Law of Agency (2)

7/31/2019 Law of Agency (2)

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LAW OF AGENCY

Definition:The law of agency is an area of commercial law dealing with a set of contractual,quasi-contractual and non-contractual relationships that involve a person, called theagent, that is authorized to act on behalf of another (called the principal) to create alegal relationship with a third party.

This law separates and regulates the relationships between:

Agents and principals; Agents and the third parties with whom they deal on their principals' behalf; and Principals and the third parties when the agents purport to deal on their behalf.

KINDS OF AGENTS:

1. General Agents2. Special Agents3. Universal Agents4. Mercantile Agent5. Factor6. Commission Agent7. Del Credere Agent8. Broker9. Auctioneer10. Indenter

11. Banker12. Advocate





Duties of Agent

Duty to follow directions of the principal or customs of trade

Duty to work with Reasonable skill Duty to Render Accounts

Duty to communicate

Duty to Termination of Agency

Duty not to Deal on his Own Account

Duty not to make Secret Profit

Duty to Pay Sums Received

Duty not to delegate Authority

Rights of agent:

Right to Retain

Right to receive Remuneration

Right of Lien

Right to be indemnified for lawful acts

Right to be indemnity for acts in good faith

Right to Compensation for Injury Right of Stoppage of Goods

Right of Principal

Right to Recover Damages

Right to Obtain Secret Profit Right to refuse to indemnity Agent





MCQ”S LAW OF AGENCY:

1. An agent who is appointed to sell good to the highest

bidder at a public sale for commission is:

Indenter

Auctioneer

Del cIedere agent

2. D, a director of a company, contracted S to buy

machinery for the company. D acts as an agent of the

company so the company is liable for D’s acts as a

principal.

Agency by ratification

Agency by operation of law

Agency of necessity

3. A mercantile agent is:

Who has the authority to sell or buy goods or to raise money on the security of

goods.

Who is appointed to do some particular acts in a particular transaction.

Who negotiates and makes contracts between principle and the third party.

4. If the principal does not give any directions to agentthen the agent should:

Deal on his own account Follow the custom of trade

Terminate the agency



5. B is servant of A. b buys goods on credit from c and

pays A for them regularly. B buys the goods from C on

credit for personal use. A is liable to C for payment. Agency by holding out

Agency by estoppels

Agency by necessity

Law cases of agency:

1. A enter into the contract with b for buying b motor car as an agent of c without cauthority. B repudiates the contract before c comes to know of it. C subsequently

ratifies and contract sues to enforce it.

Discussion:

C is entitled to enforce the contract or claim damages. It is a case of agency by

ratification. Where the agency come into the existences from the moment the agent

acted and not and not from the time where the principal ratified. Hence b repudiation

of the contract is inoperative.

2. A enter into the contract with B to sell him 1,000 bales of cotton and afterwardsdiscovers that B was acting as agent of C. advice A as to the person against

whom he should bring a suit for the price of the cotton.

Discussion:

A may sue either B or C or both for the price of the cotton. It is a case of

undisclosed principal and the liability of the principal and agent is joint and

several in such a case.

3. Where the principal instructed the agent to warehouse the good at a particular

place and the agent warehoused them at a different warehouse which was

equally safe, and the goods were destroyed by fire without negligence, it was

held that the agent was liable for the loss because any departure from the

instructions makes the agent absolutely liable.



Discussion:

Duties of agent: they cannot follow the principal advice that why they are liable.

Documents

Law of Agency (2)