PRINCIPALS Appoint or direct an agent to act on his behalf

AGENCY A person who has appointed by a principal

To implement a particular work

To act on the principals behalf

Dealing with 3rd party

Dealing with 3rd party

Types of Contract of Agency

Principal and Agent

Agent derives his authority to act for and his behalf

Agent and Third Party

Principal and third party through the medium of the agent

CAPACITY OF AGENTS AND PRINCIPALS

AGENT Principal must have the capacity to make the contract Agent has no rights and liabilities under the contract Do not need full contractual capacity Minor maybe an agent but principal could not recover any losses against minor

 Other related terms; Eg: sole agent/sole distributer not a Need to distinguish agent. the use of word agent in the legal and Estate agent only act commercial as intermediary between a seller and buyer.

PJJ-Business Law

Creation of agency
Agency

Express Appointment

Implied Appointment

Ratification

Necessity

Doctrine of Estoppel.

By Principal

By Principal

By Principal

Operation of Law

Holding Out

AGENCY BY AGREEMENT
Express Appointment Oral In Writing

No special form is required If the agent is authorised to enter into contract under seal Appointment must be made under a Power of Attorney
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IMPLIED APPOINTMENT

IMPLIED APPOINTMENT A person through words or conduct hold himself To be an agent

Relationship between Husband and Wife

Relationship between Partners

Section 7 of the Partnership Act 1961 Revised 1974)

Ratification -Sec 149 of the Contract Act -Retrospective

2 types
Agent has been appointed But exceeded his authority When he entered into contract with a third party Principal may accept or reject Section 149 of the Contract Act A person with no authority to act for principal But acted as if he has authority to enter into a contract with third party.

If he accepts = RACTIFICATIION

Impliedly
Expressly

Conditions where ratification can be made

1) The act must be unauthorised 2)The unauthorised act must be one which is recognised by law 3) The agent must expressly act as agent for the principal 4)The agent must have a principal who is in actual existence or capable of being ascertained 5)The principal must have contractual capacity at the time the contract is made and at the time of ratification

 6) The principal must at the time of ratification, have full knowledge of all material facts 7) The principal must ratify the whole act or contract

8) The ratification must be made within reasonable time.

9) The ratification must not injure a third party

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AGENCY BY NECESSITY
A person might NOT need to be appointed in order to become an agent. Eg : deserted wifecam pledge her husbands credit A person entrusted with anothers property

Conditions

Impossible To get Principals

Good Faith

Instructions

Agents action Is necessary in that ctc, To prevent loss

To Nizam

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CLASSIFICATION OF AGENCY

Classification of Agency

Classification According to the Extent of Authority

Classification According Function

1)Del Credere Agent 2) Factors 3) Brookers 4) Auctioneers 5) Bankers

1) A universal agent 2) A general agent 3) A special agent

PJJ-Business Law

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Extent of Authority
A universal agent: - a general agent with extensive power A general agent an agent who is employed to act on behalf of his principal generally A special agent Agent appointed to do a specific act for a specific purpose

Functions Del Credere AgentsAgent enters into contract with third party w/by third party will perform his liability Factors Commercial agent- sells good in his own name.

PJJ-Business Law

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 Brokers- agent employed to make contract between Prin & 3rd party Auctioneers An agent who is employed to sell goods by auction. Agent for buyer and seller.

Banker Bank employees Agent for the Bank

Agent for Customers

PJJ-Business Law

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AUTHORITY OF AGENTS
An agents act is binding if it is done within his authority In excess or outside authority
Will not bind principal unless principal adopts/ratify
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Classifications Apparent/Ostensible Authority

1) Actual Authority

Actual Authority

Authority conferred upon the agent by agreement

Express

Implied

Orally/ Writing

Express power All powers are Proper to Execute the Express authority

The circumstances Of the case

The customs or usage Of trade

Situation and Conduct of the parties

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Apparent/Ostensible Authority :Authority given by the law 2 situations 1) Section 190 CA 1950 A principal make the third party believe that his agent has the authority to make contracts for him.
Through words or conduct

2) An agent has the authority previously, but the authority was terminated by the principal.
Third party was not given any notice.
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Duties of Agent to His Principal

1) To obey the principals instructions (sect 164) 2) In absence of instructions act according to customs (sect 164) 3)To exercise care and diligence in carrying out his work and to use such skill as he possess (sect 165) 4) render proper account when required (sect 166) 5) To pay his principal all sums received on his behalf (sect 171)
6) To communicate with principal (sect 167) 7) Not to let his own interest conflict with his duty 8) Not to make any secret profit out of his duty 9)Not to disclose confidential information or documents entrusted to him by his principal. 10) Not to delegate his authority

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Duties of Principal to His Agent Section 175 - 178

To pay commission or other agreed remuneration unless agency is gratuitous

Not to willfully or hinder the agent from earning his commission

To indemnify and Reimburse the agent For acts done In the exercise of his duties

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To indemnify and Reimburse the agent For acts done In the exercise of his duties

Agent has incurred Losses or liabilities In performance Of the contract Of agency

Where the agent causes injury to third party in the execution of his authority as agent

Where the agent suffers injury during the course of his duty due to the principals neglect or want of skill

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BREACH OF WARRANTY OF AUTHORITY

Breach of Authority
Breach of warranty of authority

A third party is misled by the agents misrepresentation of authority

Agent is personally liable Measure of damages

Third party can sue the agent

Actual loss sustained or benefit the other party would have had from the contract if the representation had been true

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Relationship between principal and third party

Categories of principals

1)
-

A named principal principals name has b been disclosed third party knew The agent is acting for a known principal

2) A disclosed principal -Existence is disclosed -Identity is not known -Third party knew that Agent is a contracting agent

3) An undisclosed principal Existence and identity is Not known

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 Named Principal The relation of an agency exist Agent incurs not right of liability under the contract. Principal alone can sue and be sued

Exceptions 1) Agent agrees to accept personal liability 2) Agent executes a deed in his own name. 3) Agent signs a negotiable instrument in his own name
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 Disclosed Principal

Principals existence is revealed but not his identity. Section 183 : an agent cannot personally enforce contracts entered into by him on behalf of his principal nor he is personally bound by them

Exception where agent will be liable 1) The contract is made by an agent for the sale or purchase of goods for a merchant resident abroad 2) Where agent does not disclosed the name of his principal- agent will be liable 3) The principal is a foreign sovereign or ambassador or a minor or of unsound mind.

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 2) Right of the Principal -section 184(a)- P may require the 1) Rights of third party performance of - no knowledge or contract by third party reason to suspect that the person is dealing is Third party has as against P, the same an agent he has the right as he would have right to sue either P or has against the agent if A or BOTH the agent has been principal

Undisclosed Principal

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 3) Agents Rights against Third Party - He can sue of on the contract simply because it is his contract. If he has represented himself as the contracting party.

Section 189 of the Contract Act. A person with whom a contract has been entered into in the character of agent is not entitled to require the performance of it if he was in reality acting not as agent, but on his own account Section 189 of the Contract Act.
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TERMINATION OF AGENCY :
i) By act of the parties

ii) By operation of law

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ACT OF THE PARTIES

a) Section 154 Mutual consent or unilateral revocation by principal notice Exception i) Agent has interest in the property and form part of subject matter (s155) ii) If the authority has been partly exercised (s157) Unilateral renunciation by the agent at any time - need to give notice - if agency is for indefinite duration reasonable notice If for fixed period agent is liable to compensate the principal for premature renunciation

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By operation of law
1) The contract of agency has been performed (section 154- Completion of agency business 2) By the expiration of the period fixed or implied in the contract of agency 3) By the death of either the principal or agent- section 154 4) The subsequent insanity or either the principal or agent 5) Principal being adjudicated or declared bankcrupt or an insolvent 6) The happening of an event which renders the agency unlawful

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Contract Act
1) Section 154 Termination of Agency 2) Section 155Termination of Agencywhere agent has an interest in subject matter 3) Section 156 (where principal may revoke agents authority) 4) Section 157- revocation where authority has been partly exercised) 5) Section 158 Compensation for revocation by principal or renunciation by agent 6) Section 159 (Notice of revocation or renunciation)
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