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-17Contract 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-17AGENCY 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 7Krishna 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 7ESSENTIAL 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 \ 7Agent 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-17Kinds of agents 1.Mercantile agent. 27-May-17Del 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-17Creation 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 7Creation 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-17Creation 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-17Relation 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-17Delegatus 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-17Rights 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