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Definition:
The law of agency is an area of commercial law dealing with a set of contractual, quasi-contractual and non-contractual relationships that involve a person, called the agent, that is authorized to act on behalf of another (called the principal) to create a legal relationship with a third party.
Agents and principals; Agents and the third parties with whom they deal on their principals' behalf; and Principals and the third parties when the agents purport to deal on their behalf.
KINDS OF AGENTS:
1. General Agents 2. Special Agents 3. Universal Agents 4. Mercantile Agent 5. Factor 6. Commission Agent 7. Del Credere Agent 8. Broker 9. Auctioneer 10. Indenter 11. Banker 12. Advocate
Creation of agency:
Agency by Estoppel
Estoppel means to prevent a person from denying a fact. When a person by his conduct induces others to believe that a certain person is his agent, he is stopped from subsequently denying it.
Agency by Ratification
When a person acts on behalf of others without his authority, and his act is accepted by that person agency is said to be created by ratification.
Duties of Agent
Duty to follow directions of the principal or customs of trade Duty to work with Reasonable skill Duty to Render Accounts Duty to communicate Duty to Termination of Agency Duty not to Deal on his Own Account Duty not to make Secret Profit Duty to Pay Sums Received Duty not to delegate Authority
Rights of agent:
Right to Retain Right to receive Remuneration Right of Lien Right to be indemnified for lawful acts Right to be indemnity for acts in good faith Right to Compensation for Injury Right of Stoppage of Goods
Right of Principal
Right to Recover Damages Right to Obtain Secret Profit Right to refuse to indemnity Agent
Duties of Principal
Duty to indemnify for Lawful Acts Duty to indemnify for Acts in Good Faith Duty to indemnify for Injury by Principals Neglect Duty to Pay Remunerations and Dues
Termination of Agency
Agreement Revocation by Principal Revocation by Agent Completion of Business Expiry of time Death of Principal or Agent Insanity of Principal or Agent Insolvency of Principal Destruction of Subject matter On becoming Alien Enemy Change of Law
2. D, a director of a company, contracted S to buy machinery for the company. D acts as an agent of the company so the company is liable for Ds acts as a principal.
Agency by ratification Agency by operation of law
Agency of necessity
4. If the principal does not give any directions to agent then the agent should:
Deal on his own account
Follow the custom of trade Terminate the agency
5. B is servant of A. b buys goods on credit from c and pays A for them regularly. B buys the goods from C on credit for personal use. A is liable to C for payment.
Agency by holding out Agency by estoppels Agency by necessity
3. Where the principal instructed the agent to warehouse the good at a particular
place and the agent warehoused them at a different warehouse which was equally safe, and the goods were destroyed by fire without negligence, it was held that the agent was liable for the loss because any departure from the instructions makes the agent absolutely liable.
Discussion: Duties of agent: they cannot follow the principal advice that why they are liable.