Define and explain ‘’Agent’’ and ‘’Principal’’. What are essential elements of agency? What are the different kinds of agent? What are the Duties of Agent? What are Duties and Rights of Principal ?
Ans:- Section 182 defines the terms "Agent" and "Principal" as follows:
An "Agent" is a person employed to perform any act by another or to represent another in dealing with third parties. The persons for whom said act is performed, or who are so represented, are called "Principal".
In an agency, one person (Principal) employs another person (agent) to represent or act on your behalf, in dealings with a third person. The agent's act binds the principal in the same way that he would be obliged if he did it himself.
The agent may be expressly or implicitly authorized to perform an act on behalf of the director. If I authorize my agent to sell my house to a third person and he does, I am forced to sell the house to the third person in the same way as if I contract to sell the house to the third person myself. The agent is just a connecting link between your manager and the third person. Contracts concluded through an agent and the obligation derived from the acts performed by an agent, can be executed in the same way and will have the same legal consequence, as if the contract had been concluded and the acts performed by the director in person. [Section 226] Explaining the definition of agent as a state in Section 182, Dhavan, J. noted in Loon Karan v. John and Co, AIR 1967 all. 308, 311:
Essentials to Creation of Agency
An act performed by an agent on behalf of the director links the director to a third person. The relationship between the Principal and the Agent between the person represented and the person he represents must exist for the responsibility of the principal towards the third person to arise. In the following situations, the principal is bound by the acts of the agent, that is, in such situations, the agent has the power to link his principal:
(1) By the actual authority conferred on the agent to act on behalf of the principal. Such authority can be express or implicit.
(2) By the agent's authority to act on behalf of the principal in an "emergency" situation.
(3) For the conduct of the director, who creates an agency based on the Estoppel Law.
(4) By rectification of the agent's act by the director, although the same has been done without the prior authorization of the director.
(5) Due to presumption of agency in the Husband-wife relationship.
(1) Acts performed with the real authority of the director or Principal.- A director or Principal is bound by the acts performed by his agent with his authority. The authority of an agent can be express or implicit. [Section 186] Section 187 defines express and implicit authority as under:
Express authority.- An authority is said to be express when it is given by spoken or written words.
Implicit authority.- The judicial authority is said to be implicit when inferred from the circumstances of the case; and the things spoken or written, or the ordinary course of the negotiation can be considered circumstances of the case.
For example :
A owns a store in Serampore, lives in Calcutta, and visits the store from time to time. B manages the store, and he has a habit of ordering products from C in A's name for the purpose of the store and paying for them with A's funds with A's knowledge. B has implicit authority from A to order goods ( on credit) from C to A for the purposes of the store.
(2) Authority of the agent in an emergency (Section 189).- Section 189 explains the authority of an agent in an emergency, as in:
’189. Authority of the agent in the event of an emergency.- An agent has the authority in the event of an emergency, to carry out all these acts in order to protect his director from losses as a person of ordinary prudence would do in his own case in similar circumstances.
Illustrations
(a) An Agent for sale can repair the goods if necessary.
(b) Consign provisions to B in Calcutta, with instructions to send them immediately to C in Culttack. B can sell the supplies at Calcultta if they can't handle the trip to Cuttack without spoiling "."
(3) Principal bound by Estoppel.- Sometimes the agent does not have express or implied authority to do an act on behalf of the director, but the director by his conduct creates an impression in the mind of the third person that the agent has a authority to act on their behalf. In such case, the principal is responsible to the third person for the acts performed by the agent, based on the application of the impediment law. The basis of the action is what the third person appears to be an authority, that is, an apparent or ostensible authority vested in the agent. Section 237 contains the following provision in this regard:
’237. Principal's responsibility, including the belief that the agent's unauthorized acts were authorized. or the conduct led said third parties to believe that such acts and obligations were within the scope of the agent's authority. ''
The arrangement has been explained by the following illustration:
(a) A consigns goods to B for sale, and instructs B not to sell at a fixed price. C, ignoring B's instructions, enters into a contract with B to buy the goods at a price below the reserved price. A is bound by the contract.
(b) A entrusts to C a negotiable instrument endorsed in bank B sells them to C in violation of A's private orders. The sale is good.
The House of Lords at Armadas Ltd, v. Mundogas S.A., (1986) A.C. 717 (emphasis added), stated:
... Apparent authority occurs when the principal, by word or conduct, has represented that the agent has the actual requested authority, and the party dealing with the agent has entered into a contract with him based on that representation. The director in these circumstances is prevented from denying that the real authority existed. In the commonly found case, the ostensible authority is of a general nature, arising when the principal has placed the agent in a position that, in external words, is generally considered to be the carrying authority to carry out transactions of the type in question. Ostensible authority can also arise when the agent has had a course of dealing with a particular contractor and the manager has accepted in this course of transactions and honest transactions arising from it.
(4) Principal bound by ratification.- It has been previously indicated that a principal is bound by acts performed by the agent with his authority that may be express or implied. He is also bound by acts performed in an emergency. In addition, it is bound by impediment when there is an apparent or ostensible authority conferred on the agent. It has also been observed that when the agent performs an act for which he has no authority, the director is not obligated to do the same. There is an exception to this when the director may be bound even by acts done without any authority. If the director ratifies, that is, grants subsequent approval to, an act performed without his authority, but on his behalf, the director would be obligated with respect to that act.
Type of agents
1) Del credere agent, 2) Commission agent, 3) Factor, 4) Broker,
5) Co-agent, 6. Sub-agent.
1) Del Credere agent.- A del credere agent is one who for additional remuneration, called the credere commission, assumes the responsibility of guaranteeing the due performance of the contract by the other party. Because she charges an additional fee, she assumes responsibility for the solvency and performance of her contracts by the other parties, and therefore indemnifies her employer for the loss. A dealer agent is responsible for paying the seller only if due to the buyer's insolvency or other similar cause, the seller is unable to recover the buyer's price; but not if the buyer, although solvent, has refused to pay because the seller has not duly fulfilled the contract.
2) Commission Agent- A commission agent is a person who buys or sells goods on the market on behalf of her employer on the best terms and who receives a commission for her work.
3) Factor-A factor is an agent in charge of the possession of goods in order to sell them. You can sell the products in your own name. A factor is entitled to retain the assets for a general account balance.
4) Broker- A broker is a mercantile agent employed for the purpose of buying and selling goods. His main duty is to establish a relationship between two parties for a transaction and he receives a commission for his work. The possession of property is not entrusted to him. It simply brings the two parties together and, if the transaction materials, you are entitled to commission.
5) Co-agent.- When an authority is expressly granted to several people without stipulation that one or more of them are authorized to act on behalf of the whole body, they have joint authority and are called co-agents.
6) Sub-agent.-A sub-agent is a person employed and acting under the original agent in the agency business.
Duties of Agents
The following are the duties of the agent:
1. It is the duty of an agent to reasonably care for the principal's property and not destroy the sale.
2. It is the agent's duty not to deal on their own.
3. It is the duty of an agent to execute the mandate of its director.
4. An agent should not delegate her authority to another person, but perform agency work herself.
5. An agent is required to render appropriate accounts to her principal upon request.
6. An agent must not obtain any secret benefits from her agency.
7. In the event of difficulty, the agent should inform the principal and obtain instructions from him before taking any action to deal with the difficulty or emergency.
Duties of the Principal
The following are the duties of the principal:
.
1. The principal must compensate his agent with respect to injuries caused to said agent by the negligence or lack of skill of the principal.
2. The principal is obliged to indemnify the agent against the consequences of the legal acts carried out by said agent in exercise of the authority conferred on him
Principal 's Rights
The following are the rights of the director:
1. No action by the agent according to the instructions of its director.
2. Failure to follow the customs of commerce in the absence of instructions.
3. If the principal suffers a loss, she has the right to recover from her agent if it occurs due to the following reasons;
4. Failure to perform their duties with skill, care, or diligence.
5. If the principal demonstrates that the agent has acted as the principal and not simply as the agent, he has the right to refuse to compensate the agent for the losses suffered by the agent in such transaction.
6. If the agent without the knowledge and consent of the director makes any secret agency profile, the director has the right to recover them from the agent.
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