Chapter X of the Indian contract act deals by means of agency with the topic of appointment & authority of agents. For this agency law, we know there is the maxim “qui facit per alium facit per se”, which meaning is “who acts throughout another are deemed in rule or law to do it himself“. In this agency law, contract formed by express or implied consent, conduct of the agent’s act by the principal Section 182 to 189 of this act. This act is exceedingly imperative for the law connecting to agency for the reason, almost entire business transactions worldwide are carried out during agency. All commerce, big or small, carries their work out throughout agency.
Agents in this contract act known as any person who has been chosen and nominated to do certain acts by principal.
Anything done by agent, any transaction with third party then that transaction will mechanically bind the principal with third party.
182. “Agent” and “principal” defined.
An agent is a person employed to do any act for another, or to represent another in dealings with third person. The person for whom such act is done, or who is so represented, is called the ‘principal’.
The legal relationship between the agent and the principal is called agency.
Any person who is of the age of majority according to the law to which he is subject and who is of sound mind, may an agent.
Agent gets authority from his principal
- Principal will tell the agent what act he has to do and what act not to do.
- Agent cannot go beyond his authority
- It means that the authority defined or given by the principal to him, he has to act within that authority only.
The function of an agent is to bring his principal into connectional relations with third parties. The agent is merely a connecting link between the principal and third parties.
Section 182 says that-
This section defines an agent as a
- Who is employed by another that is principal
- To do any act for the principal
- To represent him in dealings with third parties or person.
183. Who may employ agent.
Any person who is of the age of majority according to the law to which he is subject, and who is of sound mind, may employ an agent. Principal can employ the agent.
As such any competent to contract may employ an agent and a minor, a lunatic or a drunken person cannot employ an agent.
- It means principal is the person who actually appoints the agent.
- He must be competent to contract
- He must be major and of sound mind
- Minor cannot employ agent.
184. Who may be an agent
As between the principal and third persons, any person may become an agent, but no person who is not of the age of majority and sound mind can become an agent, so as to be responsible to the principal according to the provisions in that behalf herein contained.
- An agent need not be competent to contract
- It means that an agent can be minor also.
- But if agent is minor or unsound mind then he is not responsible to the principal.
- It means that if because of agent, principal or the third party suffers loss than in that case agent will be not personally liable.
If principal appoints minor as an agent to transfer goods from Delhi to Mumbai and in between goods are destroyed, then for this agent will be not personally liable either to the third party or to the principal.
185. Consideration not necessary.
No consideration is necessary to create an agency. It is exception to the general rule- a contract without consideration is void. But as per this exception, it can be say that a contract without consideration is valid.
It means that for the appointment of an agent consideration is not necessary.
186. Agent’s authority may be expressed or implied.
The authority of an agent may be expressed or implied.
187. Definitions of express and implied.
An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, may be accounted circumstances of the case.
According to Section 187 of this act , the authority is said to be express when it is given by words spoken or written.
According to Section 187 of this act, authority is said to be implied when it is to be inferred from the facts and circumstances of the case. In carrying out the work of the Principal, the agent can take any legal action. That is, the agent can do any lawful thing necessary to carry out the work of the Principal.
Implied authority is of four main categories
- Incidental authority- it means doing something that is incidental to the due performance of express authority
- Usual authority- it means doing that which is usually done by persons occupying the same position
- Customary authority- it means doing something according to the pre-established customs of a place where the agent acts
- Circumstantial authority- it means doing something according to the circumstances of the case
A owns a shop in Bihar, living himself in Haryana, and visiting the shop infrequently. The shop is managed by B, and he is in the habit of ordering goods from C in the name of A for the purposes of the shop, and of paying for them out of A’s funds with A’s knowledge. B has an implied authority from A to order goods from C in the name of A for the purpose of the shop.
188. Extent of agent’s authority.
An agent, having an authority to do an act, has authority do every lawful thing which is necessary in order to do so such act.
An agent having an authority to carry on a business has authority to do every lawful thing necessary for the purpose, or usually done in the course, of conducting such business.
- In this section authority of agent is limited.
- Main elements of this section are that
- An agent have authority to do every lawful act
- An agent has authority which is necessary to do such act.
(a) X are employed by Y, residing in London, to recover at Bombay a debt due to Y. A may adopt any legal process necessary for the purpose of recovering the debt, and may give a valid discharge for the same.
(b) X constitutes Y his agent to carry on his business of a shipbuilder. Y may purchase timber and other materials, and hire workmen, for the purpose of carrying on the business.
189. Agent’s authority in an emergency.
An agent has authority, in an emergency, to do all such acts for the purpose of protecting his principal from loss and would be done by a person or ordinary prudence, in his own case, under similar circumstances.
This section must read with section 214 of this act.
Section 214:- it is the duty of an agent, in cases of difficulty, to use all reasonable diligence in communicating with his principal, and in seeking to obtain his instruction.
- It means that agent has authority
- To do all such acts
- This protects his principal from loss.
- In emergency like situation an agent would act in the same manner as his principal may act in that emergency.
- Or it can be said that in an emergency like situation an agent would act as a man of ordinary prudence.
- As in section 214, it is said that in an emergency like situation if agent got a chance to contact with principal then he must do that.
(a) an agent for sale may have good repaired if it be necessary.
(b) P consigns provision to be at Calcutta, with direction to send them immediately to R, at Cuttack. Q may sell the provision at Calcutta, if they will not bear the journey to Cuttack without spoiling.
Appointments and authority of agents deals with section 182 to 189 of the Indian contract act, 1872. Contracts establishing a relationship of the agency are very common in law and regular life also. This agency can be express or implied in this act. There are a variety of examples of such a relationship like: Insurance agency, advertising agency, travel agency, factors, brokers, etc.