AGENCY

1. SURAJ LAMPS V. STATE OF HARYANA (SCOPE OF

GPA SALES)
We have merely drawn attention to and reiterated the well-settled legal position that
SA/GPA/WILL transactions are not `transfers' or `sales' and that such transactions cannot
be treated as completed transfers or conveyances. They can continue to be treated as
existing agreement of sale.

Nothing prevents affected parties from getting registered Deeds of Conveyance to

complete their title. The said `SA/GPA/WILL transactions' may also be used to obtain
specific performance or to defend possession under section 53A of TP Act. If they are
entered before this day, they may be relied upon to apply for regularization of
allotments/leases by Development Authorities. We make it clear that if the documents
relating to `SA/GPA/WILL transactions' has been accepted acted upon by DDA or other
developmental authorities or by the Municipal or revenue authorities to effect mutation,
they need not be disturbed, merely on account of this decision.

19. We make it clear that our observations are not intended to in any way affect the
validity of sale agreements and powers of attorney executed in genuine transactions. For
example, a person may give a power of attorney to his spouse, son, daughter, brother,
sister or a relative to manage his affairs or to execute a deed of conveyance. A person
may enter into a development agreement with a land developer or builder for developing
the land either by forming plots or by constructing apartment buildings and in that behalf
execute an agreement of sale and grant a Power of Attorney empowering the developer to
execute agreements of sale or conveyances in regard to individual plots of land or
undivided shares in the land relating to apartments in favour of prospective purchasers. In
several States, the execution of such development agreements and powers of attorney are
already regulated by law and subjected to specific stamp duty. Our observations regarding
`SA/GPA/WILL transactions' are not intended to apply to such bonafide/genuine
transactions.

2. ENGLISH V. DEDHAM VALE PROPERTIES LTD.

(IMPLIED AGENCY)
Facts: A couple sought to sell land and were negotiating with Dedham. Dedham applied for planning
permission on the land, which was granted, and therefore made the land more valuable. Dedham did not
tell the couple this and bought the land at its original value. The couple subsquently sued.

- Mr. and Mrs. English owned a freehold house and about four acres of land adjoining
it. The adjoining land, which would have ripe for development. However, it was
refused by the planning authority to grant planning permission. Mr. and Mrs. English
so decided to sell the property to defendant property company Dedham Vale
Development Properties Ltd.
- During the negotiation period (1971), an employee of Dedham vale Property
Company on the instructions of the Managing Director applied for planning
 permission for the part of the plot. The application purported to be made on behalf of
Mr. and Mrs. English and they knew nothing about it. Although the employee of the
defendant company did mention to the plaintiffs that the company proposed to make a
planning application in respect of a small plot of the property, he did not make its
form clear. He did not mention that it was proposed to make it in the plaintiffs’
names. The plaintiffs gave no consent to the use of their names for any application.
- Relying upon the said presentations the plaintiffs agreed to accept the money from
defendants. Therefore, the sale was concluded as a written contract and completed the
conveyance. The planning permission was granted, but the plaintiffs were not
informed of that fact. In 1972, the plaintiffs issued a writ seeking rescission of the
conveyance and damages for false representation. However, Mr. English subsequently
died in1974, but, the cause of action being a joint one, which survived to Mrs.
English, she had continued the action on her own.

Held: It was held that Dedham had appointed themselves as agents of the couple in applying for
planning permission so there was a fiduciary duty (which includes a duty to disclose any conflicts of
interest); so Dedham had to account for the profits made on the transaction.

- held that the representations made by the employee of the defendant company during
the pre- contract negotiations were not false to his knowledge at the time they were
made. The employee did not induce the plaintiff into the contract. The planning
application about the small plot did not affect the truth of the representation made by
the employee. Therefore, the plaintiff’s claim for damages for false representation
failed. No misrepresentation made by the defendant but there was a fiduciary
relationship arose between the plaintiff (vendor) and Defendant (purchaser).
- Fiduciary relationship imposed a duty on the defendant to disclose his acts to the
plaintiffs before conclusion of the contract. Therefore, the defendant was liable to
account to the plaintiff for any profit made as a result of the purported agency.
Consequently, the defendant was under a duty to account for the profits received as
result of the successful planning application.
- An implied contract must be deemed to have arisen between the defendant and the
plaintiffs, and the defendant was in breach of the duties arising from such implied
contract in failing to disclose the making and result of the planning application. If this
plan was disclosed to the plaintiff, they might reasonably be supposed to be likely to
influence in deciding whether to conclude a contract or not.

2. SIM’S & CO. V. MIDLAND RAILWAYS (AGENCY BY

NECESSITY)

3. The relationship of
principal and agent i.e.,
 agency may be created in
any
4. of the following ways;
5. 1. By express
appointment.
6. 2. Implied agency or by
the conduct or situation of
the parties.
7. 3. By necessity
8. 4. By subsequent
ratification of an
unauthorized act
9. The relationship of
principal and agent i.e.,
agency may be created in
any
10. of the following ways;
11. 1. By express
appointment.
12. 2. Implied agency or by
the conduct or situation of
the parties.
13. 3. By necessity
14. 4. By subsequent
ratification of an
unauthorized act
- Agent’s authority in an emergency (Section
189)
- The rule contained in this Section is known as the rule relating to
“authority of necessity”. The prior rules lay down duty or restrictions
on the powers or authority of an agent. In an emergency whose rules
become inapplicable during emergency. This Section may apply where
in an emergency it is not possible to communicate with the principal or
as a result of steep rise or fall of the market rate if instructions to sell
or purchase were carried out the principal may be put to a loss. This
Section, therefore, lays down a very sensible and sound rule of acting
prudently as it were a personal case of the agent himself.
- In Sims and Co. v. Midland Railway Company, a quantity of butter was
consigned with the defendant railway company. It was delayed in
transit owing to a strike. The goods being perishable, the company
sold them. 
- The sale was held binding on the owner, the companies’ action was
justified by the necessities of the case and it was also not possible to
get instructions from the owner. 
 3. SINGAPUR AIRLINES V. UNION OF INDIA (IMPLIED
AGENCY(NECESSITY)) (S. 182)
- Petitioner has challenged imposition of penalty under Section 116, Customs
Act (hereinafter referred to as the Act) on account of goods short-landed. The contention
of the learned counsel for the petitioner is that notice under Section 116 of the Act had to
be issued to the person-in-charge of the conveyance and not to the owner of the
conveyance, the petitioner is the owner of the conveyance and cannot be said to be the
person-in-charge. Section 116 imposes liability on account of short-landing of goods on
the person-in-charge of the conveyance. The expression person-in-charge has been
defined in Section 2, sub-section (31) of the Act to mean : "(b) in relation to an aircraft,
the Commander or pilot-in-charge of the aircraft." The aircraft in question had a pilot-in-
charge and notice under Section 116 of the Act should have addressed to him rather than
to the petitioner who is the owner of the conveyance.

- It is submitted by the learned Counsel for respondents that in view of Section

148 of the Act an implied agency of necessity has to be accepted. The owner of
the aircraft must be held to be an agent of the commander/pilot of the aircraft for
purposes of Section 116 of the Act

4. BOLTON PARTNERS V. LAMBERT (AGENCY BY

RATIFICATION)(s. 196)
- concerns the validity of the contract for the sale of property ratified by the
principal.

Facts:
In the case of Bolton Partners v Lambert [1889], a third party offered to sell the
property to the managing director of a company. The latter accepted the offer
without authority on behalf of the company. After some correspondence, the
defendant withdrew his offer stating that he had been misled regarding the value
of the property.
The plaintiff company claimed specific performance of the agreement. In
response, the defendant denied the existence of any complete contract.
Issue:
Whether there was a valid contract for the sale of the property?
Held:
The Court of Appeal held that the defendant was prevented from withdrawing
the offer as the contract was timely ratified. In particular, according to the court,
the contract, once ratified, should be treated as if it had been made with proper
authority from the start. In the present case, the contract for the purchase of the
property was valid.

FACTS:

An offer of purchase was made by the Defendant, A. J. Lambert, to P. A.

Scratchley, who was acting as an agent of the Plaintiffs, Bolton Partners (Limited),
but was not authorized to make any contract for sale on 8th of December, 1886.
The offer was accepted by Scratchley on 9th of December on behalf of the Plaintiffs
with a direction that the company’s solicitor had been instructed to prepare the
necessary documents. On the 13th of January, 1887, the defendant withdrew his
offer on the ground that he had been misled by the statements that had been made
to him as to the value of the property. After the withdrawal, the Plaintiffs, on 28th
of January, ratified the acceptance of the offer by S.

ISSUES:

1. Whether there ever was a completed contract between the parties?

2. Whether the contract was obtained by misrepresentation on the part of those
seeking to enforce it?
3. Whether the ratification was ultrà vires?

CONTENTIONS:

Defendant

1. There was no concluded contract but only negotiations. The letters relied on
amounted only to a conditional offer as formal documents were yet to be
prepared. Also, other terms were introduced by subsequent letters and hence
Hussey v. Horne-Payne[1] is applicable.
2. If there is a contract, it was induced by the misrepresentations of the
company’s agents.
 3. After the Defendant had repudiated his offer it was too late for the company
to ratify Scratchley’s acceptance and such ratification was ultra vires.

Plaintiff

1. As soon as an offer has been accepted the contract is complete.

2. The ratification by the board of directors on the 28th of January, was good,
and related back to the date of the original contract; so that the repudiation
by the Defendant on the 13th of January, 1887, was of no effect
3. There was no misrepresentation.

HELD:

Court of 1st Instance (Kekewich, J.)

1. The two letters of the 8th and 13th of December contained a distinct offer by
the Defendant and acceptance by Mr. Scratchley on behalf of the Plaintiffs
and there was nothing in the previous or subsequent negotiations to the
contrary.
2. On the evidence, that there had been no misrepresentation on the part of the
Plaintiffs.
3. As per doctrine of ratification , the ratification would have retrospective
effect and hence  it would not be ultra vires.

Court of Appeal

Cotton L.J.

1.  (w.r.t 1st contention of the defendant) Mere expression of an intention to

have further documents does not prevent there being a contract. There was a
binding contract constituted by the two letters alone. Hussey v. Horne-Payne
is not applicable as in that case it was not because the subsequent letters
raised a doubt, that it was held that the two original letters did not form a
completed agreement, but because the two original letters of themselves
contained terms which raised the doubt.
2. (w.r.t 2nd contention of the defendant) The rule of ratification is applicable as
per which ratification is thrown back to the date of the act done, and that the
agent is put in the same position as if he had had authority to do the act at
the time the act was done by him.
3. On the evidence, that there had been no misrepresentation on the part of the
Plaintiffs.

Lindley L. J. & Lopes, L.J.: They all concurred to Cotton L.J.’s observation.

 
LAW POINTS:

 Retrospective Effect of Ratification

Ratification is thrown back to the date of the act done, and that the agent is put in
the same position as if he had had authority to do the act at the time the act was
done by him.

Exceptions to Ratification

(1) Where a vested estate is divested;

(2) Where there has been forgery;

(3) Where the ratification is after the time when the act could be done.

Criticism

1. Gives an inappropriately full effect to the doctrine of relation back

2. The third party is in the power of the principal, not merely as to whether he
had made a contract, but also as to whether he must already answer for
breach of it.
3. When the third party discovers before any ratification that the agent is
unauthorized, he should be able to escape from the transaction rather than
have to wait, if only for a reasonable time, to see if he has a contract.
4. Only restricted to cases of lack of authority. If the original agreement is
ineffective for any other reason (like, lack of deed), there is no contract to
withdraw from and doctrine of relation back does not apply.

The rule of ratification unduly favours the principal because till ratification he was
not bound, and he had an option to adopt or not to adopt what had been done.

[1] Where you have a contract in letters or other such like documents, that is to
say, not reduced into a document of legal form; you are bound to look, not only at
what occurred before–what led up to the contract–but also at what occurred
afterwards, with regard to the contract, in order to determine the question whether
there was a completed contract,

5. ASBRY RAILWAY COMPANY V. RICHY

(RATIFICATION OF ULTRA VIRUS ACT)
  DIFFERENCE BETWEEN AGENT AND SERVANT
Comparison Chart

BASIS FOR
AGENT SERVANT
COMPARISON

Meaning An agent is a person appointed A servant is the one

by the Principal to act on his employed to do work at
behalf. that person's home as a
gardener or cleaner, etc.

Works for Principal Master

Compensation Commission Salary or Wages

Legal Relationship An agent can enter into contracts A servant cannot bring the
on behalf of his/her principal. master and the third party
Thus. he/she can bring the into a legal relationship.
principal into a legal relationship
with a third party.

Direct Control and An agent comes under direct A servant comes under
Supervision supervision and control of the direct supervision and
Principal. control of the Master.

Work An agent can work for many Servants can work for
principals at the same time. only one master at a time.

Acts A principal is liable for all the A master is liable for all
 BASIS FOR
AGENT SERVANT
COMPARISON

acts of the agent performed the acts of the servant

within the scope of his authority. performed in the course of
his employment.

Duty Assignment An agent can never act as a A servant can be assigned

servant. the duties of the agent and
act like one in certain
cases

DOCTRINE OF INDOOR MANAGEMENT - Any

person who enters into a contract with the
company shall ensure that the transaction is
authorised by the articles and memorandum of
the company