What Is the Law of Agency with Example? What Is the Law of Agency with Example? The law of agency is a branch of commercial law. It deals with a set of contractual, quasi-contractual, and non-contractual fiduciary relationships. Also, it involves a person called the agent. The agent is authorized to act on behalf of another (called the principal) to create legal relations with a third party.
Agency is the relationship that subsists between the principal and the agent, who has been authorized to act for him or represent him in dealing with others.
In reflect of an agency, there is an effect of two contracts i.e. It can be highlighted that this branch of law separates and regulates the relationships between:
Definition of Agent and Principal
In section182 of the Contract Act 1872, “Agent” and “principal” defined as below:
“An “agent” is a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the “principal”.”
Who does May employ as an Agent?
In section 183 of the Contract Act 1872, it mentioned that “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.”
Who May be an Agent?
In section 184 of the Contract Act 1872, it mentioned that “As between the principal and third persons any person may become an agent, but no person who is not of the age of majority and of sound mind can become an agent, so as to be responsible to his principal according to the provisions in that behalf herein contained.”
Is Consideration necessary to create an Agency?
In section 185 of the Contract Act 1872, it mentioned, “No consideration is necessary to create an agency.”
What are the Types of Agent’s Authority?
Reference of section 186 of the Contract Act 1872, “Agent’s authority may be expressed or implied”
Definitions of express and implied authority with Example
In reference to section 187 of the Contract Act 1872, “An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case; and things are spoken or written, or the ordinary course of dealing, may be accounted circumstances of the case.”
A owns a shop in Mymensingh, living himself in Dhaka, and visiting the shop occasionally. The shop is managed by B, and he is in the habit of ordering goods from C in the name of A for the purposes of the shop, and of paying for them out of A’s funds with A’s knowledge. B has an implied authority from A to order goods from C in the name of A for the purposes of the shop.
The extent of the agent’s authority
Reference of section 188 of the Contract Act 1872, “An agent having an authority to do an act has authority to do every lawful thing which is necessary in order to do such act.
An agent having an authority to carry on a business has the authority to do every lawful thing necessary for the purpose, or usually done in the course of conducting such business.”
(a) A is employed by B, residing in London, to recover at [Chittagong] a debt due to B. A may adopt any legal process necessary for the purpose of recovering the debt, and may give a valid discharge for the same.
(b) A constitutes B his agent to carry on his business of a ship-builder. B may purchase timber and other materials, and hire workmen, for the purposes of carrying on the business
Agent’s authority in an emergency
In reference to section 189 of the Contract Act 1872, “An agent has authority, in an emergency, to do all such acts for the purpose of protecting his principal from loss as would be done by a person of ordinary prudence, in his own case, under similar circumstances.”
(a) An agent for sale may have goods repaired if it is necessary.
(b) A consigns provisions to B at Chittagong, with directions to send them immediately to C at Dhaka. B may sell the provisions at Chittagong if they will not bear the journey to Dhaka without spoiling.