Contract of Agency - Principal and Agent

 

A contract of agency is a legal agreement where one party, known as the principal, appoints another party, known as the agent, to act on their behalf in dealings with third parties. This relationship is governed by the Indian Contract Act, 1872, specifically under Sections 182 to 238.

Definition of Contract of Agency

According to Section 182 of the Indian Contract Act, 1872:

  • An "agent" is a person employed to do any act for another or to represent another in dealings with third persons.
  • The "principal" is the person for whom such act is done, or who is so represented.

Relationship Between Principal and Agent

The relationship between a principal and an agent is fiduciary, meaning it is based on trust and confidence. Here are some key aspects of this relationship:

  1. Authority of the Agent: The agent acts within the scope of authority granted by the principal. This authority can be express or implied (Section 186 and 187).
  2. Duties of the Agent:
    • To conduct the business of the principal according to the directions given by the principal or, in the absence of such directions, according to the custom which prevails in doing business of the same kind (Section 211).
    • To act with reasonable diligence and to use such skill as he possesses (Section 212).
    • To render proper accounts to the principal on demand (Section 213).
    • To communicate with the principal in case of difficulty (Section 214).
  3. Rights of the Agent:
    • Right to remuneration (Section 219).
    • Right to retain sums received on account of the principal in the business of the agency (Section 217).
    • Right to be indemnified against consequences of lawful acts done in exercise of authority (Section 222).
  4. Duties of the Principal:
    • To indemnify the agent against the consequences of all lawful acts done by the agent in exercise of the authority conferred upon him (Section 222).
    • To indemnify the agent against the consequences of acts done in good faith (Section 223).
  5. Rights of the Principal:
    • Right to repudiate the transaction if the agent acts outside his authority (Section 226).
    • Right to claim damages for breach of duty by the agent (Section 225).

Relevant Case Laws

  1. Pannalal Jankidas v. Mohanlal (1951): This case established that an agent is entitled to be indemnified by the principal for all lawful acts done in the course of the agency.
  2. Syed Abdul Khader v. Rami Reddy (1979): This case highlighted the fiduciary relationship between the principal and agent, emphasizing the agent's duty to act in the best interest of the principal.

These sections and case laws provide a comprehensive understanding of the contract of agency and the relationship between a principal and an agent.

Comments

Post a Comment

Popular posts from this blog

Conditions and Warranties implied in the Contract of the Sale of Goods

 Briefly explain the conditions and warranties implied in the Contract of the Sale of Goods. Here is the break down the implied conditions and warranties in a contract of sale of goods under the Sale of Goods Act, 1930. Implied Conditions Condition as to Title : The seller has the right to sell the goods. Condition as to Description : The goods must correspond with the description provided by the seller. Condition as to Quality or Fitness : The goods must be fit for the purpose for which the buyer requires them, provided the buyer has made this purpose known to the seller. Condition as to Merchantable Quality : The goods must be of merchantable quality, meaning they should be fit for sale and use. Condition as to Sample : If the sale is by sample, the bulk of the goods must correspond with the sample in quality. Implied Warranties Warranty as to Quiet Possession : The buyer shall have and enjoy quiet possession of the goods. Warranty as to Freedom from Encumbrances : The goods shal...
Read more

Contract of Indemnity and Contract of Guarantee

Explain and illustrate the differences between the contract of indemnity and a contract of guarantee. Let's discuss the differences between a contract of indemnity and a contract of guarantee under Indian law. Contract of Indemnity A contract of indemnity is defined under Section 124 of the Indian Contract Act, 1872. It involves a promise by one party (the indemnifier) to save the other party (the indemnified or indemnity holder) from loss caused by the conduct of the promisor or any other person. Key Features: Parties Involved: There are two parties - the indemnifier and the indemnified. Purpose: To compensate for the loss. Liability: The indemnifier's liability arises only when the indemnified suffers a loss. Example: If A contracts to indemnify B against the consequences of any proceedings which C may take against B in respect of a certain sum of 200 rupees, this is a contract of indemnity. Case Law: Gajanan Moreshwar v. Moreshwar Madan (1942): This case highlighted tha...
Read more

Bailment - Duties and Rights of a Bailor

Image
  What is bailment? what are the duties and rights of a bailor? Bailment is a type of contract where one party, the bailor, delivers goods or property to another party, the bailee, for a specific purpose, such as repair, storage, or transportation. The bailee takes possession of the goods, but the ownership remains with the bailor. Duties of a Bailor 1. Delivery of Goods: The bailor must deliver the goods to the bailee in a reasonable condition. (Section 150, Indian Contract Act) 2. Disclosure of Faults: The bailor must disclose any known faults or defects in the goods. (Section 151, Indian Contract Act) 3. Payment of Expenses: The bailor is responsible for paying any expenses incurred by the bailee in the performance of the bailment. (Section 154, Indian Contract Act) Rights of a Bailor 1. Right to Recovery: The bailor has the right to recover the goods from the bailee at the end of the bailment period. (Section 155, Indian Contract Act) 2. Right to Compensation: The bail...
Read more