or Agent; Principal and Agent
  becoming alien enemy; By object of
  Agent becoming unlawful.

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