The document defines key terms related to agency, including agent, principal, and agency. It outlines several essential elements of a valid agency, including an agreement between the principal and agent. It also distinguishes agents from other roles like servants, independent contractors, and bailees. The document discusses different types of agents based on authority, including special, general, and universal agents. It also covers mercantile agents like auctioneers, factors, brokers, and commission agents.

1. AGENCY
Definition and Essentials of Agency:
• AGENT
According to Section 182 of the Act, “An AGENT is a person employed
to do any act for another or to represent another in dealings with third
persons.
According to Cheshire, Fifoot and Furmston’s Law of Contract,
“ Agency is a comprehensive word which is used to describe the
relationship that arises where one man is appointed to act as the
representative of another”.

2. • Principal
The person for whom such act is done, or who is
so represented, is called the “PRINCIPAL”.
• AGENCY
A ‘contract of agency’ is one by which an agent is authorized
to establish privity of contract between the principal and a third
party. It is not necessary to have a formal agreement. ‘Agency’
is the relationship that arises when a person is appointed to
represent another in dealings with third persons.

3. There are following 2 rules of agency:
Secondly, agency is based upon the principle
“he who does a thing through another does it
himself ”.
General rules of Agency
Firstly, all acts which a person can do himself can
be done through an agent. However, in case of a
contract which from their very nature should be
done by a person himself, he cannot appoint any
agent. These include marriage and contracts of
personal nature.
The test of agency is whether the person is
purporting to enter into transaction on behalf of the
principal or not that is, to create, modify, or terminate
contractual obligations between principal whom he
represents and, some third person.
Test of Agency
Section 226 provides the contracts entered into
through an agent, may be enforced in the same
manner, and will have same legal consequences
as if the contracts had been entered into and acts
done by the principal.

4. 4
Essential Elements of Valid Agency
Agreement between
principal and agent
Agent may not
be competent to
contract
The principal must be
competent to contract
Essential
Elements of
Agency
The person must
act in a
representative
capacity
Creation of legal
relations
Consideration is not
necessary to create an
agency

5. 5
3. THE PRINCIPAL MUST
BE COMPETENT TO
CONTRACT
According to Section 183 of
the Act, “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.”
Thus any person who is
competent to contract has a
right to appoint an agent.
1. AGREEMENT BETWEEN
PRINCIPAL AND AGENT
Ordinarily, an agreement
between principal and agent is
necessary for creation of
agency. It may be oral or in
writing. However, in certain
cases agency may be created
without agreement, example.,
by ratification, etc.
2. THE PERSON MUST ACT IN
A REPRESENTATIVE
CAPACITY
The person must act as a
representative of other in a
business negotiations, that is to
say, in the creation, modification,
or termination of contractual
obligations between the principal
and third parties.
4. AGENT MAY NOT BE
COMPETENT TO CONTRACT
Section 184 of the Act, which lay
down that, as between the
principal and third persons, any
person may become an agent. Even
a minor can be an agent. However,
such a person will not be
responsible to the principal. To be
responsible, he too should be a
person of the age of majority.
5. CONSIDERATION IS NOT
NECESSARY TO CREATE AN
AGENCY
Section 185 of the Act
specifically states that “No
consideration is necessary to
create an agency.” Accordingly,
this may be considered to be an
exception to the rule that, an
agreement made without
consideration is void.
6. CREATION OF LEGAL
RELATIONS
An agent establishes legal
relations between his principal
and third parties. Thus, he is a
connecting link between his
principal and the third parties.

6. Distinction between Agent and Servant
A servant is a person
who is employed by
another to do certain
types of work/job.
An agent is a person
employed to do any act
for another or to
represent another in
dealings with third
persons.
• AGENT

7. Distinction between Agent and Independent
Contractor
Agent
• An agent is a person employed to do any act
for another or to represent another in
dealings with third persons.
• An agent established privity of control
between his principal and third parties. Thus,
he has the authority to bind the principal
towards the third parties.
• A principal is liable for the acts of the agent
done within the scope of his real or apparent
authority.
• An agent is usually paid commission.
• An agent does not usually invest any money.
• An agent is not personally liable for the acts
performed by him within the scope of his
authority.
Independent Contractor
• Independent contractor is one who undertakes to
produce a given result. But in that actual execution
of the work he is not under the order or control of
the person for whom he does it, and may use his
own discretion in things not specified before him.
• An independent contractor does not represent the
person for whom he performs the work in relation to
third parties. He has no authority to bind the person
for whom he performs the work.
• The person who employs in independent contractor
is not liable for the conduct of independent
contractor.
• An independent contractor is paid lumpsum or in
instalments as the work progress.
• An independent contractor usually invests money.
• An independent contractor is personally liable for
the acts performed by him as he does not have
representative character.

8. Distinction between Agent and Bailee
Agent
• An agent is a person employed to do any act
for another or to represent another in
dealings with third persons
• An agent represent his principal in dealings
with third parties.
• An agent has the authority to make contracts
on behalf of his principal, within the scope of
his authority.
• The principal is liable to third parties for the acts
of the agent within the scope of his real or
apparent authority.
• An agent need not have possession of goods.
• An agent usually gets remuneration.
• An agent generally does not use the goods.
Bailee
• A bailee is a person to whom goods are
delivered for a specific purpose. The goods are
to be returned to the bailor or disposed off as per
directions of the bailor.
• A bailee does not represent the bailor. He merely
exercises, with the permission of the bailor,
certain powers of the bailor in respect of his
property
• The bailee has no power to make contracts on
bailor’s benefit.
• Bailor is not liable for the acts of the bailee, as
the bailee does not represent the bailor.
• In case of bailment, possession is transferred to
the bailee.
• Bailment may be gratuitous or non-gratuitous.
• Bailee may use the goods for the purpose for
which they are delivered to him.

9. KINDS OF AGENTS
ON THE BASIS OF THEIR EXTENT OF AUTHORITY, AGENTS ARE DIVIDED INTO
THREE CLASSES: SPECIAL, GENERAL AND UNIVERSAL.
SPECIAL AGENTS GENERAL AGENTS UNIVERSAL AGENTS
Special Agent is one who is
appointed for a particular purpose.
He is authorised by the principal to
do a particular act or transact a
particular business affairs. The
special agent is invested with
limited powers. He has no authority
to bind the principal in respect of
any other act, contract or
transaction. Than, that for which he
is employed. For example, if a
person is employed to purchase a
house, the authority of such a
person as a special agent comes
to an end as soon as a house is
purchased.
A general agent is one who has
authority to do all such acts as are
connected with a particular kind of
business or trade, or to transact a
particular business at a certain
place. If, for instance, a person is
placed in charge of a store as its
manager, he has authority to bind
the principal for all his acts falling
within the scope of the business of
managing the store.
A universal agent is one who enjoys
unlimited authority to do all such acts
as could be delegated and which the
principal himself could lawfully
perform.
An agent of this type is usually
appointed by a businessman who
owing to his physical condition, wants
to retire by giving a blanket power of
attorney to the agents to do anything
that has to be done while he is in the
service.

10. Mercantile and Non-mercantile Agents
Auctioneer: An agent appointed by
the seller to sell his goods at a
public auction, usually for a reward
in the form of commission, is
known as an auctioneer.
CASE LAW: Rainbow vs Howkins
Factor: A factor is a mercantile
agent to whom goods are
entrusted for sale. He has
authority to sell the goods or can
send the goods for the purpose of
sale. He may sell the goods upon
such a terms as he deems fit, and
in his own name, receive the price,
and gives a valid discharge to the
buyer. He may sell goods on
reasonable credit.
MERCANTILE AGENTS: According to Section 2(9) of the Sale of Goods Act 1930, “mercantile agent” means an agent having
in the ordinary course of business as such agent authority either to sell goods, or to consign goods for the purpose of sale, or to
buy goods or to raise money on the security of goods. There are various types of mercantile agents which are discussed as
follows:
He may pledge the goods and receive
money on the same. A factor has a lien
on the goods for a general balance of
account with the principal. CASE LAW:
Folkes vs King.

11. Broker: Broker is an agent employed
to make bargains in matters of trade,
commerce, etc. between certain parties
for a compensation commonly called
brokerage. Like a factor, a broker is
also an agent appointed by a person to
buy or sell goods on his behalf.
Unlike a factor, a broker is not
entrusted with the possession of the
goods. He merely negotiates a contract
between two parties.
A broker has no authority to sue in his
own name. He has no lien on the goods
since he does not have possession of
goods.
CASE LAW: Ryan vs Pilkington
Commission agent: He is an agent
employed to buy or sell goods on behalf of
his principal. He may or may not be entrusted
with the goods. His business is to buy or sell
in his own name on behalf of his principal on
the most favourable terms. There is no privity
of contract between the principal and the
third party unless otherwise agreed.
Commission agent is personally liable to the
third party and also to his principal. He is paid
commission for his services.
According to Section 171 of the
Act, only a policy broker has a
lien on the policy for the general
balance due to him.

12. Del Credere agent: He is an agent who guarantees the receipt of
payment from those he introduces to his principal. In consideration
of an extra commission, the del credere agent guarantees his
principal that third parties with whom he contracts, as for instance,
a buyer to whom he sells goods, will honour the financial obligation.
He bears the bad debts, if any, on the sales made by him on behalf of
his principal. However, he does not guarantee the performance of the
Contract.
Non-mercantile agents are those who do not come within the purview of the term
‘Mercantile agents’ as defined in the Sale of Goods Act. An advocate, a wife, etc.,
are non-mercantile agents.
Non-mercantile agents

13. MERCANTILE
AGENTS

14. MERCANTILE
AGENTS
AUCTIONEER

15. MERCANTILE
AGENTS
AUCTIONEER
FACTOR

16. MERCANTILE
AGENTS
AUCTIONEER
FACTOR
BROKER

17. MERCANTILE
AGENTS
AUCTIONEER
FACTOR
BROKER
COMMISSION
AGENT

18. MERCANTILE
AGENTS
AUCTIONEER
FACTOR
BROKER
COMMISSION
AGENT
DEL
CREDERE
AGENT

19. CREATION OF AGENCY
AN AGENCY MAY
BE CREATED IN
ANY ONE OF THE
FOLLOWING
WAYS:
BY
RATIFICATION
AGENCY IMPLIED OR
INFERRED FROM
CIRCUMSTANCES
BY OPERATION OF
LAW
BY EXPRESS
AGREEMENT

20. 1. AGENCY BY EXPRESS AGREEMENT (SECTION 187)
A contract may be express or implied, so also a contract of
agency may be express or implied. According to Section 187 of the
Act, “An authority is said to be express when it is given by words
spoken or written.” Express authority may thus be given by a
principal to his agent orally or in writing.
A power of attorney is the usual form of a written contract of
agency. It is a formal instrument by which one empowers another to
represent him, or act on his behalf for certain purposes.
A power of attorney may be general or special.
A general power of attorney authorizes an
agent to do all lawful acts on behalf of the principal or to act generally in the
business of the agency.
A special power of attorney authorizes an agent to
enter into a single transaction of a special nature. A special power of
attorney, for example, a vakalatnama, authorizing an advocate to appear on
behalf of his client in a legal suit, should be in writing.

21. 2. AGENCY IMPLIED OR INFERRED FROM CIRCUMSTANCES
(SECTION 187 AND 189)
According to Section 187 of the Act, “An authority is
said to be implied when it is to be inferred from the circumstances
of the case; and things spoken or written, or the ordinary course of
dealing, may be accounted circumstances of the case.”
That is, from the conduct of the parties, or from the situation of the
parties or from necessity.
Implied agency may be any of the following forms:
a) Agency by estoppel: This form of implied agency arises by the
conduct of the principal, who without conferring any authority upon
an agent, causes an inference to be drawn that authority has been
conferred upon him.
Agency by holding out is a part of the agency by estoppel. In this
case, a person, by his words or conduct, holds out another as his
agent to make contracts on his behalf.
Case law: Trueman v. Loder

22. b) Agency by necessity:
A person may act on behalf of another under certain circumstances which are compelling in nature. In such cases,
his acts will be binding upon the person on whose behalf he acts, although without any authority. Thus, when a
person is compelled by circumstances to act as an agent of another, he becomes an agent of necessity.
The following conditions must be fulfilled before a person is entitled to act as agent of necessity:
(i) He could not communicate with his principal and get his instructions.
(ii) The course he took was necessary as it was the only reasonable and
prudent course to take.
(iii) He acted bona fide in the interest of the parties concerned.
Agency by necessity arises in the following situations:
1. Agent exceeding his authority, bona fide, in an emergency: According to Section 189 of the Act, “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.
2. A person or a carrier of goods acting as bailee: a non-agent doing anything to protect or preserve the goods
in an emergency. CASE LAW: Couturia v. Hastie.
3. Where a husband improperly deserts his wife without providing her means of sustenance: If a husband
wrongfully deserts his wife without providing her means of sustenance, she becomes his agent of necessity. She
has authority to pledge the credit of her husband for necessaries for herself and her children. Her authority to
pledge the credit of her husband does not depend upon cohabitation, but it arises from the facts of her marriage.

23. Further she has no authority if she has sufficient means to support herself and her children.
Wife as an implied agent of husband for necessaries
When the husband and wife are living together in a domestic establishment and wife managing household affairs, there
is a presumption that the wife is entitled to pledge his credit for necessaries of life. Thus, an implied agency to buy
necessaries is presumed if the following conditions are satisfied:
(i) The husband and wife are living together.
(ii) Should be living in a domestic establishment.
(iii) Pledge the credit of the husband only for necessaries suitable to the style in which the husband chooses to live in.
This presumption can be rebutted by the husband in any one of these ways :
(1) by proving that he expressly warned the tradesman not to supply his wife with goods on credit,
(2) by proving that he had expressly forbidden the wife to pledge his credit,
(3) by proving that the wife was already supplied with sufficient means
(4) And if the order for necessaries was excessive or extravagant.

24. 3. AGENCY BY RATIFICATION (SECTION 196 TO 200)
According to Section 196 of the Act, “Where acts are done by one person on behalf of another; but without his
knowledge or authority, he may elect to ratify or to disown such acts. If he ratifies them, the same effects will follow
as if they had been performed by his authority.”
CASE LAW: Williams v. North China Insur Co, if a person insures the goods of another without his authority, the
owner of the goods may ratify the act. If he does so the policy will be as valid as the person or the agent had been
authorized to insure the goods.
Ratification is retrospective: In stating the effect of ratification, this section does not distinguish between an
unauthorized act of an agent and the act of a total stranger who purports to act as agent for the principal. In
both the cases, the effect is the same, i.e., an unauthorized act is converted into an authorized act from the
moment that act was done, and not from the time the act was ratified.
Section 197 of the Act. The Section states that, “ratification may be express or may be implied in the conduct of
the person on whose behalf the acts are done.”

25. ESSENTIALS OF A VALID
RATIFICATION

26. 1) The person must
have acted as an
agent for an
identifiable
principal.

27. 2) The principal
must be in
existence.

28. 3) The principal
must have
contractual
capacity.

29. 4) The act must be
capable of
ratification.

30. 5) The principal
must have full
knowledge of
material facts.

31. 6) Whole
transaction must
be ratified

32. 7) Ratification
should be done
within a
reasonable time.

33. 8) Ratification
must not cause
damage to the
third party.

34. ESSENTIALS OF
VALID
RATIFICATION
The person must have acted as an agent
for an identifiable principal:
The act must have been done on behalf of an identifiable
principal. “It is not necessary that he should be named
but there must be such a description of him as shall
amount to a reasonable designation of the person
intended to be bound by the contract”
The principal must be in existence:
For ratification to become valid, the principal must be
in existence at the time the contract was made.
Case law: Kelner vs. Boxter, in K agreed to sell a
hotel to B, who was acting as the agent of a company
yet to be formed. The company ratified the contract
after its incorporation. Subsequently, it went into
liquidation and K sued B upon the contract. B
contended that the liability had passed to the
company by ratification and hence, did not attach to
him. The Court rejected this contention on the ground
that ratification can only be by a person in existence
either actually or in contemplation of law.

35. The act must be capable of ratification:
The act which the principal purports to ratify should be
legal, and not void from its inception. Again, forgery
cannot be ratified not only because it is a crime but also
because a forger does not profess to act as an agent.
The principal must have full knowledge
of material facts:
In order that ratification may be binding on the
principal, he must have full knowledge of the facts.
According to Section 198 of the Act, No valid
ratification can be made by a person whose
knowledge of the facts to the case is materially
defective.
The principal must have contractual
capacity:
Ratification is not possible if, at the time the contract was
entered into by the agent on behalf of the principal, the
principal was incapable of contracting.

36. Ratification should be done within a
reasonable time:
Ratification can be effective only if it is made
within a reasonable time after the act is done on
his behalf.
Case law: Grover & Grover Ltd Vs Mathew.
Section 199 of the Act States: “A person
ratifying any unauthorized act done on his
behalf ratifies the whole of the transaction of
which such act formed a part.”

37. 4. AGENCY BY OPERATION OF LAW
Law treats a person as an agent of another.
Ratification must not cause damage to the
third party:
According to Section 200, an act cannot be ratified
where its effect is to subject a third person to
damages or terminate any right or interest of a
third person.

38. EXTENT OF AGENT’S AUTHORITY
The authority of
an agent means
his capacity to
bind the principal.
It is “the sum total
of the acts it has
been agreed
between the
principal and
agent that the
agent should do
on behalf of the
principal”
1. Actual or
real authority
(Sections 187
and 188).
Actual authority of
an agent is the
authority conferred
on him by the
principal. Section
186 provides that,
“The authority of
an agent may be
express or
implied.”
2. Ostensible
or apparent
authority
(Section 237)
Ostensible or
apparent authority
is the authority of
an agent as it
appears to others.
• The term ‘ostensible
authority’ denotes no
authority at all.
• It is a phrase
conveniently used to
describe the position
which arises when
one person has
clothed another, or
allowed him to
assume an
appearance of
authority to act on his
behalf, without
actually giving him
any authority either
express or implied, by
which appearance of
authority a third party
is misled into
believing that a real
authority exists.”

39. Incorporation of Doctrine of Ostensible Authority
(Section 237)
• Section 237 deals with the case where there is relationship of principal
and agent, and the agent has acted without authority of the principal.
• The principal is bound by the unauthorized acts of the agent if by words or
conduct he induces a third party to believe that unauthorized acts are
within the scope of the agent’s authority.
• Section 237 does not apply unless the relationship of principal and agent
is proved to exist between the parties. The doctrine of ostensible authority
is really an application of doctrine of estoppel.
An act done by an agent in excess of his actual authority is not binding on
the principal with respect to those persons having notice that the act is
unauthorized.
Example: A consigns goods to B for sale, and gives him instructions not to
sell under a fixed price. C, being ignorant of B’s instructions, enters into a
contract with B to buy the goods at a price lower than the reserve price. A is
bound by the contract.

40. DELEGATION OF
AUTHORITY
An Agent cannot further Delegate (Section 190)
General Rule : An agent cannot further delegate. Delegation of
authority means appointment of sub-agent by the age. Agency
arises on the basis of trust and confidence. A person employs
another as his agent, only because he has confidence in the
agent, and relies upon the competence and integrity of such a
person. Hence, the agent cannot employ another and entrust
the work which he has himself undertaken to do. Having
derived the authority to act on behalf of his principal, the agent
cannot, in turn, transfer the authority to another person.

41. 06
05
Exceptions
04
03
02
01
3. Principal’s express
permission.
Where the principal has expressly permitted the
agent to appoint a sub-agent the agent can
appoint a sub-agent.
5. Unforeseen
emergencies.
Where unforeseen emergencies arises
which make the appointment of sub-agent
necessary. For example, where an agent is
injured in an accident, he may appoint a sub-
agent for the time being.
4. Principal’s implied
permission.
Where the principal has impliedly permitted
the delegation of authority the agent can
appoint a sub-agent.
6. Ministerial or clerical
acts.
Where the acts to be done are purely
ministerial in nature and thus not involving
any discretion. For example, an agent may
appoint a sub-agent for doing clerical work.
1. Nature of agency.
When the nature of agency demands it or
permits the appointment of a sub-agent (S.
190). For example, an agent is permitted to
file a suit against a debtor then he can
appoint an advocate to file the suit.
2. Custom of trade
When the ordinary custom of trade in a
particular business allows the appointment
of a sub-agent (S. 190). For example,
architects appoint surveyors to assist them.

42. Sub-Agent (Sections 191 to 193)
According to Section 191 of the
Act, “A sub-agent is a person
employed by and acting under
control of the original agent in the
business of the agency.”
This section clearly states that the
sub-agent is appointed by the
agent, and is under his control in
the business of the agency.

43. Relationship between principal and sub-agent
when sub-agent is properly
appointed
when he is not properly
appointed
• (a) The principal becomes liable to third
parties for the acts done by the sub-
agent.
• (b) The agent is liable to the principal for
the acts of the sub-agent.
• (c) The sub-agent is responsible for his
acts to the agent, but not to the principal,
except in case of fraud and willful wrong
• (a) The principal is not represented by
the sub-agent, and hence, he is not
responsible for the acts of the sub-agent
to third parties.
• (b) The agent is responsible for the acts
of the sub-agent both to the principal and
third parties
• (c) The sub-agent is not responsible to
the principal even for fraud or willful
wrong.

44. Substituted Agent (Sections 194 and 195)
Sections 194 and 195 of the Act contain provision relating to a
substituted agent According to Section 194, “Where an agent, holding
an express or implied authority to name another person to act for the
principal in the business of the agency, has named another person
accordingly, such person is not a sub-agent, but an agent of the
principal for such part of the business of the agency as is entrusted to
him.”
Thus, this section clearly lays down that a substituted agent appointed
by the agent holding express or implied authority to name another
person to act for the principal, is not a sub-agent, but an agent of the
principal.

45. Basis Sub-Agent Substituted Agent
1. Appointment/
selection
A sub-agent is appointed by the agent.
He is appointed usually as an exception
to the general rule delegatus non protest
delegate.
A substituted agent is selected by the agent to
act for the principal. He is selected or named
by the agent by virtue of authority, express or
implied, vested in the gent.
2. Responsibility
A sub-agent is not responsible to the
principal for his acts, except in case of
fraud or wilful wrong, particularly when
he is improperly appointed.
The substituted agent is responsible to the
principal for all his acts in such capacity.
3. Privity of contract
There is no privity of contract between
the sub-agent and the principal.
There is privity of contract between the
substituted agent and the principal.
4. Direction and
control
A sub-agent works under the directions
and control the agent.
A substituted agent works under the direction
and control of the principal.
5. Liability of agent
The agent is responsible for the acts of
sub-agent to the principal.
The agent is not responsible for the acts of the
substituted agent to the principal.
6. Responsibility of
principal
Where the sub-agent has been improperly
appointed by the agent, the principal is not
responsible for the acts of the sub-agent.
The principal is liable for the acts of the
substituted agent.

46. Duties
of
Agent
4. Duty to Communicate with
the Principal (Section 214)
According to Section 214 of the Act, “It is
the duty of an agent, in cases of difficulty,
to use all reasonable diligence in
communicating with his principal, and
seeking to obtain his instructions.”
5. Duty Not to deal on his
Own Account (Section 215)
According to Section 215 of the Act, the agent
should not deal on his own account in the
business of the agency, without the consent of
the principal
1. Duty to follow
Principal’s Instructions
(Section 211)
According to Section 211 of the Act, it is the
duty of an agent to conduct the business of
his principal according to the latter’s
directions, and in the absence of any such
directions, according to the custom which
prevails in doing business of the same kind
at the place where the agent conducts
such business.
3. Duty to render Proper Accounts
(Section 213)
An agent is bound to render proper accounts to his principal
on demand. Rendering proper accounts, within the meaning
of the section means, not only producing accounts with the
relevant vouchers, but also explaining them.
2. Duty to conduct the business with
Skill and Diligence (Section 212)
According to Section 212 of the Act, it is the duty of the agent
to conduct the business of the agency with as much skill as is
generally possessed by persons engaged in similar business,
unless the principal has notice of his want of skill.
1
2
3
4
5

47. Duties of agent
06
07
08
09
8. Not to Delegate
Authority (Section 190)
It has already been pointed out that under
Section 190 of the Act, an agent, to whom the
principal has delegated authority for doing a
particular work, cannot further delegate, except
under the circumstances mentioned therein,
and the others enumerated in that context.
7. Duty to pay Sums Received
(Sections 217 and 218)
Section 218 read with S. 217 of the Act lays down that it is
the duty of the agent to pay to his principal all sums
received on his account, after retaining all moneys due to
himself in respect of advances made or expenses
property incurred by him in conducting the business.
9. Duty to protect and
preserve the Principal’s
Interest on his death or
insanity (Section 209)
According to Section 209 of the Act, on the
principal’s death or insanity, when the
agency is terminated, it is the duty of the
agent to protect and preserve the interests
of his principal on behalf of the latter.
6. Duty Not to make
Secret Profit
(Section 216)
The relationship of the agent with his
principal is of a fiduciary nature. Therefore,
Section 216 provides that if an agent,
without the knowledge of the principal,
deals in the business of agency on his own
account instead of on account of his
principal, the principal is entitled to claim
from the agent any benefit which may have
resulted to him from the transaction.

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2. Right to
Remuneration (Sections
219 and 220)
The agent is entitled to remuneration for
his services, unless he has consented to
act gratuitously. Section 219 of the Act,
in this context lay down that an agent is
entitled to his remuneration only after the
completion of the act as a result of the
agent’s services in regard to which the
remuneration is payable, in the absence
of a special contract to that effect.
1. Right of Retainer
(Section 217)
Section 217 of the Act confers upon an
agent the right to retain, out of any
sums received on account of the
principal in the business of the agency,
all moneys due to himself in respect of
advances made or expenses properly
incurred by him in conducting such
business.
3. Right of Lien (Section 221)
The agent is entitled to retain goods,
papers and other property, whether
movable or immovable, of the principal
received by him, until the amount due to
himself for commission, disbursements and
services in respect of the same had been
paid or accounted for to him.
4. Right to be Indemnified
against consequences of
Lawful acts
According to S. 222 of the Act, the agent is
entitled to be indemnified by the principal
against the consequences of all lawful acts
done by him in the exercise of the authority
conferred upon him
5. Right to be Indemnified
against consequences of
acts done in Good Faith
(Section 223)
Section 223 provides that’ “Where one
person employs another to do an act, and the
agent does the act in good faith, the
employer is liable to indemnify the agent
against the consequences of that act, though
it cause on injury to the rights of third persons
6. Right to
Compensation (Section
225)
If, in the course of conducting agency
business, any injury is caused to the
agent by the principal’s negligence, or
want of skill, the agent has a right to be
compensated by the principal.
RIGHTS OF AGENT