Lecture on The Law of Contract 09

Law of Contract

Agency

Agency is a contractual a legal relationship between and agent and his principal. An ‘Agent’ is a person employed to do any act for another or to represent another in dealings with third person, – [see.182] and the person for whom such act is done is called principal.

Example: “A” appoint “B” to buy fifty bags salt on his behalf. Here “A” is the principal “B” is agent and the relationship between “A” and “B” is an agency.

The function of an agent is to bring about contractual relation between the principal and third parties. Usually agent are appointed with specific instruction and authorized to act within the scope of their instructions. Acts of the agent within the scope of the instructions bind the principal as if he has done them himself. There is a legal maxim regarding agency. “Que facit per alium per se” which means – “He who does through another does by himself.” The act of an agent is the act of the principal.

An Agent may be appointed by the principal, executing a written and stamped document. Such a document is called power of Attorney.

No consideration is necessary to create an agency (see.185). The acceptance of the office of an agent is regarded as sufficient consideration for the appointment. The agency contract generally provides for the amount of remuneration payable by the principal to the agent.

Who can appoint an agent?

“Any person who is of the age of majority according to the law to which he is subject and who is of sound mind, may employ an agent.”(see.183)

Who may bean agent?

Any person may be an agent, even a minor. A minor acting an agent can bind the principal to third parties. But a minor is not himself liable to his principal. (see.184)

Methods of creating Agency

Agency may be created in any one of the following ways

Agency by Express agreement
Agency by Implied agreement
Agency by estoppel
Agency by necessity
Agency by ratification

1. Agency by Express agreement agreement

A contract of agency may be created by express agreement. The agreement may be either oral or written. It is usual in many cases to appoint agents by executing a formal power of attorney on a written and stamped document.

2. Agency by Implied agreement

An Agency agreement may be implied under certain circumstances from the conduct of the parties or the relationship between them. Agency by estoppel and Agency of necessity are cases of Implied Agency.

3. Agency by estoppel

Agency may be created by estoppel. When a man has by his conduct or statements induced other to believe that a certain person is his agent, he is precluded from subsequently denying it. Thus an agency is certain by implication of law.

4. Agency by necessity

Circumstances sometimes force a person to act on behalf of another without any express authority from him. In such cases an agency of necessity is said to be created.

5. Agency by ratification

A contract of agency may be created by ratification. Ratification means the subsequent adoption and acceptance of an act originally done without instruction or authority.

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