Unit - AGENCY Chapter-1 Contract of Agency ——— Definition of agent According to Section 182 of the Contract Act, an ‘agent’ is Person employed to do any act for another, or to Tepresent another in dealing with third person. As per Section 182 an age nt is one- i) who is employed by another-(principal) ii) todo any act for another | (principal), or ii) “represent another (principal) in dealing with third person. Definition of Principal __ As per Section 182 of the Contract Act, "The Tson for whom 8 is done, or who is so represented (agent) is called the — ee eae Principal is one who employs another to act for him subject to neral control and instruction; the Person from whom an agent's is divided. For example, A appoints B to urchase 100 ddy from C on his behalf. A is the ‘principal’ and B is the agent? =§ Ot. Dawe ty be Section 183 of the Contract Act, any person who is of rity according to the law to which he is subject, and ~ nd mind, may employ an agent. ae? ontract Act provides that as between the a person may become an agent, but no ~ e can Become\ a \e » © ~” Dhavan J observed, (O-1, —nt C tract HL 9 as 10 ible 1 the principal according to ik. an agent, so 4 S : P provisions jn that pehalf herein contain Apprentices: attorneys: auctioneers: barlees, executors and jos A ors; guardians, partners, ealagen's being tinguishable fom, hority is of special administrators. actors fi and trustees at agents ne of the fact that their aul ~ablic officers public © i ris generally BY reason of We and Timited character in most respects: The duty of. the agent js to enter into legal and contractual half of the principal with third parties. He derives his al. The principal will obligations, on. do so from je con fr nt so far as these are within the scope au be liable for all acts of the age! of hi rity. The agent js a connectiny link between the inc snd the third parties: gent ig BORE — papcipa an v John and Co., {AIR 1967 All 308, 31 this definition, an agent ce y s In Loon Kare " "According tO his own behalf but always on behalf of another. feeither repr edie on his princi “ny transactions OT deali ith a thi p palin y dealings with a third performs an act for thi |. In either case, the act or acne “s in law to be not his own but of the Oe ae . The wil crucial test of the status of an a: i gent is that his acts bi s bind the princi ipal.” A persol . pe sch BEY gives advice to another in_matt a ‘in matters of agent, The essential arabon it business does not thereb inding on the princi ; the agency b} pal who is represented y the - for all le agent till the latter's authority om purpones of inated. nor be tettnak a Personally in respect of personally liable for an agent does Pte Satine or the same, but a pri some O sed act also by Principal _ - ratification.y-I1, Ch.1) Contract of Agency Wm \ An agent in whom the principal places trust and confidence we stands ina fiduciary position in relati n to the principal. Although the fiduciary relation is the key to much of the law governing this relation, ‘every agent cannot said to be in fiduciary position vis-a-vis his principal. I ES bs .e Directors of a company are in the eye of law, agents of the company for whichthey act. But a company promoter is not as there 9°", )can be no agent for a non-existent principal) A / a The post office is not an agent of the sender of the postal article. x A person employed by another to invest money on his behalf and represent him with debtor is an agent within the meaning of Section 182. in Delhi Electric Supply Undertaking v. Basanti Devi, [AYR on 43] it was held that the employer, Who deducts the insurance premium every month from the salary of its employee under Salary Saving Scheme of the LIC was an agent of the LIC -for collecting premium from its employees, under Section 182, though he was not an insurance agent under the Insurance Act. In Varsha ineering P. Ltd. y. M/s. Vijay Trades, Baroda and others, [AIR 1983 Guj. 166], it was observed"that-by-merely giving @ guarantee for a particular period in regard to carrying out the repairs one can never say that the title to the goods ever passed. In all such cases, the distributors or all such persons who purchase for tesale of such goods can never be considered or termed as agents as contemplated by Section 182 of the Act. = In Sakiti Sugar Ltd. v. Union of India, [AIR 1981 Delhi 2121, it was held that the State Trading Corporation, which was a legal entity, when permitted to export sugar, did not become the agent of Union of India, while exercising that commercial function. Agent and Servant As defined by Webster, "A servant is one who serves or does ) : ol Who issn VON } r labour, and is subject to his athe ieee so hUaaeyl, ch.1] Contract of A ency 127 meaning of Agency Agency is the relationship of principal g ‘ : pal and agent. ahs ‘an agent acts on behalf of his principal and often use on means pis acts in that capacity are attributable to the principals Ss name and Agency is the legal! relationship which exists ernie tes parties. In simple words, the relationship between the a . i ‘a principal is called ‘agency’. For example A appoints B to ee ni 2 a of rice on his behalf. A is the principal and B is the “ ont ae relationship between A and B is called ‘agency.’ gent. The ce The SUpeC EE of ‘agency’ stems out of two Latin maxims qui alium facit, per seipsum facere videtur' ("He who does an on through another is deemed in law to do it himself") and “qui facit per alium, facit per se” (He who acts by another acts by himself). The law of ‘agency’ is based on the idea of a unilateral manifestation of willingness to be bound. The base of ‘agency’ is the consent of one party, the principal, that the other party, the agent, shall act on his behalf and the agent consents so to act. Hence ‘agency’ is a comprehensive word which is used to describe the relationship that arises where one man is appointed to act as the representative of another. Agency may for example be the making of a contract, the institution of an action, the conveyance of land or, in the case of a power of attorney, the exercise of any proprietary right available to the employer himself. __. Agency has two aspects namely i) it creates an obligation between the employer and employee giving rise to mutual right and liabilities between them; ii) it leads to the creation of privity of contract between the employer and a third party. Contract of Agency In English Law, employment of one person by anoth legal relations with a third person”. f lays emphasis on the creation 0 and third parties, the Indian Law defines agency as a puns ‘contract of agency’ is understood as “the er in order to bring the latter into While the English definition of f a relationship between the matternts Different kinds of a Be n to the agent to Depending on the kind of authority esics kinds. ~*~ on behalf of the principal, the agents 7° a (1) Auctioneers : is to sell An auctioneer is an agent whose Se tic eaihorit = r other property by auction, i.e., by oPe™ ee a Re iraittics Atte, * ne t to giv oa him is to sell the goods only, and no g that behalf2 He oe of the seller, unless expressly authorized in. mercantile agent within the 7 antag of Section 2(9) of the Sale of Goods Act. If the owner of the goods puts him in Possession of the goods, although the authority to sell has not been conferred in him, a buyer in good faith from such an auctioneer will get a good title in respect of the goods.’ Thus, if he has been authorized to sell the goods only subject to a reserved price but he sells the same to an innocent and bona fide buyer below the reserved price, the buyer will get a good title in respect of such goods.* (2) Factors A factor is a mercantile agent who is entrusted with the possession of the goods for the purpose of sale.6 He has also the power to sell goods on credit and also to receive the price from the 1. Chairman, Life Insurance Corporation and others v. Rajiv Kumar Bhasker, AIR 2005 SC 3087. 2. Payne v. Lord Legonfield, (1881) 51. LJ.Q.B. 642. 3. See proviso to Section 27, Sale of Goods Act, 1930. Also see Section 1%, Indian Contract Act, regarding pledge by a mercantile agent. 4. Folkes v. King, (1923) 1 K.B. 282; Rainbow v. Howkins, (1904) 2 K.B. 322 5. See E.H. Parekh v. King Emperor, A.LR. 1926 Oudh 202.AGENCY owner has put a factor in r. If ll of title but without author > the docume oods by him will Convey a good title to the sale 0 Edits to Section 171 of the Contract Act, puyer Be] lien over the goods belon t of ge a factor has gin ‘ ; he general balan 3 in his possession, for the g are 8 to his Principal, which ce of account. re) Brokers is an agent who has an authority to negotiate the sale A en oods on behalf of his principal, with a third person. uurchase © ie himself has no possession of the goods. He merely or aike a factor, arties to enter into a contract. He gets his akes pe ee any transaction materializes through his commissio efforts. Agents 1 Credere (4) De i inci ird person. He is not rincipal and a thir plished between eel for the failure of the third person 8 snswerable Baek A del credere agent constitutes an ae ; abn the eee. ile agent, who, on the payment of som Pe e He is a issi the ommission, guarantees issi known as del credere c pe xtra eee the BS feat by the third person. If in suc e ce O rforman lied to instance, fails to pay for are shies agent the third person, ee bring an action a ihe. that of a surety, : e principat ca” the del credere agent, ; Sen for Pein. The fe arises if the ee ease Co i) e Its js seconda E ae is due under the contrac the princip the function of an agent is over after a contract is lly, Genera s