Contract

of
Agency
 Learning outcome
• Meaning of agency
• Parties of agency
• Features of agency
• Types of agents
• Relation ship between principal and agent
• Termination of agency
 Contract of agency
• Section 182-238

• Its a contract which creates relationship

between principal and agent .

• Agency contract may be express/implied

 Parties of Agency
• Agent is
• A person employed to do any act for
another
• To represent another in dealing with the
third persons .

• Principal is a person for whom such

act is done or who is so represented.
 Essential rules of valid agency
• Agreement between principal & agent

• Agent must act in representative capacity

• Principal must be competent to contract

• Agent need not be competent to contract

• Consideration is not necessary

 Creation of agency
• Agency by express agreement

• Agency by implied agreement

• Agency by estoppels

• Agency by holding out

• Agency by necessity

• Agency by operation of law

• Agency by ratification
 Classification of agents

1. Mercantile/ commercial agents

2. Non mercantile/ non commercial agents

On the basis of nature of work agents can be
Mercantile agent:

(i) Factor : general lien

(ii) Auctioneer : particular lien
(iii)Broker : No lien
(iv) Commission agent: no lien
(v) Del creder agents: Both guarantor and agent
(vi) Banker
 2. Non mercantile agent
Solicitor
Insurance agent

3. On the basis of authority

Special agents
General agents
Universal agents
 Other types
• Sub agent
• Substituted agent
Duties of an agent:
1. To follow instructions of principal
2. To carry out work with reasonable care
3. To render proper accounts to principal
4. To communicate with the principal
5. Not to deal on his own account
Duties of an agent:
1. To pay sums received for the principal
2. Not to make any secret profits
3. Do not setup an adverse title
4. Duty to protect interest of principal
5. Duty not to delegate authority
6. Duty not to misuse information
Rights of agent:
1. Right of retainer
2. Right to receive remuneration
3. Right of lien
4. Right of indemnification
5. Right of compensation
6. Right of stoppage in transit
Duties of principal
1. To indemnify the agent against the
consequences of all unlawful acts
2. To indemnify the agent against the
consequences of acts done in good faith
3. To indemnify agent for injury caused by
principal’s neglect
4. To pay the agent the commission or other
remuneration agreed
Rights of principal
1. To recover damages
2. To obtain an account of secret profits and
recover them and resist a claim for
remuneration
3. To resist agent’s claim for indemnity
against liability incurred
 Termination of agency
• Its end of relationship between principal
and agent.

• Agency may be terminated by

a) Act of parties
b) Operation of law
Termination of Agency

A. By the act of parties

1. Agreement
2. Revocation of authority by the principal
3. Revocation by the agent
B. By Operation of Law:
1. Performance of contract
2. Death and insanity
3. Expiry of time
4. Insolvency
5. Destruction of subject matter
6. Principal becoming alien enemy
7. Dissolution of company
 Effectiveness of termination
• When an agent or third party comes to
know about the termination of agency.
Irrevocable agency
1. Agency coupled with interest
2. Where the agent has incurred a personal
liability
3. Where the agent has partly exercised the
authority
 THANK YOU

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