Principal agent relationship indian contract act

principal agent relationship | India Judgments | Law | CaseMine

principal agent relationship indian contract act

S. of the Indian Contract Act, provides that an agent also has . In case of sole selling agent, the relationship between the principal and the sole. Contracts of Agency Sec of the Indian contract act, defines Agent and Principal as: Agent means a person employed to do any act for another. 11 The Indian Contract Act Agency Learning Objectives In this chapter, the students will come to know What is a contract of agency-agent-principal?.

Authority by virtue of a position held to deter fraud and other harms that may befall individuals dealing with agents, there is a concept of Inherent Agency power, which is power derived solely by virtue of the agency relation. Even if the agent does act without authority, the principal may ratify the transaction and accept liability on the transactions as negotiated.

This may be express or implied from the principal's behavior, e. Liability[ edit ] Liability of agent to third party[ edit ] If the agent has actual or apparent authority, the agent will not be liable for acts performed within the scope of such authority, as long as the relationship of the agency and the identity of the principal have been disclosed.

When the agency is undisclosed or partially disclosed, however, both the agent and the principal are liable. Where the principal is not bound because the agent has no actual or apparent authority, the purported agent is liable to the third party for breach of the implied warranty of. Liability of agent to principal[ edit ] If the agent has acted without actual authority, but the principal is nevertheless bound because the agent had apparent authority, the agent is liable to indemnify the principal for any resulting loss or damage.

Law of agency - Wikipedia

Liability of principal to agent[ edit ] If the agent has acted within the scope of the actual authority given, the principal must indemnify the agent for payments made during the course of the relationship whether the expenditure was expressly authorized or merely necessary in promoting the principal's business.

An agent owes the principal a number of duties. An agent can represent the interests of more than one principal, conflicting or potentially conflicting, only after full disclosure and consent of the principal. An agent must not usurp an opportunity from the principal by taking it for himself or passing it on to a third party.

Agency - finer details in the Indian context

In return, the principal must make a full disclosure of all information relevant to the transactions that the agent is authorized to negotiate. Termination[ edit ] Mutual agreement also through the principal responding his authority. Through renouncing when agent hm self stop being an agent. The internal agency relationship may be dissolved by agreement.

Under sections to of the Indian Contract Actan agency may come to an end in a variety of ways: Withdrawal by the agent — however, the principal cannot revoke an agency coupled with interest to the prejudice of such interest. An agency is coupled with interest when the agent himself has an interest in the subject-matter of the agency, e. Alternatively, agency may be terminated by operation of law: If he does, he is liable to compensate the agent for the loss caused to him thereby.

The same rules apply where the agent, renounces an agency for a fixed period. Notice in this connection that want of skill, continuous disobedience of lawful orders, and rude or insulting behavior has been held to be sufficient cause for dismissal of an agent. Further, reasonable notice has to be given by one party to the other; otherwise, damage resulting from want of such notice, will have to be paid s.

The Rights of the Agents: The agent has a right to certain monies in his hands held on account of the principal for the expenses incurred by him in the course of agency business; He has a lien on the goods of the principal for his dues; He has a right to adjust his commission or remuneration against the amount payable to the principal; All these rights are, however, subject to a contract to the contrary and therefore different provisions can be made in the agreement of agency.

Duties of the Principal: The principal is bound to indemnify the agent against any consequences of lawful acts done by such agent in exercise of the authority conferred on him; The principal is bound to indemnify the agent against consequences of the acts done by the agent in good faith though it may cause injury to the third persons; The principal is bound to make compensation to the agent in respect of any injury caused to such agent by the principal's neglect or want of skill; These duties are not subject to a contract to the contrary and, therefore, they cannot be avoided by an agreement.

Contracts lawfully entered by an agent on behalf of the principal are binding on the principal; What is done by the agent within authority is binding but what is done beyond authority is not binding on the principal but if both the acts cannot be separated, then both the acts are not binding on the principal; Notice to or information obtained by an agent in course of business is a notice or information to the principal; A contract entered into by an agent cannot be specifically enforced by him nor is he personally bound by it unless where the contract is for sale or purchase of goods or from a merchant abroad or unless the principal is not disclosed by the agent or unless the principal cannot be sued; In case of an undisclosed principal, the third party has the same right against the agent as he would have if the principal was disclosed.

Agency under Contracts - Academike

Similarly, in such a case a third party would not be bound by the contract if he could show that he would not have entered into the contract if he had known the principal; In the event of personal liability, both the agent and the principal would be liable. Even an act of fraud or misrepresentation done by an agent in the course of his agency business is binding on the principal; These provisions are not subject to any contract to the contrary between the principal and the agent.

principal agent relationship indian contract act

Sub agents are generally of three types Those employed without the express or implied authority of the principal and by whose acts the principal is not bound; Those employed with express or implied authority of the principal but between whom and the principal there is no privity of contract; Those employed with the express authority of the principal and between whom and the principal there is a privity of contract and a direct relationship of principal and agent is accordingly established.

Overview of Sub Agents and their rights: A sub agent is a person employed by and acting under the control of the original agent in the agency business. The paper distinguishes between agents and servants, agents and sub-agents, and sub-agents and substituted agents. Introduction The paper discusses the characteristics and the role of an agent under the Indian Contract Act, A section of the paper also creates a distinction between agency and dealership, as to how a dealer who may appear to be an agent is not actually an agent.

It tries to discuss the relationship between a principal, an agent, a sub-agent and a servant. It also differentiates between the role and duties of an agent, a servant, sub-agent and a substituted agent. The principal-agent relationship is defined at a later stage in the paper.

In India, the agent and principle share a relationship that is contractual in nature, and therefore it is governed by the terms and conditions of the contract between them. Chapter X of the Indian Contract Act, provides the basic structure of rules and regulations that basically govern the performance and formation of any type of contract including the agency contract. In agency contracts, there exists a legal relationship between two people whereby one person acts on behalf of the other.

The person acting on behalf of the other is called an agent, and the person from whom the agent derives authority to act is called the principal. Agent and principal are defined under Section of the Indian Contract Act, Now who can become an agent? Section answers this question.

Business Law by Tejpal Sheth

According to this section any person can become an agent i. Therefore, a minor can also act as an agent. But the minor will not be responsible to his principal. Creation of an agency By express or implied contract- A principal may implicitly or expressly employ an agent.

The appointment may be expressed in writing or it may be oral. By conduct of party or situation— E. By ratification- assent is given either to an act done by someone who had no previous authority to act or to an act that exceeded the authority granted to an agent. By Necessity- a person acts for another in an emergency situation without express authority to do so. Duties of an agent Duty to follow instructions or customs Duty of reasonable care and skill Duty to avoid conflict of interest Duty not to make secret profit Duty to remit sums Duty not to delegate Rights of an agent Right to remuneration— an agent is entitled to get an agreed remuneration as per the contract.

If nothing is mentioned in the contract about remuneration, then he is entitled to a reasonable remuneration. But an agent is not entitled for any remuneration if he is guilty of misconduct in the business of agency.

principal agent relationship indian contract act

Right of lien— an agent has the right to hold back or retain goods or other property of the principal received by him, till the time his dues or other payments are made.

Right to indemnity— an agent has the right to indemnity extending to all expenses and losses incurred while conducting his course of business as agency.