Who is an agent and a principle (Section 182)?
An “agent” is a person hired to perform an act for another or to represent another in dealings with third parties. The “principal” is the person who does or is represented by such an act.
The relationship between an agent and a principal is known as a “Agency.” An agent thus puts together his principal and a third party. Ex: A appoints B to buy a house for him. A is the principle, B is an agent, and their relationship is one of agency.
General Rules of Agency
Except for tasks requiring personal skill and qualifications, a person competent to contract may perform any act through an agent. For example, a person cannot marry or paint through an agent.
For all legal purposes, an agent’s actions are the same as those of the principal.
Who May Employ an Agent (Sec 183) According to the legislation, anyone over the age of majority and of sound mind may hire an agent. A kid, a lunatic, or an inebriated person cannot hire an agent.
Who can be an agent (Sec 184)? “As between principle and third person, any person may become agent” Thus, a kid, a lunatic, or an inebriated person can work as an agent. However, in such a circumstance, he faces a significant risk because he cannot hold such an agent accountable for misbehavior or carelessness.
Modes of creation of Agency
Formation of Agency The following are various methods of creating agency.
- Agency via Express Agreement: This procedure results in a number of agency contracts coming into existence. It can be oral, documentary, or through a power of attorney.
- Agency by operation of law: An agency contract may sometimes come into effect as a result of legal provisions.
For example, under the Partnership Act, each partner serves as both the firm’s and other parties’ agent. It is an inferred agency. Because of this implied agency, only a partner can bind both the firm and the other partners to his conduct. Similarly, according to the Companies Act, promoters are recognized as agents of the firm.
- Agency by Ratification: Ratification is the eventual adoption of an activity. Principal-agent relations will be operational shortly following ratification. The individual who completed the activity will become the agent, while the one who provided ratification will become the principal.
Ratification may be spoken or implied. Express ratification occurs when an activity is adopted by expression. For example, without A’s permission, B purchased products for A’s benefit. Ratification occurs after A has expressed his support (adoption) for B’s activity. Now, A is the principal, while B is the agent.
Ratification without expression is known as implicit ratification. For example, Mr. Q has P’s money with him. Without P’s approval, Q lent the money to R. R then paid interest straight to P. Without any dispute, P has stolen that much from R. It means that P has expressed his support for Q’s activity. It is an implied ratification.
Agency by implied authority: This type of agency is formed as a result of the parties’ relationship or their conduct.
For example, A and B are brothers; A has relocated to a foreign nation without A’s permission; B has transferred A’s agricultural land to a farmer on these terms; and B is collecting and remitting rent to A. In this case, A automatically becomes the principal, and B becomes his agent. Agency via implied authority has three sorts, as shown below:
Agency can be established through necessity, estoppel, or holding out.
- By Necessity: at an emergency circumstance where another’s property or interest is at jeopardy, it may be necessary for one person to serve as an agent for another. The conditions that allow a person to act as an agent of another in necessity are as follows:
- There should be a compelling reason for acting on behalf of the principle.
- It should be impossible to communicate with the principle within the time frame provided.
- The alleged agent should behave honestly and in the best interests of the principal.
For example, A handed over 100 bags of butter to a road transport business. Actually, the bailment contract assumes that all vehicles in transit have stopped and that further movement will take one week. As a result, the authorities at the transportation firm have sold the butter in the adjacent villages. Here, agency by necessity is visible.
- By Estoppel: If a person knowingly leads another to believe that a certain person is acting as his agent through his conduct or words spoken or written, he is estopped from later contesting the facts of the situation.
Example: In the presence of A, B tells C that he (B) is A’s agent, despite the fact that this is not the case. A has not prevented B from making such a statement. It’s agency by estoppel.
- By holding out: the principal is obligated by the agent’s act if he has previously led others to assume that another person performing an act on his behalf is acting under his authority.
Example: Y is X’s servant, and X has trained Y to fetch things on credit from Z. On one occasion, X gave Y money to bring products from Z in cash. B bought stuff on credit as usual and fled with the money. This is agency by holding out, and hence X is obligated to pay the money to Z.
