Contract of Agency

Basics
The law relating to agency is contained in Chapter 10 of the Indian Contract Act, 1872. An Agent is a person employed to do any act for another or to represent another in dealings with third persons The person for whom such act is done is called the Principal and the legal responsibility that the Principal carry with is called the Third person..

Essentials of Agency
Agreement between the Principal and the Agent..

Intention of the agent to act on behalf of the principal..

Who can be an Agent

Any person who is authorized to act as an agent and been given the authority by the Principal for his deeds.. Even a Minor or a person of unsound mind could be an agent Not necessarily Consideration is always a part to create an Agency

Creation Of an Agency
By Express AgreementSec 186 By Implied AgreementSec 187 a- agency by estoppel.. Sec 237 (hearing) b- agency by holding out..(prior experiences) c- agency by necessity/emergency.. Sec 189 By ratification.. Sec 197 By operation of the law..

Duties/ Rights of an Agent

To carry out the work undertaken according to the directions given by the principal.. To carry out the work with reasonable care, skill and diligence.. To render proper accounts to the principal.. To communicate with the principal in case of difficulty.. Not to deal on his own accounts.. To pay sums received for the principal.. Not to disclose any information thereto..

Right of retainer Right to receive remuneration.. Right of lien.. Right of indemnification..

Duties of Principal
To indemnify the Agent against the lawful consequences.. Indemnify Against acts done in good faith.. To pay the agent commission or remuneration as agreed..

Rights..
To recover damages.. To obtain an account of secret profits and recover them and resist a claim for remuneration.. To resist agents claim for indemnity against liability incurred..

Sub Agent
A Sub-Agent is a person employed by and acting under the control of the original agent Sec 191.. The relation of subagent to agent is that between the agent and the principal..

Relationship, Sub-Agent to principal

The legal relation between the principal and the sub-agent depends upon the crucial question as whether the appointment of the subagent is proper or improper.. Proper appointment Sec 192 Improper Appointment.. Sec 193

Substituted Agent
A substituted agent is a person who is named by the agent, on an express or implied authority from the principal, to act for the principal.. Sec 194

Sub Agent Vs Substituted Agent

A Sub- agent does his work under the control of the agent whereas a substituted agent works under the instructions of the principal.. There is no privity of contract between a subagent and the principal.. The agent is responsible to the principal for the acts of the sub-agent. But he is not responsible to the principal for any act or negligence of the substituted agent..

Position of Principal and Agent in relation to Third Parties

Named Principal: both name and existence are disclosed. Acts of Agent are the acts of the principal.. Principal is liable on behalf of acts done by agent towards third party.. Unnamed Principal: Existence is disclosed but not the name The principal is again liable unless there is a separate term, express or implied made to make the agent personally liable..

 Undisclosed Principal: Nor name or existence of Principal is disclosed..

Position of principal: On being discovered the third party may sue him or the agent.. Position of agent: He has all rights covered as against the principal but as regards the third party, he is personally liable on the contract.. Position of third parties: Third party has all rights against agent as against the principal till the time principal is not disclosed..

Termination of Agency
Sec 201 describes the modes of termination of agency.. 1- Termination by act of the parties: Agreement Revocation by the principal Revocation by the agent

2- Termination by operation of law (Sec 201)

Performance of the contract Expiry of time Death and insanity Insolvency Destruction of subject matter Principal becoming an alien enemy

Irrevocable Agency
When an agency cannot be terminated or put an end to, it is said to be an irrevocable agency.. An agency is Irrevocable in following cases: Where the agency is coupled with interest.. Where the agent has incurred a personal liability.. Where the agent has partly exercised the authority..