Law of Agency - Special Contracts, Business Law Video Lecture | Business Law - B Com

hello friends in this part we should
understand various provisions related
with the contract of agency first of all
we should understand certain basic
concepts related with the law agency
then we will discuss what are various
modes of creating agency then we shall
understand what is the extent of an
ageing Authority what are duties and
obligations of an agent
what are rights of an aging and finally
we shall discuss how an agency can be
terminated let's start with certain
basic concepts of law agency section 182
of the contract Act gives us two basic
definitions related with the concept of
agency the first is agent what do we
mean by an agent
the law says agent is a person employed
to do any --it for another or to
represent another in dealings with third
parties so basically agent is a person
who has been employed by somebody else
for doing something on behalf of debt
somebody else or to represent that
somebody else in a dealing with third
parties related with the agent there is
a concept of principal now very simply
principal is the person for whom such
act as being them or who is being so
represented so person who is
representing somebody else he is called
agent the person who is being
represented he is called principal the
very basic rule of law agency that for
any act done by the agent
principal is treated as responsible as
if the Act has been done by the
principal tensile do the principal is
getting the acted done through an agent
but whatever shall be done by the agent
it shall be treated as if it has been
done by the principal himself and
accordingly the principal shall only be
responsible for whatever has been done
by the agent now the question comes who
can appoint agent as we can see section
183 is giving us that concept and
mentioning that any person who has got
two qualities one who has attained the
age of majority and second who is of
sound mind this person can appoint
another person as as agent and then
another very important rule related with
the contact of agency is given by
section 185 which fails very simply that
no consideration is necessary for the
contact of agency this in fact is an
exception to the basic rule of the
contract Act that normally a contract
without consideration is void but a
contact of agency can be a contract for
which no consideration is necessary
after in tuscany some very basic initial
rule selected with the contact of agency
now let's discuss what are the various
modes of creation of agency in how many
ways a contract of agency can be created
there are five different ways through
which a contact of agency can come into
existence
the first is agency by Express Authority
next is agency by implied authority and
here also there are two different
possibilities when is agency by what is
called
stop L and second is Agency by holding
out then there is something called
agency in case of emergency agency in
case of necessity agency by
certification and finally agency by
operation of law so these are five
different modes through which a contact
of agency can be created in the next few
slides we'll be discussing each of these
modes in little bit detail the process
agency by Express Authority now this
will say the most obvious way of
creating a contact of agency well one
person is expressly appointing somebody
else to do something on his behalf the
obvious example mister a residing in
Delhi having a house at Kolkata he
appoints B in Kolkata is a caretaker of
his house by a power of attorney now a
has appointed B as agent of a by way of
an express Authority the next way for
which a contact of agency comes into
existence is what is called bio of
employed or Austin civil authority here
there is no Express arrangement among
the parties for the contract of agency
but the agency gets created by the
conduct of the parties the first such
possibility is by agency through stopple
now this is a concept where when person
allows another to act on his behalf in
such a manner that a third reasonable
person would believe that there is a
relationship between principal of agent
between first and second person and in
such case the first person would be
stopped from denying that he is not
appointed second person as his agent he
the first and second person to the
conduct are conveying a message to the
third party that they are having a
relationship of principal and agent
let's try to get a further clarity on
the concept by way of an example mr.
Raju
informs hurry in the presence of Titian
that Kishen is reduce digit when Raju is
informing this to hurry
Kishen is also present and Raju is
saying to mr. Hari the accretion is my
agent
later on hurry and passing to a contact
with Kishen
thinking that Kishen is an agent of
value in this case Raju and Kishen
through their conduct have conveyed this
message to hurry that Titian is agent of
Raju and that's right leader mr. Raju
normal attrition can later on refused
the obligations under the contract this
creates an agency by stoppeth another
type of agency by implied Authority is
agency by holding out this concept says
that if any person holds himself out as
an agent of another he declares to
public at large that he is agent of
somebody else and that another that
somebody else does not deny it then also
a relationship of agent and principal
gets created if somebody says that he is
an agent of yours and you do not denied
the law assumes that there is a
relationship of agent and principal gets
created between you and that third
person another we are creating a
contract of agency is agency in case of
necessity or agency in case of emergency
this is a situation where the agency is
getting created
due to circumstances sometimes
circumstances may create a relationship
of agent and principal let us understand
it with a very simple example a horse
has been sent by rail but it has not
been taken delivery by the owner at
destination the stationmaster was
required to feed the house the losses in
this situation circumstances have
created a relationship of agent and
principle between stationmaster and the
owner of that house and now the owner
shall be required to compensate the
stationmaster for whatever expenditure
has been incurred by him this is an
agency in case of emergency another way
of creating agency is given by section
196 of the contact tag which is called
agency by ratification here the section
says that when one person does something
on behalf of another without the
knowledge of another that another is
having an option either to ratify the
West done by the first person or deform
this work done by that first person
however if this second person decides to
let aside the work done by first person
now a contract of agency has been
created between first person and second
person the first person shall be treated
as agent of the second and second shall
be bound to compensate the first say for
example a without authority by
switchboard be later on be sales these
good to see here the beasts conduct has
implied that he has ratified the
purchase made by a and a contact of
agency has come into existence the print
a
be by ratification and finally in some
cases agency gets created by operation
of law also and certain circumstances it
does not which creates a relationship of
agent and principal the very obvious
example says partners and partnership
firm after law partners are considered
as agents of each other and also the
agents of the firm
so this is agency which is getting
created by operation of law after
discussing various modes through which a
contact of agency can be created now
let's try to understand another issue
that is what is the extent of the
authority of an agent the law discusses
the extent of agents Authority in two
different circumstances first a 30 of
agent in normal circumstances and second
what is the 30 of an agent in case of
emergencies let's discuss these concepts
in next slides first of all what is the
30 of an agent in normal circumstances
section 188 gives a very important
provision in this regard and says that
well an agent is having an authority to
do any act he has authority to do every
licensing rifle which is necessary to do
the additional actor so the pointers
agent has been appointed to do a
particular act he has been given an
authority to do any particular act the
law says in order to do the minute
whatever lawful things are required
agent shall be having an authority to do
and both lawful things the key point is
whatever is being done by agent that
should be a lawful text
see for example mr. a has employed mr. B
recover a date do now mr. Ismay adopt
any legal process which is necessary for
recovery of the date he has been
appointed only to recover the date and
he can take all the legal processes
which has required for the currently of
this date this is what is the authority
of an agent and the normal circumstances
as an extension of earlier concept the
section also phase that if an agent has
been given authority to carry on the
business he shall be having an authority
to do every lawful thing necessary for
the purpose of the business and to do
all these things which have usually done
in the course of conducting that
business say for example a has appointed
B as his agent to carry on the business
of a shipbuilder now mr. B may purchase
timber and other materials he may also
hire workmen further paragraph
carrying on the business he has been
given an authority to carry on the
business and in this case he can do all
the things which are necessary for the
Telegraph business which are usually
done in the course of conducting such
business after discussing a 30-person
agent and the normal circumstances
section 189 discusses that 30 as an
agent in case of an emergency the law
says that in case of an emergency an
agent has a party to do all such H so
the total of protecting the conceited
from less which are done by any normal
person any person of ordinary prudence
in a case under similar circumstances
so if there is an emergency the agent
shall be having authority to do all the
acts which are done by a normal person
under the similar circumstances
the idea being protecting the principle
from laughs very simple example an agent
have fill may get good saluted if it
becomes necessary goods have become
damaged he shall have an authority to
get those boots repaired this was bad
party of an agent in case of emergency
section 220 line of the Act covers the
matter of notice given to an agent
section phase that if any notice has
been given to the agent for any
information has been obtained by the
agent it shall be deemed as this notice
has been given or this information has
been obtained by the principle himself
so when an aging enters into negotiation
with a client it does concede that that
principle is aware of the fact is a ways
of the all the negotiations which are
happening between agent and the client
and now let's discuss some very
important provisions related with the
duties and obligations of an agent first
of all what is the duty of an agent in
the conducting business of the principal
section 211 provides the enter and it
says that an agent is bound to conduct
the business of the principal as per the
direction given by the principal however
what will happen if no clear directions
are available from the principal the
section has the provides
if there are more such directions then
agent is required to carry on the
business in accordance with the
prevailing customs in respect of that
particular business
and then what will happen if the agent X
otherwise section featherface
if any large has occurred the agent is
required to make this less good to the
principal however if any special attack
loose he must give the traffic back to
the principal
he must account for the traffic to the
principal say for example B is an agent
in the business
well the scene is only on cash it was
not customary to sale on credit
however a gentle sells goods of a on
credit to see at the time of sale the
credit of C was very very high however
before making the payment C becomes
insolvent not here be the agent has not
acted as per the substance of the
business and that's why he is required
to make did dis lock to his principal
that is mr. e section 212 talks about
kills and religions required from an
agent section face that everything agent
is required to use general skills for
carrying out that particular business as
much skill as generally possessed by the
persons who are engaged in similar line
of business if we doesn't use this
general level of skill then if any loss
has been suffered by the principal due
to lack of skill from the agent the
agent shall be liable to compensate this
loss to the principal say for example
mr. a an agent has been authorized to
sell the goods on credit he feels these
goods to a customer's be without making
the normal inquiry regarding solvency of
the customer at the time of sale itself
this customer was in solvent here the
agent has not used the normal skills
required in the business he let such
whatever loss has occurred to the
principal agent shall be liable to
compensate for this to the principal
section 2 & 3 creates when more Duty for
the agent by saying that agent is
required to give proper accounts to his
principal on demand accounts for
whatever expenditures he has incurred
accounts of whatever money he has
received on behalf of the people is
required to give proper accounts to the
principal
whenever demanded by the principal
another duty of agent has been created
by section 214 regarding communication
with the principal section says that in
case of any difficulty it is duty of an
agent to use all reasonable diligence to
use all reasonable means in order to
communicate with his principal and to
obtain his instruction so there is any
difficulty it will be duty of the agent
to communicate with the principal and to
get his directions as to what is to be
done in that particular circumstances
for this communication he should use all
the possible means he should use all
reasonable diligence section 2 and 6
discusses about the very important
situation that is what will happen when
the agent deals in this will account
instead of dealing on account of
principal the identity deals on this own
account section says they took without
the knowledge of the people the
agent DS on his own account in the
business of agency instead of dealing on
behalf of principal in such case the
principal is entitled to claim any
benefit which has been excluded to the
agent from this transaction so agent
must make good all those things which we
have get out of the transaction to the
principal if he is built in a case on
his own account instead of dealing on
account of ten people see for example
mr. a has directed his agent to buy a
particular house agent tells to the sir
a that house is not available and later
on he buys the house first himself later
on when principal comes to know about
this he may come tell the agent to fill
the house to the principal at the price
what has been decided by the principal
after discussing various duties of an
agent now let's talk about rights of an
agent the first right of an aging is
right to be indemnified against
consequences of any lawful acts done by
the agent section 222 discusses this
concept further and says that the
inspire the principle of the aging is
bound to indemnify the agent in respect
of any lawful act which shall be done by
the agent in exercise of the authority
given to him so if within the limit of
authority agent has done any of the
lawful act the employer the principal
shall be required to indemnify the agent
against the consequences of all such
lawful acts say for example
mr. d an agent under instructions from
his principal has contracted to fail
certain goods to a third party see
principal has not sent those goods to
the agent and that's why agent couldn't
deliver those goods to the customer the
customer mr. C has filed the suit on
agent for breach of contract B has
informed the fact to the principal and
principal a has authorized the agent B
to defend the fruit B defends the fruit
and as required to pay damages and has
incurred expenditures in defending that
route all this thing has been done by
the agent within the limit of his
authority these are lawful act done by
him and as such section 222 shall be
applicable in the situation the
principal mr. a is liable to be for all
such damages and expenditure Section 223
talks about the situation we have agent
has done something in good faith and the
law says again agent has a right to be
indemnified against consequences of all
those acts which have been done by him
in good faith
let's celebrate the puncture further
section says that when one person
employs another to do an act when the
principal appoints an agent in the agent
desk that act in good faith the
principal the able to indemnify the
agent against the consequences of all
those acts even with the color of the
earth of the agent and injuries have
caused to the third party for the whole
idea is this employer has asked the
agent to do something agent does this in
good faith the color of this act of
agent and injury has caused two third
party but
here the employer shall be liable to
indemnify the agent tiller expect up all
the eggs which have been done in good
faith by the agent let us take another
example the agent feels good
installation of this principle however
principal was not having any legal right
to sell those Goods the agent mr. B is
not arrays of this fact and he simply
hangs over the field two seats to the
principal mr. a he has done this whole
act in good faith
later on the real owner of the goods mr.
C finds a court case on the agent mr. B
and recovers the value of goods from the
agent now here the principal a is liable
to indemnify the agent D for whatever
amount he is required to pay to third
party C and for agent all expenses the
agent has acted in good faith in the
situation and that's right principally
shall be liable to compensate the agent
in respect of right of agent to be
indemnified a very important exception
has been created by section 224 which
says that agent does not have any right
to be dignified in respect of any
criminal acts section says that where
when person appoints another to do any
act which is criminal in nature then the
agent shall not be entitled the employer
the principal shall not be liable to
indemnify the agent against the
consequences of that act the Act which
agent has been asked to do was criminal
agent performs that particular act
whatever consequences of that criminal
act agent must deal those consequences
himself employer shall not be liked
but to indemnify the agent in that
respect
a very simple example is mr. a appoints
mr. B to beat see and agree to indemnify
him against all the consequences of the
Act D whereupon beats mr. C and then he
is required to pay damages to mr. C for
doing true D cannot claim any amount
from the cell a B is not entitled to be
indemnified by his principal because the
Act which has been done by B was
criminal in nature after right of
indemnity section 207 gives us the
provision regarding right of retention
of an agent section says that any firm
which has been received by the agent on
account of principal in the business of
agency he may retain out of besoms two
types of monies due to him first any
money which is due to him in respect of
expenditure incurred by him advances
made by him in a conducting the business
of agency M second he can also retain
only remuneration which is due to him so
out of the money belonging to principal
agent can retain these two types of
money this is an express right given to
him under Section two hundred and
seventy seconds to twenty one talks
about right of lien of an agent section
says that unless there is any contract
to the contrary the agent shall be
entitled to retain whatever he receives
on behalf of principal it may be good as
it may be papers it may be any other
movable or immovable property belonging
to the principal and which has been
received by him in the course of agency
business
agent shall be entitled to retain all
those things unless and until whatever
amount do to him are paid to him this
amount may be on account of commission
on account of expenditure incurred by
him he may retain the goods papers and
other property of the principal can tell
all these amounts are paid to the agent
the first-called
right of lien of an agent and now let's
discuss the idea how an agency gets
terminated how el agency come to an end
there are five different modes through
which an agency gets terminated and
these are where the principal revoke the
authority given to the agent where the
agent announces the business of agency
he denies to carry on the business of
agency further where the agency business
gets completed the business for which
agency contact has been created that
business is oh well the agency gets
terminated for situation either the
principal or the agent dies or become
often unsound mind person when that case
also agency gets terminated and finally
where the principal has been adjudicated
as an insolvent this will also result in
termination of contract of pagentry this
completes our discussion regarding
contact of agency
let's summarize whatever we have
discussed in this part the very basic
principle of contract of agency is that
have any act of agent the principal is
responsible as if this Act has been done
by the principal himself whatever has
been done by the agent is considered to
be done by the principal no
consideration is necessary for the
contract of agency
agency may get created either by way of
an express Authority given by the
principal or there may be an implied
Authority for creation of contact of
agency the contract of agency comes into
existence in the case of necessity the
agency may get created by ratification
also and in certain circumstances it is
law which creates a contract of agency
between different persons the law says
that if an eject has been given an
authority to do any particular act he
shall have authority to do all the
lateral things which are necessary
Sceptile serving the main act the
contacted for welcome various duties of
the agent right he is conducting the
business of principal and similarly
radius lights have also been given to
the agent in the respect of his dealings
for the principal thank you