In the realm of business, the concept of agency plays a significant role. It allows individuals or entities to delegate certain tasks and responsibilities to another party, known as an agent. In India, the provisions related to agency are outlined under the Indian Contract Act, 1872.
DEFINITION :
According to Section 182 of the Indian Contract Act, “An ‘agent’ is a person employed to do any act for another or to represent another in dealings with third persons.” Thus, an agent acts on behalf of the principal, representing their interests in various business transactions.
TYPES OF AGENT :
- Agent by Appointment : An agent can be appointed by an express agreement, either written or oral, between the principal and the agent. This type of agency can be created for a specific purpose or for a particular period of time.
- Agent by Ratification : In certain cases, an agent might act without the prior authority of the principal. However, if the principal later approves or ratifies the agent’s actions, the agent becomes an agent by ratification.
- Agent by Estoppel : When a person, by their actions or words, leads others to believe that a certain individual is their agent, even though no formal appointment has taken place, an agency by estoppel is created.
RIGHTS AND OBLIGATIONS OF AGENT :
- Duty of Good Faith : An agent must act in the best interests of the principal and not misuse their position for personal gain.
- Duty of Skill and Care : An agent is expected to possess the necessary skills to perform their tasks and should exercise reasonable care in carrying out their duties.
- Duty to Account : Agents are required to keep accurate records of all transactions made on behalf of the principal and provide an account of the same.
- Duty to Communicate : An agent must promptly communicate all relevant information to the principal and keep them informed about the progress of any transactions.
LIABILITIES OF AGENT :
- Liability for Negligence : If an agent fails to exercise reasonable care and skill, resulting in a loss to the principal, they can be held liable for negligence.
- Liability for Breach of Duty : If an agent breaches any of their obligations, such as acting beyond their authority, they may be held liable for breach of duty.
- Liability for Misrepresentation : Agents can be held accountable for making false statements or misrepresenting facts that harm the principal’s interests.
The concept of agency under the Indian Contract Act provides a framework for businesses to delegate tasks and represent their interests through agents. Understanding the rights, obligations, and liabilities associated with agency relationships is crucial for both principals and agents. By adhering to the provisions of the Act, parties can establish effective agency relationships and navigate the world of business smoothly.
REFERENCES :
