Law of Agency
TOPIC THREE: LAW OF AGENCY * Nature and Creation of an Agent * Duties of an Agent to his Principal * Duties of a Principal to his Agent * Termination of Agency Contract NATURE OF AGENCY
What is an agency?
Section 135 of Contract Act 1950:
“Agency is the relationship which subsists between the principal and the agent who has been authorized to act for him or represent him in dealings with others.”
There are two types of agency contracts:- 1. Contract between principal & agent 2. Contract between principal & third party through the medium of the agent. CREATION OF AGENCY
Agency can be created through:- 1. Express appointment 2. Implied appointment by principal 3. Ratification by principal 4. Necessity 5. Estoppel 1. Express appointment
This happens when the principal expressly appoints a person to be his agent. This could be done in two ways: a) oral b) in writing
2. Implied appointment
Implied appointment may be created under three situations:-
a) When a person by his word or conduct holds out another person as having authority to act for him b) Relationship between husband & wife c) Relationship between partners
3. Ratification (Approval)
Agency by ratification can happen only if it falls under these two situations:- a) Agent who has been appointed but has exceeded his authority when he entered into a contract with a third party. b) A person who has no authority to act for the principal but he acted as if he has the authority to enter into a contract with third party.
According to Section 149 of Contract Act, if either one of these two situations involve, the principal has two choices i.e.: to reject the contract or to accept the contract. When he accepts the contract, it is known as ‘ratification’.
Conditions of a Valid Ratification a) The contract done by agent was without authority or exceeding authority. b) The contract recognized by law. c)
What is an agency?
Section 135 of Contract Act 1950:
“Agency is the relationship which subsists between the principal and the agent who has been authorized to act for him or represent him in dealings with others.”
There are two types of agency contracts:- 1. Contract between principal & agent 2. Contract between principal & third party through the medium of the agent. CREATION OF AGENCY
Agency can be created through:- 1. Express appointment 2. Implied appointment by principal 3. Ratification by principal 4. Necessity 5. Estoppel 1. Express appointment
This happens when the principal expressly appoints a person to be his agent. This could be done in two ways: a) oral b) in writing
2. Implied appointment
Implied appointment may be created under three situations:-
a) When a person by his word or conduct holds out another person as having authority to act for him b) Relationship between husband & wife c) Relationship between partners
3. Ratification (Approval)
Agency by ratification can happen only if it falls under these two situations:- a) Agent who has been appointed but has exceeded his authority when he entered into a contract with a third party. b) A person who has no authority to act for the principal but he acted as if he has the authority to enter into a contract with third party.
According to Section 149 of Contract Act, if either one of these two situations involve, the principal has two choices i.e.: to reject the contract or to accept the contract. When he accepts the contract, it is known as ‘ratification’.
Conditions of a Valid Ratification a) The contract done by agent was without authority or exceeding authority. b) The contract recognized by law. c)