Who are Agents and Rights and Duties of Agents
1. Who is an Agent?
Definition:
An agent is a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the principal.
📜 Legal Source: Section 182 of the Indian Contract Act, 1872.
2. Essentials of Agency:
Principal must be competent to contract: The principal must be of the age of majority and of sound mind.
Agent need not be competent: The agent may be a minor, but then the agent won’t be personally liable.
Consent: There must be mutual consent between principal and agent.
No consideration required: Agency can be created without consideration.
3. Creation of Agency:
Agency can be created in several ways:
By express agreement (written or oral)
By implied authority (e.g., through conduct or relationship)
By necessity (when it's necessary to act for another)
By ratification (when a person adopts an act done on their behalf without authority)
By estoppel (when a principal allows third parties to believe someone is their agent)
4. Rights of an Agent:
Right to Remuneration:
The agent is entitled to remuneration as agreed upon, but not for misconduct.
🧑⚖️ Case Law: Laxmi Narayan v. Narayan (AIR 1962) – The court held that the agent was entitled to his commission even if the sale wasn't finally concluded, provided the agent had fulfilled his obligations.
Right of Retainer:
The agent can retain money received on the principal’s behalf for dues like remuneration, advances, or expenses.
Right to Indemnity:
The principal must indemnify the agent against lawful acts done in exercise of the authority.
Right to Compensation:
If an agent suffers injury due to the principal's negligence or lack of proper instructions, they can claim compensation.
5. Duties of an Agent:
Duty to follow instructions:
The agent must act according to the principal’s directions.
🧑⚖️ Case Law: Pannalal Jankidas v. Mohanlal – Agent was held liable for acting beyond instructions leading to loss.
Duty of care and skill:
An agent must act with reasonable diligence and competence.
Duty to avoid conflict of interest:
Must not deal on their own account in the business of the agency without the principal's consent.
Duty not to make secret profit:
The agent must not make any secret profits out of the agency.
🧑⚖️ Case Law: Hely-Hutchinson v. Brayhead Ltd. (1968) – The agent acted beyond his authority but the principal ratified the acts later, making them binding.
Duty to render accounts:
The agent must maintain proper accounts and render them to the principal upon demand.
Duty not to delegate:
Delegation is not allowed unless it's customary or necessary.
🧑⚖️ Case Law: De Bussche v. Alt (1878) – Sub-agency was allowed as it was necessary due to the nature of the trade.
6. Termination of Agency:
An agency can be terminated by:
Completion of business
Expiry of time
Death/insanity of principal or agent
Revocation by principal
Renunciation by agent
🧑⚖️ Case Law: Illustration in Section 201 of the Indian Contract Act – Agency comes to an end upon death of either party.
7. Personal Liability of Agent (Exceptions):
An agent is generally not personally liable, but they can be held liable if:
Acts for a foreign principal
Does not disclose the name of the principal
Acts for a principal who cannot be sued
Exceeds authority
🧑⚖️ Case Law: Keighley Maxsted & Co. v. Durant (1901) – An agent who acted without authority could not bind the principal, and was personally liable.
Conclusion:
An agent is a vital link between a principal and third parties in commercial and legal dealings. While agents have various rights (e.g., remuneration, indemnity), they also bear serious duties (e.g., loyalty, care, accountability). The law of agency aims to maintain trust, efficiency, and fairness in these relationships.
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