Special Contract Project

MATS LAW SCHOOL

MATS UNIVESITY

Project report submitted for partial fulfillment of BBA.LLB X Semester for subject of Special Contract

On

Duties of Agent

Submitted by- Submitted to- Dr. G.P Tripathi

Name – Vishal Kohli

Student ID - MU11BLB040

Semester - IXth

ACKNOWLEDGEMENT

We have taken efforts in this banking law project. However, it would not have been possible

without the kind support and help of many individuals and my Professor Dr. G.P Tripathi. I

would like to extend my sincere thanks to all of them.

I am highly indebted to MATS Law School for their guidance and constant supervision as well as

for providing necessary information regarding the project & also for their support in completing

the project.

I would like to express my gratitude towards my parents for their kind co-operation and

encouragement which help me in completion of this project.

I would like to express my special gratitude and thanks to my professor for giving me such

attention and time.

My thanks and appreciations also go to my colleague in developing the project and people who

have willingly helped me out with their abilities.

Vishal Kohli

B.B.A.LL.B

9th Semester

CERTIFICATE

It gives me great pleasure to certify that the project entitled name of project In the partial

fulfillment of award of the degree B.B.A.LL.B is record of Vishal Kohli own work under my

supervision and guidance . The analysis made and conclusion arrived at are based entirely on her

own study of primary and secondary sources relevant to the topic and have not been submitted

elsewhere for the award any other degree.

Date:

SUPERVISOR: DR. G.P TRIPATHI

(ASSISTANT PROFESSOR OF LAW)

MATS Law School

DECLARATION

I, Vishal Kohli, B.B.A.LL.B 8th Semester of MATS Law School do hereby declare that, this

project is result of my own studies and observation and hence original in nature, nothing in it is

borrowed or copied without due acknowledgement. I express my gratitude and indebted to one

and all from whose works I have quoted references in my project. Further I would appreciate

cooperation and proper guidance of my faculty Prof. Dr. G.P Tripathi that helped me carries out

my work efficiently.

Vishal Kohli

B.B.A.LL.B

9th Semester

Index Page no.

• Introduction 4

• Appointment of an Agent 6

• Types of agency 8

• Duties of an agent 11

• Conclusion 22

• Bibliography 23

Chapter- I

Introduction

The law of agency is an area of commercial law dealing with a set of contractual, quasi-

contractual and non-contractual fiduciary relationships that involve a person, called the agent,

that is authorized to act on behalf of another (called the principal) to create legal relations with a

third party.[1] Succinctly, it may be referred to as the equal relationship between a principal and

an agent whereby the principal, expressly or implicitly, authorizes the agent to work under his or

her control and on his or her behalf. The agent is, thus, required to negotiate on behalf of the

principal or bring him or her and third parties into contractual relationship. This branch of law

separates and regulates the relationships between:

• agents and principals (internal relationship), known as the principal-agent relationship;

• agents and the third parties with whom they deal on their principals' behalf (external

relationship); and

• principals and the third parties when the agents deal.

In 1986, the European Communities enacted Directive 86/653/EEC on self-employed

commercial agents. In the UK, this was implemented into national law in the Commercial Agents

Regulations 1993

Any person, who is of the age of majority according to the law to which he is subject, and who is

of sound mind, can employ an Agent . As between Principal and third person a person may

become an Agent, so as to be responsible to his Principal according to the provisions contained

in the Act . No consideration is necessary to create an agency. The authority of an Agent may be

express or 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 in the ordinary course of dealing may account for the circumstances of the case. An

Agent having an authority to do an act has authority to do every lawful thing, which is necessary

in order to do such act. The Agent in doing that act must neither do anything that is illegal, not

beyond the limits of his own authority, nor beyond the powers of his Principal. An Agent has

authority in an emergency to do all such acts for the purpose of protecting his Principal from loss

as would be done by a person of ordinary prudence, in his own case under similar circumstance .

Several types of commercial agents have been recognized under Indian law, which includes inter

alia brokers, auctioneers, del credere agents, persons entrusted with money for obtaining sales

and insurance agents.

Chapter- II

Appointment of an Agent

Apart from the principal who has the authority to appoint an agent, an agent may be appointed

under statutory powers by a person who represents an estate or by legal guardians. Co-principals

are also authorized to appoint an agent, and the agent can act in matters in which the co-

principals are jointly interested; however, if the co-principals each own property, the agent is an

agent of each co-principal separately in respect of each one’s property. Further, under the Act,

two persons can also be appointed as agents and unless the contract of agency requires them to

act jointly, the act of either will bind the principal.

Sub-Agents:

A ‘sub-agent is a person employed by, and acting under the control of, the original agent in the

business of the agency. However, an agent cannot lawfully employ another to perform acts

which he has expressly or impliedly undertaken to perform personally, unless by the ordinary

custom of trade a sub-agent may, or, from the nature of the agency, a sub-agent must, be

employed.

The appointed sub-agent is bound by and responsible for his acts as if he were an agent that was

originally appointed by the principal; the agent is responsible to the principal for the acts of the

sub-agent and the sub-agent is responsible for his acts to the agent. However, the sub-agent is

not responsible towards the principal, except in cases of fraud or willful wrong.

Where an agent, without having an authority to do so, appoints a person to act as a sub-agent

stands towards such person in the relation of a principal to an agent, and is responsible for his

acts both to the principal and to third persons; the principal is not represented by or responsible

for the acts of the person so employed, nor is that person responsible to the principal.

An agent is liable to the principal for any fraud or negligence of the sub-agent. However, an

agent can exclude his liability for the negligence of the sub-agent in the contract of agency.

There is no privity of contract between the principal and sub-agent; therefore a principal cannot

claim that a sub-agent to be accountable to him. However, a sub-agent is accountable to the

principal for a secret commission improperly received by him and is also liable to him in tort.

As per the Act, contracts entered into through an agent, and obligations arising from the acts

performed by an agent, may be enforced in the same manner, and will have the same legal

ramifications, as if the contracts had been entered into, and the acts were personally performed

by the principal. The Act protects the principal from being liable where the agent acts beyond

his authority. In certain situations, where an agent does more than what he is authorized to do,

the part of what he does which is within his authority, can be separated from the part which is

beyond his authority and only the part done within his authority is binding.

Chapter- III

Types of Agency

The most common types of agents are:

• Sole selling agent;

• Sub agent;

• Mercantile agent;

• Factor;

• Forwarding or Clearing Agent;

• Insurance Agent;

• Director Agent;

• Auctioneer;

• Estate Agent;

• Broker etc

Brief description:

Sole Selling Agent:

In case of sole selling agent, the relationship between the principal and the sole selling agent is

more or less of a seller and buyer and therefore, when a sole selling agent sells the goods to his

buyer the relationship between the sole selling agent and the buyer may be of the vendor and

purchaser unless the agency is disclosed.

Mercantile Agent

A mercantile agent is one having authority in the course of business to sell goods or consign

goods for the purpose of sale or to buy goods and even to raise money on the security of goods.

A mercantile agent is also called a commissioner agent.

Factor

A factor in ordinary course of business is entrusted with possession of the goods or with

possession of documents of title to goods;

Broker

He only brings about the transaction between the principal and the buyer or seller but the

possession of the goods or document of title to goods is not given to him. He is, therefore, an

agent, who in ordinary course of business is employed to make contract for the purchase or sale

of shares or goods.

Forwarding or Clearing Agent

A forwarding agent, also called shipping agent or clearing agent acts as agent of the principal,

who wants to export goods outside the country or to clear the goods imported by the principal

and all the functions for exporting or clearing and taking possession of imported goods are done

by this agent.

Estate Agent

An estate agent generally deals as intermediary in the transaction of sale and purchase of

immoveable property or in management of any property.

Auctioneer

An auctioneer is in law an agent of the person whose property is to e sold by auction through

him. He also becomes the agent of the auction purchaser when the bid is struck down in his

favor.

Agents under the Companies Act

There are three types of Agents under the Companies Act, 1956.

• Sole Selling Agent;

• Managing Director;

• Manager;

The legislation puts certain restrictions on appointment:

In respect sole Selling agent:

• The term of appointment of a Sole Selling agent cannot be for more than 5 years; though

renewable.

• The appointment, as such, is subject to the approval of a general body of share holders of

the company prior to appointment or subject to ratification subsequent to the

appointment;

• The terms and conditions of the appointment of a sole selling agent are subject to

approval by the Central Government, which has the power to vary the same in the event

they are found to be prejudicial to the interests of the Company;

• The Company can appoint more than one such agents, however, the Government has a

right to declare any of them as the sole selling agent of that area;

• A company cannot appoint as sole selling agent an individual, firm or body of persons if

it has any substantial interest in the company without the Government approval;

• A Company having a paid up capital of Rs. 50 Lakhs or more cannot appoint such agent

without Government consent;

Chapter IV-

Duties of an agent

An agent has a fiduciary duty to act loyally for the principal’s benefit in all matters connected

with the agency relationship. This duty supplements the duties created by an agency contract. A

fiduciary duty exists because agency is a relationship of trust and confidence. The principal’s

many remedies for an agent’s breach of her fiduciary duty include termination of the agency and

recovery of damages from the agent.

Duties to execute mandate:

The first and the foremost duty of every agent is to carry out the mandate of this principal. He

should perform the work which he has been appointed to do. Any failure in this respect would

make the agent absolutely liable for the principal’s loss. Thus it had been held in number of cases

that:

“The rule of equity is, that if an order is sent by a principal to a factor to make an insurance, and

he charges his principal, as if it was made ,if he never in fact made that insurance, he is

considered as the insurer himself.”

In such cases the agent is held liable to the principal for the amount which would have been

recovered if the goods had been insured. Thus, for example, in Pannalal Jankidas v. Mohanlal:

A commission agent purchased goods for his principal and stored them in a go down pending

their dispatch. The agent was under instruction to insure them. He actually charged the premium

for insurance , but failed to insure the goods. The goods were lost in an explosion in the Bombay

harbor. The agent was held liable to compensate the principal for his loss in us the amount

received under the Bombay Explosion Ordinance, 1944, under which the Government paid

compensation up to fifty per cent in respect of the uninsured merchandise lost in the explosion

Duties to follow Instructions or Customs:

When an agent is appointed to facilitate or negotiate a transaction on behalf of the principal, the

agent owes a duty to the principal to act in the principal’s best interests within the authority of

the agent.

In practice, the duty to act in the best interests of the principal requires the agent to use his due

diligence and skill to negotiate terms of a transaction on behalf of his principal with a third party

to the greatest advantage of his principal in the circumstances.

According to Section 211 an agent that an agent is bound to conduct the business of his principal

according to the directions given by the principal and to keep himself within the confines of his

authority. In the absence of directions, the agent has to follow the custom which prevails in

businesses of the same kind and at the place where the agent conducts such businesses. When the

agent acts otherwise, if any loss be sustained, he must make it good to his principal, and, if any

profit accrues, he must account for it. Thus for example, in Liley v.Doubleday:

An agent was instructed to warehouse his principal’s goods at a particular place. He placed a part

of them at a different warehouse which was equally safe. But the goods were destroyed without

negligence. The agent was held liable for the loss. Any disobedience, or departure from, the

instructions make the agent absolutely liable for the loss.

Where a principal had given instructions of ambiguous nature which were capable of two

meaning, he was not permitted to argue as against the agent that he should have read the

instruction in the other sense than what he actually did.

In the absence of instructions, business customs must be followed. Where, for example, the

customs of a trade require that goods should not be sold on credit or in return for a negotiable

instrument; the agent should not do so. If he does so, he would be liable to the principal for any

loss resulting from the transaction.

Because an agent acts under the principal’s control and for the principal’s benefit, she has a duty

to act within her actual authority and to obey the principal’s reasonable instructions for carrying

out the agency business.

There are exceptions to the duty to obey instructions. A gratuitous agent need not obey his

principal’s order to continue to act as an agent. Also, agents generally have no duty to obey

orders to behave illegally or unethically. Thus, a sales agent need not follow directions to

misrepresent the quality of the principal’s goods, and professionals such as attorneys and

accountants are not obligated to obey directions that conflict with the ethical rules of their

professions.

Usually a principal’s instructions are clear and can be easily followed. Sometimes, however, the

instructions are ambiguous. For example, an instruction may have terms an agent does not

understand. Or perhaps a cell phone conversation may be garbled due to poor signal strength.

When a principal’s instructions are unclear, the agent has a duty to communicate with the

principal to clarify the instructions.

Duty of reasonable care and skill

Section 212 lays down the standard of care and skill required by an agent.

a. Common law requires an agent to act with due care and skill in performing his duties. Agents

who fail to meet this standard are prima facie negligent.

b. Generally speaking, an agent in a certain profession, trade or calling who performs his duty

with the degree of care and skill expected of a reasonable, average member of the relevant

profession, trade or calling meets the requisite standard.

The Agent is bound to act with reasonable diligence, and to use such skill as he possesses; and to

make compensation to his principal in respect of the direct consequences of his neglect, want of

skill or misconduct, but not in respect of loss or damage which are indirectly or remotely caused

by such neglect, want of skill, or misconduct.

If the principal suffers any loss owing to the agent’s want of care or skill, the agent must

compensate the principal for such loss .An agent is liable to his principal for the direct

consequences. If, for example, an agent fails to send the principal’s money in time, he may be

liable for the money and the loss of interest, but not if the principal becomes insolvent by that

reason .Keppel v.Wheeler An agent was appointed to sell a house. He received as offer which he

promptly communicated to his principal. The latter accepted it provisionally “subject to

contract”. Subsequently the agent received a higher offer which he failed to pass on to the

principal. This resulted in final acceptance of the first offer in ignorance of the second. The agent

was held liable to make good the principal’s loss in terms of the difference in the two prices.

The meaning “direct consequences” has been explained by Pannalal Jankidas V.Mohanlal

An agent, having been instructed to insure certain goods, failed to do so. The goods were lost in

an explosion at the docks. Even if the agent had taken out a fire insurance policy in the usual

form it would not have covered a loss of this kind, as fire due to explosion would have been an

expected peril. But the Bombay Government passé an ordinance under which it overtook to pay

half loss in cases of uninsured goods. Thus the principal got only half of what he would have got

if the goods had been insured.

The agent contended that as the passing of the ordinance could not have been anticipated,the loss

was too remote. But, it was held by a majority, that the loss was the direct result of the agent’s

negligence.

A paid agent must act with the care, competence, and diligence normally exercised by agents in

similar circumstances. Paid agents who represent that they possess a higher than customary level

of skill may be held to a correspondingly higher standard of performance. Similarly, an agent’s

duty may change if the principal and the agent agree that the agent must possess and exercise

greater or lesser than customary care and skill.

Agent is also under the duty to communicate with the principal- It is the duty of an agent, in

cases of difficulty, to use all reasonable diligence of communicating with his principal, and in

seeking to obtain his instructions. Unless otherwise agreed, an agent may not use or

communicate confidential information of the principal for the agent’s own purpose or that of a

third party. Confidential information is the principal’s information entrusted by the principal to

the agent for purposes of the agent carrying out her duties. Confidential information includes

facts that are valuable to the principal because they are not widely known or that would harm the

principal’s business if they became widely known. Examples include the principal’s business

plans, financial condition, contract bids, technological discoveries, manufacturing methods,

customer files, and other trade secrets.

In the absence of an agreement to the contrary, after the agency ends almost all fiduciary duties

terminate. For example, an agent may compete with her principal after termination of the agency.

As the following ABKCO case illustrates, however, the duty not to use or disclose confidential

information continues after the agency ends. The former agent may, however, utilize general

knowledge and skills acquired during the agency.

DUTY TO AVOID CONFLICT OF INTEREST

An agent whose interest’s conflict with the principal’s interests may be unable to represent his

principal effectively. Therefore, an agent may not acquire a material benefit from a third party in

connection with an agency transaction. When conducting the principal’s business, an agent may

not deal with himself. For example, an agent authorized to sell property cannot sell that property

to himself. Many courts extend the rule to include transactions with the agent’s relatives or

business associates or with business organizations in which the agent has an interest. However,

an agent may engage in self-dealing transactions if the principal consents. For this consent to be

effective, the agent must disclose all relevant facts to the principal before dealing with the

principal on his own behalf.

Unless the principal agrees otherwise, an agent also may not compete with the principal

regarding the agency business and not assist the principal’s competitors, so long as he remains an

agent. Thus, an agent employed to purchase specific property may not buy it himself if the

principal desires it. Furthermore, an agent ordinarily may not solicit customers for a planned

competing business while still employed by the principal.

Finally, an agent who is authorized to make a certain transaction may not act on behalf of the

other party to the transaction unless the principal knowingly consents. Thus, one ordinarily may

not act as agent for both parties to a transaction without first disclosing the double role to, and

obtaining the consent of, both principals. Here, the agent must disclose to each principal all the

factors reasonably affecting that principal’s decision. Occasionally, though, an agent who acts

merely as a middleman may serve both parties to a transaction without notifying either. For

instance, an agent may simultaneously be employed as a “finder” by a firm seeking suitable

businesses to acquire and a firm looking for prospective buyers, so long as neither principal

expects the agent to advise it or negotiate for it.

An agent will not breach her duty of loyalty, however, if she acts in good faith, discloses to the

principal all material facts regarding her conflict of interest, and deals fairly with the principal.

. An agent who has accepted an appointment to act for a principal (“A”) should not

thereafter accept appointment to act for another principal (“B”) if the interests of principal B

conflict with the interests of principal A. However, if the agent fully discloses to each principal

the agent’s interests under the two appointments and the fact that he acts for both principals at

the same time and obtains the consent of each principal to the dual agency, he may still act for

the two principals. Accordingly, an estate agent who acts for both the vendor and purchaser in a

sale and purchase property transaction must disclose the fact to both the vendor and the

purchaser and obtain their consent for so acting.

• The agent’s duty to avoid conflict of interest applies equally to cases where the interest of

the agent himself or that of his close relatives conflicts or potentially conflicts with his

duties to the principal. However, if the agent fully discloses such interests to the principal

and obtains the principal’s consent, the agent may still act for the principal. Failure to

make full disclosure to the principal is a breach of the agent’s fiduciary duty and the

agent is liable to account for any profit that the agent has made from such transaction in

addition to other remedies available to the principal for the agent’s breach of duty. The

following situations require more discussion:

Purchase or rent from principal – the general rule is that an agent cannot purchase or rent

property from his principal without full disclosure of all the facts to the principal. The agent has

to show:

• How the terms and conditions of the sale or tenancy to the agent compare to a sale or

tenancy to a third party in the market;

• He has disclosed all the relevant facts to the principal before entering into any agreement

with the principal; and

• The principal has given his informed consent to such a transaction.

ii.Sale or rent to principal – similarly, an agent may not sell or let his own property to his

principal without full and frank disclosure and the obtaining of his principal’s informed consent.

The agent has also to show how the terms of the relevant transaction compare to similar

transactions in the market.

Duty not to make secret profit

Common law requires that an agent should not make any profit or acquire any benefit in the

course and in the matter of his agency without the knowledge and consent of his principal. Such

profit, generally known as secret profit, is not restricted to money but may include anything of

value, for example, an interest-free loan, a club membership, etc. An agent who has made secret

profit is liable to account to the principal for such profit in addition to any other remedies

available to the principal for the agent’s breach of duty. The following situations are some

examples of secret profit:

Use of property

An agent who uses property entrusted to him by the principal to make a profit for himself and

without the principal’s consent is in breach of his duty not to make secret profit. For example, if

an estate agent is entrusted with the keys to a property by its owner for the purpose of listing

while the owner is abroad, and the estate agent lets the property to a third party and receives and

keeps the rent for himself without the consent of the owner, the estate agent will be, among other

things, in breach of his duty not to make secret profit.

Use of position

In some circumstances, an agent may obtain a benefit simply through his position as agent of the

principal. For example, an agent appointed to purchase goods for his principal from a supplier

obtains secret monetary benefit from the supplier for placing purchase orders with the supplier.

Such an act by the agent will amount to making secret profit. Likewise, if a company director is

entrusted with the task of negotiating a contract with a third party on behalf of the company (that

is, as the company’s agent), the director cannot subsequently enter into that contract personally

with that third party, even if the latter is willing to do so without the company’s consent. An

agent who, without lawful authority or reasonable excuse, solicits or accepts any advantage in

relation to his principal’s affairs or business in the course of his agency shall be guilty of an

offence under Section 9 of the Prevention of Bribery Ordinance, Cap. 201.

Use of information or knowledge

An agent who acquires information or knowledge which he has been employed by the principal

to collect or discover, or which he has otherwise acquired for the use of his principal should not

make use of the same for his personal gain. For example, in the course of acting for a purchaser,

an estate agent looks for a property for investment in a particular building specified by the

principal and becomes aware of a property in that building which is being offered for sale at

below the market price. If the estate agent makes use of this information, which he is appointed

to obtain on behalf of the purchaser, and acquires that property himself without disclosing the

same to the purchaser and makes a profit by reselling it, the estate agent will, among other

things, be in breach of his fiduciary duty not to make secret profit.

However, the duty not to make secret profit may be discharged if the agent makes full disclosure

of all the relevant facts to the principal and the principal consents to the making and retention of

such profit by the agent.

Can agent’s duty to account to his principal secret profits he has made in the course of the agency

continue even after the agency relationship terminates.

Duty to remit sums

According to Section 218 of Indian Contract Act, agent is under the duty to remit sum repay to

his principal all sums received on his account. The agent is, however, entitled to deduce his

lawful charges, but subject only to this right, the principal’s money must be remmited to him

even if it has been received in pursuance to a void or illegal contract. The agent has to perform

this duty even if his earnings for the principal flow out of void or illegal transactions. “If an

agent receives money on his principal’s behalf under an illegal and void contract, the agent must

account to the principal for the money so received and cannot set up the illegality of contracts as

a justification for withholding payment, which illegality the other contracting party has waived

by the paying the amount.”

The agent has the right to make a counter claim. The Bombay High Court did not consider it fair

or in the interest of justice to compel the agent to deposit the amount in the court as a measure of

protecting his principal, particularly where there was a claim against the claim.

Duty to maintain Accounts:

Alan agent who receives any property for his principal or from his principal is bound to keep

such property separate from his own and he is to be treated as a trustee of such property.

• For the reason stated in sub-paragraph (a), an agent has a duty to keep proper accounts of

the property received by him in the course of the agency and to render such account to

the principal on request.

Even after the agency relationship has ceased, the agent’s duty to account to the principal may

continue. Hence, the agent is obliged to return to his principal all documents and property

originally given to the agent by the principal and documents prepared by the agent on the

instruction and at the expense of the principal.

Agents must keep accurate records and accounts of all transactions and disclose these to

the principal once the principal makes a reasonable demand for them. Also, an agent who obtains

or holds property for the principal usually may not commingle that property with her own

property. For example, an agent ordinarily cannot deposit the principal’s funds in her own name

or in her own bank account.

In Ram All v.Asian Commrel[xii]The High Court observed:

“The right to claim a statement of accounts is an unusual form of relief,only granted in certain

specific cases and is only to be claimed when the relationship between the parties is such that

this is the only relief which will enable the claimant to satisfactorily assert his legal rights”.

Duty not to delegate

The general rule is that an agent may not delegate his authority or duty in whole or in part except

with the authority and consent of the principal.

Owing to the fact that an agency agreement is privy to the principal and the agent and that

authority is normally given to the agent personally, on account of his trustworthiness, skill or

experience, the agent is under a duty to the principal not to delegate his duties under the agency

agreement to another person, but to exercise the authority in person. Hence, an agent has

normally no implied authority to employ deputies or sub-agents to carry out his duties.

Where an agent is not authorised to delegate, the act of a “sub-agent” appointed by the agent will

not be binding on the principal. The agent who so delegates his authority is also in breach of the

duty not to delegate and is liable to compensate for any loss which the principal may suffer in

consequence of the agent’s failure to exercise his authority in person.

It was laid down in John McCain and Co. v. Powthat unless so authorized by the principal, an

estate agent has no right to appoint a sub-agent and delegate to him his powers which require

special skill and care. No implied authority could be pleaded. In this case the sub-agent affected

a sale on his account. The agent had sued for his commission. The court negatived the claim as

the contract of agency did not permit appointment of sub-agent.

But there are exceptions in the following cases when the agent can delegate:

• Nature of work: Sometimes the very nature of work makes it necessary for the agent to

appoint a sub- agent .For example, an agent appointed to sell an estate may retain the

services of an auctioneer and the one authorized to file a suit may engage a lawyer. A

banker instructed to make payment toa particular person at the particular place may

appoint a banker who has an office at that place. A banker authorized to let out a house

and collect rents may entrust the work to an estate agent.

2.Trade Custom-A sub-agent may be appointed and the work delegated to him if there is ordinary

custom of trade to that effect. Thus architect generally appoints surveyors.

1. Ministerial action-An Agent cannot delegate acts which he has expressly or impliedly

undertaken to perform personally, eg. acts requiring personal or professional skill. But the agent

may delegate acts which are purely ministerial in nature, e.g., authority to sign.

4.Principal Consent

The principal may expressly allow his agent to appoint a sub-agent.His consent may also be

implied from the conduct of the parties. The principal may ratify his agent’s unauthorized

delegation.

Chapter – V

Conclusion

An agency is the creation of a contract entered into by mutual consent between a principal and an

agent. By agency, a principal grants authority to an agent to act on behalf of and under the

control of the principal. The relation between a principal and an agent is fiduciary and an agent’s

actions bind the principal. An agent is liable to a principal when he/she acts without actual

authority, but with apparent authority. An agent is liable to indemnify a principal for loss or

damage resulting from his/her act. A principal owes certain contractual duties to his/her agent.

Correlative with the duties of an agent to serve a principal loyally and obediently, a principal’s

primary duties to his/her agent include:

To compensate the agent as agreed; and To indemnify and protect the agent against claims,

liabilities, and expenses incurred in discharging the duties assigned by the principal.

Chapter – VI

Bibliography

Books referred-

• Avtar Singh, Contract & Specific Relief Act 724-727(10th ed.2008)

• Pollock & Mulla ,Indian contract and Specific relief acts 780-785(8th ed.,2008)

• R. K. Bangia, Indian Contract Act 278-280(11th ed., 2004)

• R.L.Meena ,Law of Contract 401 (8th ed. 2008)

• John Cartwright, Anson’s Law of Contract 567 (29th ed.,2010)

Websites referred-

• http://www.letlink.co.uk/index.php?option=com_content HYPERLINK

"http://www.letlink.co.uk/index.php?

option=com_content&view=article&id=271%3Athe-law-of-agency-legal-duties-of-an-

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• http://catalog.flatworldknowledge.com/bookhub/reader/6433?e=mayer_1.0-ch38_s02

• http://www.netlawman.co.in/ia/agency-finer-details-in-the-indian-context

• http://www.icaiknowledgegateway.org/littledms/folder1/agency.pdf

• http://www.vakilno1.com/bareacts/indiancontractact/indiancontractact.html

• http://www.e-iure.com/pdf/agency/2007/india.pdf

Special Contract Project

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