Kinds of Agency

Kinds of agency

Agency is a well-liked idea below Indian Contract Act, 1872. It involves 2 individuals at a time one is principal and agent. In the contract of agency one person (principal) employs another person (agent) to represent him or to act on his behalf, in dealings with a 3rd person. The act of the agent binds the principal within the same manner during which he would be certain if he will that act himself.

Section 182 of the Indian Contract Act, 1872 defines the terms “agent” and “principal”‘:-  agent may be a person utilized to try to any act for an additional or to represent another in dealings with person. The person for whom such act is completed, or who is therefore delineated from the responsibility of doing the act, is termed the “principal”. The agent could also be expressly or impliedly approved {to do|to try to |to try associated do} an act on behalf of the principal.

The agent is merely a connecting link between his principal and therefore the person. Section 226 states that contracts entered into through an associate agent associated obligation arising from the acts done by an agent, could also be implemented within the same manner, and can have identical legal consequence, as if the contract had been entered into and therefore the acts done by the principal in the flesh. within the case of Chairman, L.I.C. vs. R.K. Bhaskar (AIR 2005 S.C. 3087), it’s well settled that agency may be a legal idea that is utilized by the court once it becomes necessary to clarify and resolve the issues created by sure truth state of affairs.

Modes/kinds of Creation of Agency

An act done by associate agent on behalf of the principal binds the principal towards a 3rd person. the connection of Principal and Agent between the person delineated  and therefore the person representing has got to exist so as that the principal’s liability towards the person, arises. within the following things, the principal is certain by the acts of the agent, i.e., in such things, the agent has the ability to bind his principal:

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(1) By actual authority being presented on the agent to act on behalf of the principal. Such authority could also be either expressed or implied.
(2) By agent’s authority to act on behalf of the of ‘Emergency’
(3) By the conduct of the principal, that creates agency on things basis of the law or we can say by the law of estoppel.
(4) By confirmation of the agent’s act by the principal, even though the same has been done without the principal’s prior authority.
(5) By presumption of agency in Husband-Wife relationship.

Acts through with Principal’s Actual Authority

A principal is certain by the acts done by his agent together with his authority. The authority of associate agent could also be expressed or implied . Section 187 defines expressed and implied authority as below :

Express Authority-An authority is alleged to be categorical once it’s given by words spoken or written.
Implied Authority-An authority is alleged to be implicit/ implied once it’s to be inferred from the circumstances of the case; and things spoken or written, or the normal course of dealing, could also be accounted circumstances of the case. This type of authority of associate agent suggests that such authority that has not been presented by the categorical words, however which might be inferred from the circumstances. If associate agent has implicit  authority {to do|to try to |to try associated do} an act, the principal is certain towards the person once the agent exercises such authority. The principal continues to be certain for identical albeit he has prohibited or restricted the agent from doing the act, unless the person is aware of of the restriction.

Agent’s authority in case of emergency

It is impossible for a principal to signify the authority of agent everytime. In certain conditions, which arise out of sudden and those are not presumed, agent is required to act with the ordinary prudence, as he would do if he himself would have been in such a situation under the same circumstances. This type of authority created out of emergency. This is not presumed or pre determined. The agent has to act in the moment and take a conclusive decision. The same has been defined under section 189 as ” 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 circumstances”.

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For instance:- A’s manager B is alone in the factory and machine starts wobbling, to prevent the factory from the loss, the manager shut down all the inputs to the machine,  in this case the manager was not assigned to act on behalf of A but he made the decision under the authority of emergency.

Principal bound by Estoppel

Sometimes the agent has neither Express nor implied authority to do an act on behalf of the principal, but the principal by his conduct it creates an impression in the mind the third person that the agent has an authority to act on his behalf. In such a case, the principal is liable to the third person for the acts done by the agent on the ground of the application of the law of estoppel. The basis of the action is what appears to the third person to be an authority that is Apparent or ostensible authority conferred on the agent.

Section 237 states the provision that, when an agent has without authority, done acts or any obligation to third persons on behalf of his principal, the principal is bound by such acts obligations if he has by his words or conduct induced such third persons to believe that such acts and obligations were within the scope of agent’s authority.

For instance:- A said B to sell a consignment of goods not lower than the fixed price. But B ignored the instructions and sell the consignment to C. Now A can not avoid the contract, he is bound by it.

Principal bound by Ratification

It has been noted above that a principal is bound by acts done by the agent with his authority which may be express or implied. He is also bound by acts done in emergency. In addition, he is bound on grounds of estoppel when there is apparent or ostensible authority vested in the agent. It has also been noted that when the agent does an act for which he does not have any authority, the principal is not bound for the same. To this there is an exception when the principal may be bound even for acts done without any authority. If the principal ratifies, i.e., accords subsequent approval to an act done without his authority, but on his behalf, the principal would be bound in respect of such act.

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Agency between husband and wife

A married woman cohabiting with her husband is presumed to have the power to pledge the credit of her husband for necessaries. She may receive the supply of goods and services which may be required for the domestic use or which may be of use to her husband, herself or the children. If such goods or services are necessary, according to the condition of life of that family, the husband becomes bound to pay for them. When a man and woman are living together and they appear to be husband and wife to a third person, the woman will be able to bind the man in the same way as if she was his wife.

The implied authority to the wife to bind the husband arises when the husband and wife are cohabiting. If they are living separately, there is presumed to be no such authority in wife to pledge the credit of her husband. It is further necessary that the husband and wife must be living in a domestic establishment. If the husband and wife are living in a hotel, where they have been working as manager and manageress respectively, i.e., when the two are not living in a domestic establishment, the husband cannot be made liable for the purchases may by the wife. If the third person gives credit to the wife only, or when the husband revokes the authority by giving a notice to a third person, he is not bound by the wife’s act.

But if they are separated by the whims of the wife the husband is not liable for the wife’s necessities.

Author: Riddhi Agrawal,
Amity University, GWALIOR 3rd year

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