Contract of Agency in Commercial Law: Duties and Rights Explained
Learn about the duties and rights of agents and principals in a contract of agency under Commercial Law. Agents must execute the mandate of their principals, while principals must indemnify agents. Explore the obligations and entitlements of both parties in this legal relationship.
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CONTRACT OF AGENCY CONTRACT OF AGENCY COURSE CODE:20UCO1AC2 COURSE CODE:20UCO1AC2 COURSE TITLE: COMMERCIAL LAW COURSE TITLE: COMMERCIAL LAW PREPARED BY PREPARED BY Dr. S. SALEEM Dr. S. SALEEM ASSISTANT PROFESSOR PG & RESEARCH DEPARTMENT OF COMMERCE JAMAL MOHAMED COLLEGE (AUTONOMOUS) TIRUCHIRAPPALLI-20
COMMERCIAL COMMERCIAL LAW LAW UNIT IV CONTRACT OF AGENCY
Duties of Agents: Following are the duties of agent: 1. It is the duty of an agent to execute the mandate of his principal. 2. It is the duty of an agent to take reasonable care of the property of the principal and not to destroy the sale. 3. An agent is bound to render proper accounts to his principal on demand. 4. In case of difficulty, the agent must inform the principal and get instruction from him before taking any steps in facing the difficulty or emergency. 5. It is the duty of agent not to deal on his own account. 6. An agent should not make any secret profit out of his agency or agency agreement. 7. An agent must not delegate his authority to a different person, but perform the work of agency himself.
Rights of Agents: Following are the rights of the agent: 1. Every agent is entitled to receive agreed remuneration, or if there is no agreement, a reasonable remuneration. 2. An agent has the right to retain all money in respect of his remuneration, advances or reasonable expenses incurred by him in conducting the business. 3. An agent has to be indemnified against the consequences of all lawful acts done by him in the exercise of the authority conferred upon him. 4. It is the right of an agent to stop the goods in transit to the principal like an unpaid seller if he has bought goods with his own money and the principal has become insolvent.
Duties of Principal: Following are the duties of principal: 1. The principal is bound to indemnify the agent against the consequences of lawful acts done by such agent in exercise of the authority conferred upon him. 2. The principal must make compensation to his agent in respect of injury caused to such agent by the principal s neglect or want of skill.
Rights of Principal: Following are the rights of Principal: 1. If the principal suffers any loss, he has a right to recover from his agent if it occurs due to the following reasons; 2. Not any action of the agent according to the directions of his principal. 3. No following the customs of trade in the absence of directions. 4. No performing of his duties with skill, care or diligence. 5. If the agent without the knowledge and consent of the principal makes any secret profiles out of the agency, the principal has a right to recover them from the agent. 6. If the principal shows that the agent has acted as a principal himself and not merely as an agent, he has a right to refuse to indemnify the agent against loss suffered by the agent in such transaction.
Termination/ Revocation of Agency or Agency Agreement An agency or agency agreement could also be terminated in any of the subsequent ways: 1). Agreement: An agency or agency agreement can be terminated at any time by a mutual agreement between the principal and the agent. Therefore, the authority of an agent terminates when the principal and therefore the agent complies with to terminate it. 2). Revocation by the Principal: The principal can revoke the authority of the agent at any time before the agent has exercised his authority. 3). Revocation by Agent: An agency or agency agreement can be terminated or revoked by the agent himself because a person cannot be compelled to work as an agent. 4). Completion of business of Agency: An agency or agency agreement comes to an end automatically when the business of the agency is completed.
5). Expiry of time: If the agent is appointed for a fixed period, the agency comes to an end on the expiry of the fixed period, even though the business may not have been completed. 6). Death of the Principal or Agent: An agency or agency agreement terminates automatically on the death of the principal or agent. 7). The insanity of the Principal or Agent: An agency or agency agreement terminates automatically, where the principal or the agent becomes of an unsound mind. When the principal becomes insane, the agent cannot act for an individual of unsound mind. 8). Insolvency of the Principal: An agency or agency agreement is also terminated by the insolvency of the principal. 9). Destruction of Subject matter: An agency or agency agreement terminates on the destruction of the subject matter of the Contract of Agency. 10). Principal or Agent becomes Alien enemy: If the principal and agent are citizens of two different countries and a war breaks out between the two countries, the contract of agency(agency agreement) is terminated. Conclusion: To conclude that the Contract of Agency is merely a connecting link between the principal and the third party and is based upon consent.
