Week 13: Draft a Representation/ Agency Agreement

1. A, a restaurant owner who runs Zoom South Indian Restaurants wants to

hire the services of B Ltd., a delivery agency for the delivery of food from his
restaurants to the nearby localities. Identify and draft the following clauses
as per the facts are given below:

a. Draft a services clause explaining the scope of what services B Ltd.

would provide to the restaurant. Make it as precise as possible, i.e.
insert a mechanism in the contract for parties to specify further
technical details about the timeline for servicing and number of orders,
etc.

b. On which basis would B be remunerated for its services (e.g. number

of orders, deliveries, no. of resources deployed, etc.)? Draft a clause
for the same.

c. What could be the consequence(s) for non-performance/ performance

of the delivery agent not being up to the mark? Draft a suitable clause
including the same?

d. Write down a clause prescribing the mechanism for increase in cost

(e.g. increase in delivery volumes, increase in cost, etc.). Include an
intimation procedure for the same and a way to limit the quantum of
increase in cost.

e. Both parties agree that B Ltd. will have access to certain material of A
which needs to be used during the provision of services and B warrants
that it shall not share any in-house knowledge and processes with
others or use the information to start a similar business on its own.
Draft a suitable clause for the same.

2. Bonus Exercise

Indian Contract Act creates three kinds of agency - express, implied and
apparent authority of the agent, and creates the risk of liability for the
principal. Banks, insurance companies and apps like Flipkart, Uber and
Zomato could be vulnerable to significant risk from the actions of their
‘agents’.
 What are the possible ways to reduce risk the principal’s liability? These could
be in the form of contracts with customers, agents, managerial checks, etc.

Reference Materials

Chapter on Representation/ Agency Agreement in Module 8

IRDA (Licensing of Insurance Agents) Regulations, 2000 (​here​)
Indian Contract Act, Sections 182 - 238 (​here​) (​Optional Reading​)