Lord Herschell on agent
In Kennedy V De Trafford (1897) AC 180,188.
“No word is more commonly and constantly abused than the
word ‘agent’.
The ‘dress agent, private inquiry agent, secret agent, washing
agent, cleaning agent,
27-May-17Contract of agency
° Essentials of contract of agency:
1. Competent parties( modification ,agent need not)
2. Valid offer
3. Valid acceptance
4. Consent and free consent
5. Consideration (modification- need not present)
6. Purpose: Delegation of contract making functions
27-May-17AGENCY
S.182 Agent and principal defined: An agent is a person
employed to do any act for another or to represent
another in dealings with third person. The person for
whom such act is done, or who is so represented, is
called the principal.
Note :Definition is vague in character hence defective
Krishna V Ganapathi AIR 1955 Mad 648
“It is only when he acts as a representative of the other in
business negotiatiations, that is to say, in the creation ,
modification and termination or termination of
contractual obligations, between
27-May-17
7Krishna case continues
That other and the third persons, that he is an agent.
Representative character and derivative authority may
briefly be said to be the distinguishing feature of an
agent”
Definition: The contract of agency is a contract by
which the principal authorizes the agent to
make contract on his behalf with third persons.
27-May-17
7ESSENTIAL ELEMENTS OF CONTRACT
OF AGENCY
1. Competency of parties. Principal to be competent and
agent need not be.
2. Valid offer and acceptance.
3. Consent and free consent.
4. Consideration is not essential. 185
5. Purpose: To create contractual facility for the principal
to make contract through the agent on his behalf with
the third parties.
27-May-17
_Limitations: Qui facit per alium,facit per
se
Limitations in agency creation:
1.
Where the act performed is personal in character:
Painter
Where the transaction is required to by statute to be
done by or to be evidenced by the signature of the
principal himself: Registrar
Where competency arises by virtue of holding of
some public office:
The competency arises by virtue of some power of
personal nature and requiring skill or discretion for
its exercise: judge
Statutory non delegatable duty: judge
27-May-17
\
7Agent and servant
Re contract making capacity.
Re control over process and product.
Re remuneration( salary and commission).
x YS
Re liability of principal (scope of authority) and
master (vicarious liability) for the acts of servant and
agent.
Re number of principals and masters.
6. Managing Director or company secretary has dual
capacity (servant as well as agent in a company vis-a-
vis the third party.
27-May-17Kinds of agents
1.Mercantile agent.
27-May-17Del credere agent
1.Agent who undertake the responsibility of performance of the
contract to;
¢ Principal in case the third party fails to perform.
° Commission is higher than normal.
. Is it a contract of guarantee?
. Contingent pecuniary liability; ascertained sum due
between seller and buyer.
Courturier V Hastie (1852) 8 Exch. 40
Defendant acting as del credere agent sold the plaintifi’s good which were supposed to be
on voyage but owing to damage by heat the captain sold the goods without the
knowledge of the parties . Buyer repudiated the contract and sued the agent for
failure of the contract. Agents held liable.
27-May-17Creation of contract of agency
1. Express contract.
2. Implied contract.
3. Agent by operation of law?: Original directors
of a company, agent appointed under the provision of
statute. Oral contract may be valid though Statute
needs it to be in writing incase of insurance contract:
Delhi Electric Supply Undertaking V Basanti
Devi AIR 2000 SC 43:LIC authorized orally the
employer to collect the premium from the salary of
the employee and forward it to LIC
27-May-17
7Creation of contract of agency
continued
4, Estoppel: The contract of agency may be created on the basis
of principle Estoppel: Where A (principal) has by his conduct
makes C to believe that B is his agent and C as a result of that
changes his position on the basis of that believe( treating B as
the agent of A) A shall responsible to C as if B is the agent of A.
Example: Husband and wife living together, wife is implied agent of
husband. (Hornby: The Principles of agency 1952,page 32) .Is
husband an implied agent of wife?
27-May-17Creation of contract of agency
continued
5. Agency of emergency: Agent has the defined ordinary scope
his authority which may become extra-ordinary in case of
emergency or necessity: Great Northern Railway co.V
Swafield (1874)LR.Ex 132.Horse transportation, non to
receive, horse put in Stable case. Sim & Co.V Midland Rly.
Co.(1913) 4 KB 103. Butter transportation, strike ,butter
selling case
27-May-17Relation of principal and agent
Duties of an agent:
1 Duty to execute mandate: Pannalal Jankidas V Mohanlal AIR 1951 SC 144. Agent
bought the goods with instructions to insure them for which he charged premium but did not
insure and the goods were destroyed due to explosion. Agent held liable.
2 Duty to follow instructions or customs.$,211 Lilley V Doubleday (1881) 7QBD
510: Agent instructed to keep the goods in particular warehouse he kept in equally good
warchouse buts goods were destroyed due to the negligence. Agent held liable.
3 Duty of reasonable care and skill.$.212
4. Duty to avoid conflict of interest.S.215
5 Duty not to make secret profit: AndrewV Ramasay(1903)2KB 635 Auctioneer’s case
taking commission from the buyer was held bound to pay to the Principal.
6. Duty to remit sums.$.218.
7. Duty to maintain acounts.S.213 :Even the agent may have a right to seek accounts statement
from the Principal. NM GaziwalaV Papammal AIR 1967 SC 333
8 Duty not to delegate.S. 190: Delegatus non potest delegare. Unless...
27-May-17Delegatus non potest delegare (S.190),
Exceptions:( S.191 Sub agent)
1 Nature of work.
2. Trade custom: Architects usually appoint surveyors.
3 Ministerial action: Unless otherwise agreed.
4, Principal’s consent: (a) Express (b) Implied (c) Ratified
Sub-agent defined: Section 191.
1. Improper delegation (S.193): Implications.
2. Proper delegation (S.192)
Responsibilities of agent and sub-agent:
1 Agents responsibility to the Principal and third parties.
2. Sub-agents responsibility to the principal (no: unless fraud or willful wrong by the
sub-agent), agent and third parties
Substituted agent: Ss.194,195.
1. Relation of substituted agent and principal.
2 Agent’s duty in naming the agent: Same standard of care as in his own case.
27-May-17Rights of the agents.
1. Right to remuneration. (S.219) :(a) agreed (b) reasonable.
2. Right to retainer. (S.217)
3. Right to lien (S.221)
4. Right to indemnity (Ss.222,223)
5. Right to compensation (S.225)
27-May-17