Chapter X (Sections. 182 To 238) of The Contract Act, 1872

Chapter x (Sections.
182 to 238) of the Contract Act, 1872

DEFINITION OF AGENT AND PRINCIPAL
AGENT
An ‘AGENT’ is a person employed to do any act for another
or to represent another in dealings with third persons. The
function of an agent is to bring his principal Into
contractual relations with third persons.
PRINCIPAL
.
A person for whom the above act is done or who is so represented is called
the ‘PRINCIPAL’
4- 2
ESSENTIALS OF RELATIONSHIP OF AGENCY
• AGGREMENT B/W PRINCIPAL AND AGENT-

Agency depends on agreement but not
necessarily on contract. Any person can become
an agent b/w a principal and the third person.
• INTENTION OF AN AGENT TO ACT ON BEHALF OF

THE PRINCIPAL
4- 3
RULES OF AGENCY
There are two important rules of agency:
1.Whatever a person can do personally, he can do

through an agent
2.He who does an act through another does it by

himself .
4- 4
WHO CAN EMPLOY AN AGENT?
Acc. To sec 183 of ICA any person who is of age of majority
according to law to which is a subject, and who is of sound
mind may employ an agent.
WHO MAY BE AN AGENT?

Acc to sec 184 of ICA any person who is authorized to act
such a person may be an agent. As the agent does not
make contracts on his own behalf it is not necessary that
he should have contractual capacity.
4- 5
DIFFERENCE B/W AGENT & SERVANT
An agent is employed to bring the principal into the legal relations
with the third persons or to represent him in dealings with third
persons. A servant does not ordinarily create legal relations b/w person
and the employer.
An agent is bound to follow all the lawful instructions of the

principal but he is not subject to the direct control and
supervision of principal. A servant acts under the direct control
and supervision of his employer and is bound to follow all the
reasonable orders given to him in the course of his employment.
4- 6
Contnd...
An agent may work for several principals at the same time but
servant usually serves only one master.
A principal is liable for the wrongs of his agent done within

the scope of his authority. A master is liable for the wrongs of
the servants if they are committed in the course of his
employment.
4- 7
CREATION OF AGENCY
1. By express agreement
2. By implied agreement
Agency by ESTOPPLE.
Agency by Holding out.
Agency by necessity.
3. By ratification
4- 8
CLASSIFICATION OF AGENTS
Classification according to extent of authority
Special Agents
General agents
Classification according to nature of work performed by them

1) Commercial or Mercantile Agent
2) Non mercantile Agents
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General Agent
A General agent is one who is appointed to represent the principal

in all the matters concerning a particular business
Special Agent
A Special agent is one who is appointed
to do some particular act or enter into
some particular contract
4- 10
Mercantile Agents
• Factor
• Auctioneer
• Del Credere Agent
• Pakka and Katcha adatias
• Indentor
• Broker
• Commission Agent
4- 11
Factor
Possession of property
Sell on credit and in his own name
General lien
Cannot Barter
Cannot Delegate
4- 12
Auctioneer
Appointed to sell by auction
Deliver goods on receipt of price
Recover price from highest bidder
Can file suit in his own name
Particular Lien
4- 13
Del Credere Agent
Agent as well as Guarantor
A del credere agency is a type of principal-
agent relationship wherein the agent acts not only as
a salesperson or broker for the principal, but also as
a guarantor of credit extended to the buyer
Pakka Adatias
Guarantees Principal and Broker
Can himself perform
4- 14
Katcha Adatias
Guarantees on the part of the Principal
Indentor
Procures a sale or purchase on behalf of the
principal, with a merchant in the foreign
country
4- 15
Broker
Engage to buy or sell the property
Memorandum book- Sold and Bought note
Commission Agent
Employed to buy or sell or to Transact Business
Not Liable for third party , Particular lien
May or may not have possession
4- 16
Non Mercantile Agent
Wife as an Agent
•Living together and looking for necessaries
Husband is not Liable

Expressly forbidden credit
Not necessary
Given money
Trader is told expressly
4- 17
If they live apart:-
No fault of wife, liable to pay for her maintenance
Or
If they live apart:-
Under no justifiable Circumstances, she is not her Husband’s agent
4- 18
Sub agent and Substituted Agents
Sec 191:- Sub agent is employed by, and acting
under the control of the original agent in the
business of the agency
Sec 194:- Where an agent, holding an expressed

or implied authority to name another person has
named another person, such person is agent of the
principal for such part of the business of the
agency as is entrusted to him.
4- 19
DUTIES OF AGENT
1. To carry out the work undertaken according to the directions given by the
principal.
2. To carry out the work with reasonable care, skill and diligence.
3. To communicate with the principal in the case of difficulty.
4. To pay sums received for the principal.
5. To protect and preserve the interests of the principal in the case of his
death or insolvency.
6. Not to make secret profit from agency .
7. Not to set up an adverse title.
8. Not to use information obtained in the course of the agency against the
principal.
4- 20
RIGHTS OF AGENT
1. Right of retainer.
2. Right to receive
remuneration.
3. Right of lien.
4. Right of indemnification.
5. Right of compensation.
4- 21
DUTIES OF PRINCIPAL
1. To indemnify the agent against the consequences of all lawful acts
2. To indemnify the agent against the consequences of acts done in good faith
3. To indemnify the agent for injury caused by principal’s neglect.
4. To pay the agent the commission other remuneration agreed.
4- 22
RIGHTS OF PRINCIPAL
1)To recover damages.
2)To obtain an account of secret profits and recover them and resist
a
claim for remuneration.
3) To resist agent’s claim for indemnity against liability incurred.
4- 23
TERMINATION OF AGENCY
1. By act of the parties
 Agreement
 Revocation by the principal
Revocation by the agent
4- 24
TERMINATION OF AGENCY CON’T
2. By operation of law
 Performance of the contract
 Expiry of the time
 Death of either party
 Insanity of either party
 Insolvency of either party
 Destruction of the subject matter
 Principal becoming an alien enemy
 Dissolution of a company
4- 25
Agency Coupled with interest
• Agency is coupled with interest when authority is given for

the purpose of securing some benefits to the agent.
• The agency cannot, unless there is an express contract, be
terminated to the prejudice of such interest (Sec 202). It
becomes irrevocable to the extent of such interest and does
not terminate even by the insanity or death of the principal.
• In other words, where the agent himself has an interest in the
subject matter of the agency, the agency is one coupled with
interest.
4- 26
THANKS
27

Chapter X (Sections. 182 To 238) of The Contract Act, 1872

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Chapter X (Sections. 182 To 238) of The Contract Act, 1872

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Chapter x (Sections.

182 to 238) of the Contract Act, 1872

• AGGREMENT B/W PRINCIPAL AND AGENT-

• INTENTION OF AN AGENT TO ACT ON BEHALF OF

There are two important rules of agency:

1.Whatever a person can do personally, he can do

2.He who does an act through another does it by

WHO MAY BE AN AGENT?

An agent is bound to follow all the lawful instructions of the

A principal is liable for the wrongs of his agent done within

Classification according to nature of work performed by them

2) Non mercantile Agents

A General agent is one who is appointed to represent the principal

Guarantees on the part of the Principal

Husband is not Liable

Sec 194:- Where an agent, holding an expressed

3. To communicate with the principal in the case of difficulty.

4. To pay sums received for the principal.

6. Not to make secret profit from agency .

7. Not to set up an adverse title.

1. To indemnify the agent against the consequences of all lawful acts

3. To indemnify the agent for injury caused by principal’s neglect.

4. To pay the agent the commission other remuneration agreed.

1)To recover damages.

3) To resist agent’s claim for indemnity against liability incurred.

1. By act of the parties

 Revocation by the principal

Revocation by the agent

 Expiry of the time

 Death of either party

 Insanity of either party

 Insolvency of either party

 Destruction of the subject matter

 Principal becoming an alien enemy

• Agency is coupled with interest when authority is given for

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