Ali owns a shop in Bihar but lives in Mumbai.Circumstantial authority- doing something according to the circumstances of the case.Customary authority- doing something according to the pre-established customs of a place where the agent acts.Usual authority- doing that which is usually done by persons occupying the same position.Incidental authority- doing something that is incidental to the due performance of express authority.That is, the agent can do any lawful thing necessary to carry out the work of the Principal. In carrying out the work of the Principal, the agent can take any legal action. Implied authorityĪccording to Section 187, authority is said to be implied when it is to be inferred from the facts and circumstances of the case. Express authorityĪccording to Section 187, the authority is said to be express when it is given by words spoken or written. He guarantees the credit extended to the buyer.Īuthority of an agent can be both express or implied. Del Credere- An agent who acts as a salesperson, broker and guarantor for the Principal.Commission Agent- An appointed to buy and sell goods (make the best purchase) for his Principal.Auctioneer- An agent who acts a seller for the Principal in an auction.Broker- An agent whose job is to create a contractual relationship between two parties.
Sub-Agent-An agent appointed by an agent.General Agent- Agent appointed to do all acts relating to a specific job.Special Agent- Agent appointed to do a singular specific act.Ratification – When an act of a person, who acted as another person’s agent (on his behalf) without his knowledge is later ratified by that person, this creates an agency by ratification between the two. In a situation where one person behaves in such a manner in front of a third person, as to make someone believe he is an authorized agent on behalf of someone, an agency by estoppel is created. This creates an agency out of necessity.Įstoppel – An agency can also be created by estoppel. Necessity – In a situation of necessity, one person can act on behalf of another to save the person from any loss or damage, without expressly being appointed as an agent. Implication – When an agent is not directly appointed but his appointment can be inferred from the circumstances, an agency by implication is created. When a person, in writing or speech appoints another person as his agent, an agency is created between the two. Creation of Agencyĭirect (express) appointment – The standard form of creating an agency is by direct appointment. A sound mind and a mature age is a necessity because an agent has to be answerable to the Principal. In the same fashion, according to Section 184, the person who has attained the age of majority and has a sound mind can become an agent. Minors and persons of unsound mind cannot appoint an agent. In other words, any person capable of contracting can legally appoint an agent.
In this case, Lavanya has delegated her authority to Susan, and she becomes a Principal while Susan becomes an agent.Īccording to Section 183, any person who has attained the age of majority and has a sound mind can appoint an agent. She appoints a person Susan to take care of the dealings of the shop. Lavanya lives in Mumbai, but owns a shop in Delhi.In this case, Joe is the Principal, Mary is the Agent and the Bank is the Third Party. Joe appoints Mary to deal with his bank transactions.Here, A is the principal and B is the agent, and the person from whom the goods are bought is the ‘Third Person’. A, a businessman, delegates B to buy some goods on his behalf.Therefore, the person who has delegated his authority will be the principal. The Indian Contract Act, 1872 defines an ‘Agent’ in Section 182 as a person employed to do any act for another or to represent another in dealing with third persons.Īccording to Section 182, The person for whom such act is done, or who is so represented, is called the “principal”. Relationships relating to principal and agent involve three main parties: The Principal, the Agent, and a Third Party. Therefore, laws relating to the agency are an important area of Business Law. All corporations, big or small, carry their work out through agency. It is important to know the law relating to agency because nearly all business transactions worldwide are carried out through agency. Chapter X of the Indian Contract Act, 1872 deals with the laws relating to Agency. When one party delegates some authority to another party whereby the latter performs his actions in a more or less independent fashion, on behalf of the first party, the relationship between them is called an agency.
This article is written by Wardah Beg, student, Faculty of Law, Aligarh Muslim University.