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Agency, Various ways in which an agency may be created

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  1. 1. AGENCY
  2. 2.  “Whenever a person has the authority to act on behalf of the other and to create contractual obligation between that other and the third persons”
  3. 3.  An agent is any person who is employed to do any act for another or to represent another in dealing with other persons. The person for whom such Act is done is called Principal.
  4. 4.     Agency by Express Agreement Agency by Implied Agreement Agency by ratification Agency by Operation of Law
  5. 5.  Agency may be created by an express agreement i.e. by words (oral or written).
  6. 6.     Agency may be created by an implied agreement i.e. by conduct or through Acts. 1. Agency by Estoppel 2. Agency by Holding Out 3.Agency by Necessity
  7. 7. Agency by Estoppel Agency by Estoppel means that when an agent has without authority done Acts or incurred obligations to third person on behalf of his principal, the principal is bound by Act or obligation( if he has by words or conduct induced third person to believe that such Act were within the scope of authority) 
  8. 8. Agency by Estoppel For eg- X tells Y in the presence of Z that he is Y’s agent. Y didn’t deny and kept quiet. Later on Z entered into a contract with X ( believing him to be his agent). Now, Y is bound by the contract even though no agency existed in actual. 
  9. 9. Agency by Holding Out In this case, there is prior positive conduct of the principal which indicates that a certain was already his agent. 
  10. 10. Agency by Holding Out For eg- P allows his servant habitually to purchase goods for him on credit from T and pays for them. On one occasion, he pays his servant cash to purchase the goods. The servant misappropriates the money and purchases goods on credit from T. T can recover the price from P as he had held out his servant as his agent on prior occassions. 
  11. 11. Agency by Necessity Circumstances sometimes force a person to Act on behalf of another without ant expressed authority from him. It is the case of Agency by necessity. The following conditions must by satisfied:1. It must be impossible to get Principal’s instruction. 2. Actual necessity must be there. 3. The agent must be honest in his Act 
  12. 12.   Ratification means subsequent adoption and acceptance of an Act originally done without instructions or authority. It mean validity made from past time. EFFECTS OF RATIFICATION if the Acts are ratified than the same effects will follow as if they had been performed with authority
  13. 13.  Agency by Operation of Law sets to arrive where the law treats one person as a agent of another. For eg- In case of partnership.