Rights And Duties Of Principal And Agent Pdf
File Name: rights and duties of principal and agent .zip
In its simplest form, it is simply appointing another to act on your behalf for a specified purpose. It is inherent in every employment relationship, most sales relationships, most organizations and business structures.
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The Law of Agency
For example, when a housewife has to look after a few kids and at the same time she has to purchase groceries and fetch her kids from school.
Unless she gets some assistance from another person, she will not be able to perform all the duties smoothly. Assistance from another person in law will give rise to the creation of an agency law As agency is a relationship between a Principal and his Agent, section of Contract Acts defines Agent as person employed to do any act for another or to represent another in dealings with third persons. Whilst Principal is defined as a person to whom such act is done, or who, so represented, is called the Principal.
The example is A appointed B to be his agent to buy goods from C. A will be known as the Principal, B is the agent while C is the third party. Agency relationship creates two contracts enforceable by law. Firstly, a contract of agency between Principal and Agent and secondly, a contract of sale between Principal and Third party. In a contract of agency, consideration is not important. The contract between them is void contract.
If a person allows another to order goods on his behalf and habitually pays for them, an agency may be implied. In such a case, he will be bound by the contracts as if he has expressly authorized. A wife can use his husband's name to buy goods on credit if the goods is a necessity and suitable for their standard of living.
Prentice Hall. When the shop owner demands for payment, the husband argued had a sufficient allowance. The presumption was said to be rebuttable by the issue of an express warning to traders, by the fact that the wife was already adequately supplied or had sufficient allowance. The wife will be personally liable.
Goods were supplied to Yong but were not paid for. The respondent company obtained judgment against Chan and Yong. An Agent who was appointed exceeded his authority, or 2. A person who had no authority to act but acted as if he has the authority. Under Section of Contract Acts , it is up to the Principal whether or not to ratify the Agent's action.
If the ratifies or approves, agency by ratification may arise. When the Principal accepts and confirms, the contract is known as ratification. Section of Contract Acts provides that ratification may be made by express or implied.
Ratification will bind the Principal with the contract made by the agent at the moment of ratification. United States: Cavendish Publishing. However, there are conditions need to be fulfilled before the Principal ratifies. The act must be unauthorized or Agent has exceeded his authority, ii.
The unauthorized act must be recognized by the law must not an unlawful act , iii. The Agent must expressly act as an Agent for the Principal at the time of contract. When the Agent use his own name and does not disclose that he is an Agent for a Principal, he would be personally liable.
The Principal must be in existence and have contractual capacity at the time when the Agent made the contract. If the Principal is a minor, he cannot ratify a contract as he does not contractual capacity unless in a certain types of contract i. Contract for Necessities. The Principal must have knowledge about the material facts of the contract in order to ratify it. The Principal if he chooses to ratify must ratify the whole contract, not only the part at is beneficial to him.
Ratification must be made within reasonable time. Ratification must not injure to third party In the case of Keighley Maxted and co. The agent exceeded his authority and bought it at a higher price. However, the agent contracted in his own name. It was held that the Principal was not liable for the act of an agent who did not profess to be an agent when he entered into the contract.
This is known as agency of necessity as stated in Section of Contract Acts However some kind of contractual relationship must already exist between them. Agency by necessity may be created if the following three conditions are met. There must be a real and actual emergency. The Agent's action is necessary to prevent loss to the Principal. It is impossible for the Agent to communicate and get further instruction from the Principal.
The Agent of necessity must act in good faith and his action must be reasonable in the circumstances. In the case of Prager v Blatspiel, Stamp and Heacock,11 during the First World War the plaintiff who was from Romania contracted to buy a number of furs from defendant who was from London.
The skins increased in value and the agent sold them under agency of necessity. The court held that there was no agency of necessity. The skins were not likely to drop in value and could be preserved by proper storage. But, the Principal is aware of it but does not deny the, authority of the person. The Principal, by his word or conduct allows third party to believe that the person is his Agent. Therefore, he will be estopped from denying the agents authority.
In the case of Freeman and Lockyer v Buckhurst Park Properties,13 there were 4 directors in a company. One of them, A contracted on behalf of the company with T, a third party without any authority.
The other directors knew about the contract but does not inform T that A actually had no authority to act on behalf of the company. Thus T is induced to believe that A had authority to enter into a contract on behalf of the company. Commercial Law. Like other contract, the terms apply is as agreed expressly between parties and included in the contract document. If the contract does not expressly provide rights and obligations of parties to the contract, the rights and obligations as provided in Section to of Contract Acts applies.
If 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. However, an Agent is under no duty to obey instructions of his Principal if the instructions are unlawful. In the case of Turpin v Bilton,15 the agent has been instructed by the Principal to get the insurance for his vessel.
However, the agent failed to do so. The vessel lost and as a result the Principal bare some loss. Thus the agent liable to pay compensation. In the case of Keppel v Wheeler,16 the Defendant agent was employed by the Plaintiff Principal to sell his house. The first offer was accepted by the Plaintiff with a condition.
A few days later a higher offer second offer was made by X but this does not communicate to Plaintiff. The court held that the Defendant liable to pay the differences between first offer and second offer. Law of Contract and Specific Relief. New Delhi: Universal Law publishing co. Exception is given in emergency case if Agent fails to communicate, he may use his own discretion to safeguard the interest of his Principal.
Under the section of , an agent has authority in an emergency, to do all such acts for the purpose of protecting his Principal from loss. For example, B, a broker in whose business it is not the custom to sell on credit, sell goods of A on credit to C, whose credit at the time was very high.
C, before payment becomes insolvent. B must make good the loss to A. When the Principal approves or consents to the delegation of the authority ii. Where it is presumed from the conduct of the parties that the Agent would have power to delegate his authority iii. In case of emergency. Where the act to be done is purely ministerial or clerical.
In the case of Wong Mun Wai v. Chong,19 the Plaintiff Principal bought a flat from a company. The Defendant agent was the managing director. S Harris Trustee Ltd. Defendant submitted to Plaintiff a few confidential documents about the insurance policy. Defendant also asked Plaintiff to keep this a secret from his customer.
Rights and duties of principal towards his agent
To repudiate contract: Sec If an agent deals on his own account in the business of the agency, without first obtaining the consent of his principal and acquainting him with all material circumstances which have come to his own knowledge on the subject, the principal may repudiate the transaction, if the case shows either that any material fact has been dishonestly concealed from him by the agent or that the dealings of the agent have been disadvantageous to him. Only after obtaining the consent of the principal and full disclosure of all material facts, agent may act on his own account. Where the agent acts on his own account, principal has following rights:. To claim benefit Sec if an agent without the knowledge of the principal, deals in the business of the agency on his own account instead of on account of his principal, the principal is entitled to claim from the agent any benefit which may have resulted to him from the transaction. The principal must show that a material fact has been dishonestly concealed or the dealing of an agent has been disadvantageous to him.
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. The agent is, thus, required to negotiate on behalf of the principal or bring them and third parties into contractual relationship. This branch of law separates and regulates the relationships between:. The reciprocal rights and liabilities between a principal and an agent reflect commercial and legal realities. A business owner often relies on an employee or another person to conduct a business. In the case of a corporation, since a corporation can only act through natural person agents, the principal is bound by the contract entered into by the agent, so long as the agent performs within the scope of the agency. A third party may rely in good faith on the representation by a person who identifies himself as an agent for another.
PDF | Abstract Many agents are conceived to achieve certain goals on A corporation may be assigned rights and duties, which nei- right. to decline to produce all kinds of information is in direct conﬂict with the principle of.
Rights of Principal
The contract between Principal and Agent is called 'Contract of Agency'. The rights and duties of the Agent are corresponding to the duties. 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.
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