Chapter x (Secs.

182 to 238) of the Indian Contract Act, 1872

Sample document of contract of agency

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Agency: A Tripartite Relationship

Principal

Third Party

Agent
 ESSENTIALS OF RELATIONSHIP OF AGENCY

• AGGREMENT B/W PRINCIPAL AND AGENT-:

Agency depends on agreement but not necessarily on
contract. Any person can become an agent b/w a principal
and the third person.

• INTENTION OF AN AGENT TO ACT ON BEHALF OF THE

PRINCIPAL

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 Agent Action
Principal Obligation or liability

Fiduciary
relationship Third Party
(involving
trust)
Agent Contract
Fiduciary Duty of Loyalty
“An agent has a fiduciary
Principal duty to act loyally for the
principal’s benefit in all
matters connected with
the agency relationship.”

Agent
 WHO CAN EMPLOY AN AGENT?
Acc. To sec 183 of ICA any person who is of age of majority
according to law to which is a subject, and who is of sound mind
may employ an agent.

WHO MAY BE AN AGENT?

Acc to sec 184 of ICA any person who is authorized to act
such a person may be an agent. As the agent does not make
contracts on his own behalf it is not necessary that he should
have contractual capacity.

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 RULES OF AGENCY

There are two important rules of agency:

1.Whatever a person can do personally, he can do through

an agent

2.He who does an act through another does it by himself .

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Non Mercantile Agent
Wife as an Agent
•Living together and looking for necessaries

Husband is not Liable

Expressly forbidden credit
Not necessary
Given money
Trader is told expressly
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General Agent

A General agent is one who is appointed to

represent the principal in all the matters
concerning a particular business

Special Agent
A Special agent is one who is appointed
to do some particular act or enter into
some particular contract
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Sub agent and Substituted Agents
Sec 191:- Sub agent is employed by, and acting
under the control of the original agent in the
business of the agency

Sec 194:- Where an agent, holding an expressed

or implied authority to name another person has
named another person, such person is agent of the
principal for such part of the business of the
agency as is entrusted to him.

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 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.

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 DUTIES OF PRINCIPAL

1. To indemnify the agent against the consequences of all lawful acts

2. To indemnify the agent against the consequences of acts done in good faith

3. To indemnify the agent for injury caused by principal’s neglect.

4. To pay the agent the commission other remuneration agreed.

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 TERMINATION OF AGENCY

1. By act of the parties

 Agreement

 Revocation by the principal

Revocation by the agent

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 TERMINATION OF AGENCY CON’T
2. By operation of law
 Performance of the contract

 Expiry of the time

 Death of either party

 Insanity of either party

 Insolvency of either party

 Destruction of the subject matter

 Principal becoming an alien enemy

 Dissolution of a company

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