Business Law

LAW OF AGENCY
 The law of agency is governed by PART X OF CONTRACT ACT

1950
 AGENCY:- relationship which exists between a principal

and agent who has been authorized to act for him or
represent him in dealings with others.
 AGENT:- a person employed to do any act for another or to

represent another in dealings with third person [section 135
of CA 1950]
 PRINCIPAL :- the person for whom such act is done, or who

is so represented [section 135 of CA 1950]
QUALIFICATION OF A PRINCIPAL AND
AGENT
 QUALIFICATION OF A PRINCIPAL:- he must be a person with
full contractual capacity
 [ ie:- must attains the age of majority, of sound mind, does
not disqualified from entering into contract by any law.]
 QUALIFICATION OF AN AGENT:- A minor can be an agent.

But he cannot be held liable for any loss caused by him. But
no person who is not of the age of majority and of sound mind
can become an PRINCIPAL.
TYPES OF CONTRACTS:
Contract of appointment of
an agent: Contract between
the principal and the agent
from which the agent
derives his authority to act
for and on his behalf.
Contract between the
principal and the third party
through the medium of the
agent.
TYPES OF AGENT
 CLASSIFICATION ACCORDING TO THE AUTHORITY
i. Universal Agent
general agent with extensive power
ii. General Agent

An agent who is employed to transact on behalf of pricipal
relating to a particular business
iii. Special agent

An agent appointed to do a specific act/purpose. The authority
thus limited.
TYPES OF AGENT
 CLASSIFICATION ACCORDING TO THE EXTENT OF

AUTHORITY
i. Del Credere Agents

An agent who is in consideration of extra commission, sells goods
for his principal on credit, undertakes to sell only to person who are
absolutely solvent/
He undertakes that the third party with whom he enters into a
contract on principal behalf will perform his obligations. He will be
liable to his principal if the third party make default.
ii. Brokers
A commercial agent who is employed to make contracts between
principal and third party for a commission called a brokerage.
TYPES OF AGENT
iii. Auctioneers
An agent who is employed to sell goods by auction. He has
discretion as to the price at which the goods should be sold
unless the seller has fixed minimum/reserve price.
iv. Bankers
An individual who is engaged in the business of banking. 2
roles of bankers:
a. as agents for customer
b. as agents for the banks.
TYPES OF AGENT
v. Factors
A commercial agent who is professionally acts as the
representative of his principal and entrusted with the goods of
his principal for sale. He has a lien over the goods in his
possession and usually sells the goods in his own name and
without disclosing the identity of the principal.
TYPES OF PRINCIPAL
NAMED PRINCIPAL
DISCLOSED
PRINCIPAL
UNDISCLOSED
PRINCIPAL
NAMED PRINCIPAL
One whose name, identity and

existence are disclosed to the
third party by the agent. The
third party knows that the
agent is acting for a known
principal.
The relationship of a principal
and agent lawfully exists.
Therefore, the agent incurs no
right or liability under the
contract provided he has acted
within the authority
DISCLOSED PRINCIPAL
One whose existence is disclosed to

the third party by the agent but
whose identity is unknown. The third
party knows that the agent is
contracting as an agent but he does
not know the identity of the
principal.
The agent incurs no right or liability

under the contract unless the
contract expressly stated that the
agent will be personally liable for
the contract-section 183
UNDISCLOSED PRINCIPAL
One whose existence as well as identity

is not known to the third party at the
time of the contract. The third party acts
under the impression that he is
contracting personally with the agent
and it is only after the contract has
been made that he discovers that the
agent is in reality acting for a principal.
The agent can be held personally liable

on the contract because the third party
does not know that he is in fact an
agent for someone.
THANK YOU

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LAW OF AGENCY

 The law of agency is governed by PART X OF CONTRACT ACT

 AGENCY:- relationship which exists between a principal

 AGENT:- a person employed to do any act for another or to

 PRINCIPAL :- the person for whom such act is done, or who

 QUALIFICATION OF AN AGENT:- A minor can be an agent.

 CLASSIFICATION ACCORDING TO THE AUTHORITY

ii. General Agent

iii. Special agent

 CLASSIFICATION ACCORDING TO THE EXTENT OF

i. Del Credere Agents

One whose name, identity and

One whose existence is disclosed to

The agent incurs no right or liability

One whose existence as well as identity

The agent can be held personally liable

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