4. INTRODUCTION
In an Agency one person (PRINCIPAL) employs another
person (AGENT) to represent him or to act on him or to act
on his behalf , in dealings with a third person.
SECTION-182, defines the terms “AGENT” and
“PRINCIPAL” as follows:
An “agent” is a person employed to do
any act for another or to represent
another in dealings with the third person.
The person for whom such act is done, or
who is so represented, is called the 3/23/2015
5. DIFFERENT KINDS OF AGENTS
Depending on the kind of authority given to the agent to act on behalf
of the principal, the agents are of various kinds.
AUCTIONEERS: An auctioneer is an agent whose business is to sell goods or
other property by auction, i.e., by open sale. The authority vested in him is
to sell the goods only.
FACTORS: A factor is a mercantile agent who is entrusted with the
possession of goods for the purpose of sale.
BROKERS: A broker is an agent who has an authority to negotiate the sale or
purchase of goods on behalf of his principal, with the third person.
DEL CREDERE AGENTS: Del credere agent constitutes an exception to the
general rule of agents. He is a mercantile agent, who, on the payment of
some extra commission, guarantees the performance of the contract by
the third person.
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6. SOME FEATURES OF A CONTRACT OF
AGENCY
THE PRINCIPAL SHOULD BE
COMPETENT TO CONTRACT.
[SECTION-183].
THE AGENT MAY NOT BE
COMPETENT TO CONTRACT.
[SECTION-184].
NO CONSIDERATION IS 3/23/2015
7. MODES OF CREATION OF AGENCY
An act done by an agent on behalf of the principal binds the principal
towards a third person. The relationship of principal and agent between
the person represented and the person representing has to exist in order
that the principal’s liability towards the third person, arises.
In the following situations , the principal is bound by the acts of the agent
,i.e., in such situations, the agent has the power to bind his principal:
o ACTS DONE WITH PRINCIPAL’S ACTUAL
AUTHORITY.
o AGENT’S AUTHORITY IN
EMERGENCY.[SECTION-189]
o PRINCIPAL BOUND BY ESTOPPEL.
o PRINCIPAL BOUND BY RATIFICATION. 3/23/2015
8. ACTS DONE WITH PRINCIPAL’S ACTUAL AUTHORITY.
A principal is bound by the acts done by his agent with his authority. The
authority of an agent may be expressed or implied. [SECTION-187] defines
express and implied authority as under:
EXPRESS AUTHORITY-
An authority is said to be express when it is given by
words spoken or written.
IMPLIED AUTHORITY-
An authority is said to be implied when it is to be inferred
from the circumstances of the case; and things spoken or
written, or the ordinary course of dealing, may be
accounted circumstances of the case.
Continued……..
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9. Extent of implied authority.
Section-188 explains the extent of authority of an agent.
ILLUSTRATION- “A” constitutes “B” his agent to carry on his
business of a ship builder. “B” may purchase timber and other
materials, and hire workmen for the purpose of carrying on the
business.
Some instances-
• An agent having authority to receive goods on behalf of the
principal has an implied authority to make the payment due.
• An agent having an authority to make bet has an implied authority
to make the payment if the bet is lost.
Note:-
The termination of authority of an agent does not have effect as
regards third persons until it becomes known to them.
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10. AGENT’S AUTHORITY IN AN EMERGENCY
Section-189 explains an agent’s authority in an emergency ,as under:
“An agent has authority in an emergency, to do all such
acts for the purpose of protecting his principal from loss
as would be done by a person of ordinary prudence in
his own case, under similar circumstances.”
ILLUSTRATION-
An agent for sale may have goods repair if it be
necessary.
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11. PRINCIPAL BOUND BY ESTOPPEL
Sometimes the principal by his conduct creates an
impression in the mind of the third person that the agent
has an authority to act on his behalf. In such a case, the
principal is liable towards the third person for the acts done
by the agent, on the ground of the application of the law of
estoppel.
ILLUSTARTION-
“A” consigns goods to “B” for sale, and gives him
instructions not to sell under a fixed price. “C” being
ignorant of B’s 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.
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12. PRINCIPAL BOUND BY RATIFICATION
It has also been noted that when the agent does an act for
which he does not have any authority, the principal is not
bound for the same. To this there is an exception when
the principal may be bound even for the acts done without
any authority. If the principal ratifies, i.ie., accords
subsequent approval to an act done without his authority,
but on his behalf , the principal would be bound in respect
of such act.
Ratification covers the section [196-200] of the
Indian contract act.
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13. AGENCY IN HUSBAND- WIFE RELATIONSHIP
Agency by Co-habitation-
A married woman cohabiting with her husband is presumed to
have the power to pledge the credit of her husband for necessaries.
She may receive the supply of goods and services which may be
required for the domestic use or which may be of use to her
husband, herself or her children. The husband then becomes bound
to pay for those necessaries.
It is further necessary that the husband and wife must be living in a
domestic establishment.
Agency of necessity-
Even though the husband and wife were not living together, for
instance, when either the husband deserted his wife, or the wife
started living separately because of some justifiable reason, the
common law recognized the right of the wife to pledge the credit of
the husband in respect of the necessaries suitable to the style of
living to which she was accustomed.
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