7/31/2019 Contract of Agency PPT MBA
1/15
AgencyA person who has capacity to contract mayenter into a contract with another
1) Either by himself
2)Through another person
7/31/2019 Contract of Agency PPT MBA
2/15
An Agent is a person employed to do anyact for another or represent another in isdealings with third person
The function of an agent is to bring hisprincipal into connectional relations withthird parties. The agent is merely aconnecting link between the principal andthird parties .
7/31/2019 Contract of Agency PPT MBA
3/15
Essentials relationship of Agency
1) Agreement between the principal and theagent
2) Intention of agent to act on behalf of the
principal
7/31/2019 Contract of Agency PPT MBA
4/15
Kinds of Agents
A) 1)Special Agent2)General Agent
3)Universal Agent
B) Mercantile Agent1) Factor
2) Auctioneer
3) Broker4)Commission Agent
7/31/2019 Contract of Agency PPT MBA
5/15
Duties of an Agent
1) To Carry out the work under takenaccording to the direction given by theprincipal
2) To carry out work with reasonable careand diligence
3) To render accounts to the principal
4) To communicate with the principal in caseof difficulty
7/31/2019 Contract of Agency PPT MBA
6/15
5) Not to deal on is on account:if A acts without the knowledge of P
a) P may repudiate the contract
b) Claim benefit6) To Pay sum received for the P
7) To protect and preserve the interests of
the P in case of his death or insolvency
7/31/2019 Contract of Agency PPT MBA
7/15
8)Not to use information obtained in thecourse of agency against the P
9)Not to make secret profit from agency
10) Not to set up an adverse title conversion11) Not to put himself in a position where
interest and duty conflict
7/31/2019 Contract of Agency PPT MBA
8/15
Rights of an Agent
1) Rights of a retainer2) Rights of receive remuneration
3) Rights of lien
4) Rights of indemnification5) Rights of compensation
6) Rights to stoppage in transit
7/31/2019 Contract of Agency PPT MBA
9/15
Duties of Principal
1) To indemnify the agent against theconsequences of at lawful acts
2) To indemnify the agent against the
consequences of its done in good faith3) To indemnify agent for injury caused by
principals neglect
4) To pay the agent the commission is otherremuneration agreed.
7/31/2019 Contract of Agency PPT MBA
10/15
Rights of the Principal
1)To recover damages2)To obtain an account of secret profits
recover them and resist a claim of
remuneration3) To resist agents claim for indemnity
7/31/2019 Contract of Agency PPT MBA
11/15
Creation of Agency
A) Agency by Express AgreementB) Agency by Implied Agreement
1) inferred by circumstance
2) Things spoken / written
7/31/2019 Contract of Agency PPT MBA
12/15
Implied agency includesa) Agency by estoppel
b) Agency by holding out( positive or affirmativeact)
c) Agency by Necessity
i) Agent may exceed his authority
ii) A person entrusted with anothers property
iii) Husband and Wife
7/31/2019 Contract of Agency PPT MBA
13/15
C) Agency by Ratification
Requisites of valid ratification :-
1) The A must purport to act as agent for aprincipal who is in contemplation
2) The P must be in existence at the time of
contract (Kelner * Bayter)
7/31/2019 Contract of Agency PPT MBA
14/15
3)The P must have contractual capacity bothat the time of contract and at the time ofratification
4) Ratification must be with full knowledge of
facts5) Ratification must be done within a
reasonable time
6) The act to be ratified must be lawful andnot void or illegal
7/31/2019 Contract of Agency PPT MBA
15/15
7) The whole transaction must be ratified8) Ratification must be communicated
9)Ratification can be of the acts which the P
have power the to do .10) Ratification should not put third party to
damage
11) Ratification relates back to the date of theact of the A