LLB-II SPECIAL CONTRACTS

1. LAW OF AGENCY
Course: LLB II
Subject : Special Contracts
Unit: I

2. AGENT
Sec 182 defines:
“ An agent as 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 is
called the principal “.

3. ESSENTIALS OF
RELATIONSHIP OF AGENCY
• Agreement between principal &
agent
• Intention of agent to act on behalf of
the principal
• Anyone can be an agent
• Anyone can employ an agent

4. CREATION OF AGENCY
• BY EXPRESS AGREEMENT
• BY IMPLIED AGREEMENT
Agency by estoppel
Agency by holding out
Agency by necessity
• AGENCY BY RATIFICATION
• AGENCY BY OPERATION OF LAW

5. REQUISITES OF VALID
RATIFICATION
• Agent must act as an agent for his principal
• Principal must be in existence at the time of contract
• Ratification must be with full knowledge of facts
• Ratification should be done within a reasonable time of the
performance of the act
• The act to be ratified should be of lawful nature
• The ratification can be done only to the whole transaction & not
any part of it (Sec 199)
• Ratification should be communicated with the party to contract
• Ratification should not cause any damages to a third party
• Ratification can only be of acts which principal had the right to do

6. SUB-AGENT &
SUBSTITUTED AGENT
 A sub agent is a person employed & acting
under the control of the agent in the business of
the agency (Sec 191)
 A substituted agent is a person named by the
agent, on an express or implied authority from
the principal, to act for the principal (Sec 194)

7. DIFFERENCES BETWEEN SUB- AGENT &
SUBSTITUTE-AGENT
SUB-AGENT
1. He works under the
agent
2. There is no contact
between the agent &
the principal
3. Agent is wholly &
solely responsible for
the acts of the sub-
agent
SUBSTITUTE AGENT
1. He works under the
pprincipal
2. There is a contract
between him & the
principal
3. Agent is in no way
responsible for the
acts of the
substituted agent

8. Termination of agency
• By act of parties
 Agreement
 Revocation by the principal
 Revocation by the agent
• By operation of law
 Performance of the contract
 Expiry of time
 Death of either party
 Insanity of either party
 Insolvency of either party
 Destruction of the subject matter
 Principal becoming an alien enemy
 Dissolution of a company
 Termination of sub-agents authority

9. HOW IS AGENCY CONSTITUTED
• 1. Agency by agreement: (Secs. 186 and 187)
(i) Express
• (ii) Implied
• 2. Agent by necessity
• 3. Agency by estoppel or by holding out:
(Sec. 237)
• 4. Agency by operation of law:
• 5. Agency by ratification

10. RATIFICATION (Secs. 196 & 200)
• Ratification is adopting or accepting
subsequently a past act of an agent done on
behalf of another without authority.

11. CLASSIFICATION OF AGENTS
• CLASSIFICATION OF AGENTS
• 1. Specific or particular agent
• 2. General agent
• 3. Mercantile agents:
• 4. Sub-agent
• 5. Co-agent
• 6. Substitute agent

12. SUB-AGENTS
• SUB-AGENTS
• A ‘sub-agent’ is a person employed by, and
acting under the control of the original agent
in the business of the agency (Sec. 191).

13. RELATIONSHIP BETWEEN PRINCIPAL, AGENT
AND SUB-AGENT: (Secs. 192 & 193)
• (i) the principal is bound by and responsible
for the acts of a sub-agent; (ii) the agent is
responsible to the principal for the acts of the
sub-agent;
• (iii) the sub-agent is responsible for his acts to
the agent, but not to the principal
• except in case of fraud or wilful wrong.

14. Rights of agent
• Rights of agent
• 1. Right of retainer: (Sec. 217 )
• 2. Right to claim remuneration: (Sec. 219)
• 3. Right of lien: (Sec. 221)
• 4. Right to indemnity: (Secs. 222 & 223)
• 5. Compensation: (Sec. 225)
• 6. To do lawful things: (Sec. 188)
• 7. In emergency: (Sec. 189)
• 8. To appoint substitute agent: (Sec. 194)
• 9. To renounce agency: (Sec. 201)
• 10. Compensation for premature revocation: (Sec. 205)

15. Rights of Principal
• Rights of Principal
• 1. To repudiate contract: (Sec. 215)
• 2. To claim benefit: (Sec. 216)
• 3. To ratify or disown agent’s acts: (Sec. 196)
• 4. To revoke agent’s authority: (Sec. 203)
• 5. To claim loss or profit: (Secs. 211 & 212)
• 6. To demand accounts: (Sec. 213)
• 7. To refuse remuneration when agent is guilty of
misconduct: (Sec. 220)

16. References
• Avtar Singh : Contract Act, Eastern
• Beatson : Anson's Law of Contract, Oxford

17. Thank You