INTRODUCTION TO THE LAW OF AGENCY
1. INTRODUCTION
Law of agency is
governed by Part X of the Contracts Act 1950. An Agent is defined as a
person employed to do any act for another or to represent another in dealings
with third persons (sec 135 CA). The person for whom such act is done, or who
is so represented is called the Principal.
Therefore agency is the
relationship which subsists between the principal and agent. Thus, in agency, exists TWO contracts:
·
1st – contract made between the principal and
the agent from which the agent derives his authority to act for and on behalf
of the principal
·
2nd – made between the principal and the third
party through the work of the agent
TYPES OF AGENCY
Types according to
authority:
1. Universal
A universal agent is a
general agent with extensive powers. He can do all acts which a principal may
personally do. This kind of agency though seldom made is created by deed in the
form of Power of Attorney. A principal rarely grants such extensive
powers to an agent unless there are compelling reasons.
2. General
A general agent is an
agent who is employed to act on behalf of his principal, generally, in
transactions relating to a particular trade or business. A third party, dealing
with a general agent, can assume that the agent has power to do all that is
usual in the ordinary course of his business or trade. He is not affected by
any limitations on the agent’s usual authority unless, he is aware of those
limitations.
3. Special
A special agent is an
agent appointed to do a specific act for a specific purpose and his authority is limited to that act or
purpose.
Types according to
function:
1. Broker
A broker is a
commercial agent who is employed to make contracts between his principal and third
parties for a commission called a brokerage. He is different from a factor, in
that, he is not enthrusted with the possession of the goods and cannot contract
in his own name. his job is to find purchasers for those who wish to sell and
sellers for those who wish to buy, and to negotiate and make contracts. Once a
contract between the principal and the third party is made, he receives his
commission and is no longer concerned with it. A broker has no lien on the
goods as he has no possession of them.
2. Factors
A factor is commercial
agent, who in the ordinary course of his business, is entrusted with the goods
of his principal for sale. He usually sales the goods in his own name and
without disclosing of his principal. He has a lien over the goods in his
possession, as commission.
The fact that the agent
is under a restriction to sell at a certain price or he is bound to disclosed
the name of the principal does not disqualify him from being a factor, provided
he is in possession of the goods to be sold.
3. Auctioners
An auctioner is an
agent who is employed to sell goods by auction. He starts off as an agent for a
seller but when he accepts a bid from a buyer, he becomes an agent for the
buyer also.
4. Del Credere
A Del Credere is
an agent, who in consideration of extra commission undertakes that the third
party, with whom he enters into a contract on his principal behalf, will
perform his obligations. If the third party fails to perform the obligations of
the contract, the del credere agent will be liable for it.
PRINCIPAL
Who can be a principal?
Any person who is of the age of majority according to the
law to which he is subject, and who is of sound mind, may employ an agent (sec
136).
As between the principal and third persons, any person may become an
agent, but persons of unsound mind and who are below 18 years of age are not
liable towards their principal for acts done by them as agents
E.g. if A employs B (a minor) to buy some goods from C on his behalf and
C supplies the goods, A cannot allege that he is not liable to pay for the
goods just because B is not at the age of majority. A is still liable to pay C
for the goods.
INTRODUCTION TO THE LAW OF AGENCY
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