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AGENCY
CHAPTER – 18
PART 1 PPT by Sandeep Sharma
Meaning: Agency
 An agency is the relation between an agent & his
Principal debtor,
 Created by an Express or Implied agreement ,
 An agent is authorized by his principal to represent
him,
 Establish contractual relations with third parties.
Essentials: Agency
i. Name of a Relation: relation between an agent & his
Principal debtor
ii. Agreement, not necessarily a Contract: Created by an
Express or Implied agreement.
iii. Competence of the Principal: Principal’s capacity to
contract is must.
iv. Consideration not necessary: agency need not be
supported by any special consideration.
Consideration not necessary
(agent’s consent)
Consideration
(not required)
Deal Valid Contract
Essentials: Agency
v. Free consent: this agreement depends on the free
consent of the parties (agent & principal)
vi. Contractual relation: he represent his principal in
dealing with third parties.
vii. All essentials of valid contract
AGENCY
Principal Agent Client
Owner Dealer Buyer
Court Lawyer
Eg:- Auctioneer, Stock-broker, Insurance-agent etc.
Client
Who is an Agent & a Principal ?
Agent: (Section 182)
A person employed to do any act for
another/ to represent principal in dealing
with 3rd party.
Principal: (Section 182)
The person who is represented in
dealings with third party by an agent.
Who may be a Principal ?
Any person, who is competent to act for himself. Thus,
a minor, lunatic or unsound mind can’t employ an
agent.
Who may be an Agent ?
As between the principal & 3rd persons, anyone may
become an agent.
Even a minor/unsound mind because agency may
created by an agreement not necessarily by a contract.
Rules of Agency
There are two fundamental rules:-
i. What a person do himself, can get done through an agent:
as it says, whatever a person can himself lawfully do, can get it
done through an agent.
But there are few exceptions:-
a. Act is personal in character. Eg:- marriage
b. Where lawful act is to be done personally Eg:- authority of
magistrate by him only.
Rules of Agency
ii. Whatever a person does through another, does by
himself: this rule means, the act of an agent are the acts of the
principal. Or who acts through an agent is himself acting.
Eg:-
Mr. Roopesh Ms. Roopa Mr. Rupendra
(money due 50k)
(50k)(agent)
Here, Ms. Roopa with authority to receive money on Mr. Roopesh’s behalf.
Mr. Rupendra is discharged of his obligation to pay to principal.
Creation of Agency
1). Agency by Express agreement
2). Agency by Implied agreement
a. Agency by estoppel
b. Agency by holding out
c. Agency by necessity
3). Agency by Ratification
4). Agency by Operation by Law
Creation of Agency
1). Agency by Express agreement
A formal written document is required by law for creating
such agency. Such documents known as “Power of Attorney”.
This stamped document authorizes an agent by its principal.
Ms. Smriti Ms. Irani
appoints
by written deed
(agent)(principal)
Creation of Agency
An implied agency known by its conduct or relation of the
parties.
Mr. Ganesh Mr. Bhavesh
manage shop
Bhavesh is in habit of buying goods from Naresh in the name
of Ganesh with his knowledge, for the purpose of the shop.
(agent)(owner)
2). Agency by Implied agreement
Mr. Naresh
Agency by Implied agreement
It means stops from denying. Sometimes a principal by his
conduct makes an impression to 3rd party. Further principal
can’t deny the relation with that agency.
Mr. Burma
Mr. Bisnu
(agent)
(owner)
a. Agency by estoppel
Mr. Mikesh
(no objection)
Here, Mikesh presume that Bisnu
is an agent of Mr. Burma. So in
future Mr. Burma denies, then
Mikesh can stops him to do so.
Agency by Implied agreement
Sometimes a person by his conduct makes an impression to 3rd
party & he (3rd party) presumes an agency between the both.
Mr. Rajesh
Mr. Rakesh
(servant)
b. Agency by holding out
Mr. Roshan
Here, Roshan presumes that
Rajesh is the Principal of Rakesh.
Rakesh can’t deny his agency
with Rajesh.
(sends)
Agency by Implied agreement
When certain circumstances force a person to act as an agent
for another without his express authority.
Mr. Narayan
Mr. Murty
(railway staff)
c. Agency by necessary
Horse
Here, Murty feeds the horse
when no one came to pick him
from railways. So Murty can
claim expenses from Narayan.
(Pay)
On ratification, unauthorized act becomes authorized & person
ratifying the act becomes Principal & liable to the 3rd party.
A < B < C
Purchase
Ratify (approve)
Here, A is only authorized for 50k purchase, but he
makes it to 80k. Further he convinced rest of his
partners for additional 30k & gets ratification from
them. Now firm is liable for the entire amount.
(auth.)
Creation of Agency
3). Agency by Ratification
Here, Law presumes a person as an agent of the another.
Eg:- Every partner is an agent of the firm, for the
purpose of business of the firm.
Creation of Agency
4). Agency by Operation of Law
End of Part - 1
PPT by Sandeep Sharma

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Agency "PART 1" (Chapter 18) - Business Law

  • 1. AGENCY CHAPTER – 18 PART 1 PPT by Sandeep Sharma
  • 2. Meaning: Agency  An agency is the relation between an agent & his Principal debtor,  Created by an Express or Implied agreement ,  An agent is authorized by his principal to represent him,  Establish contractual relations with third parties.
  • 3. Essentials: Agency i. Name of a Relation: relation between an agent & his Principal debtor ii. Agreement, not necessarily a Contract: Created by an Express or Implied agreement. iii. Competence of the Principal: Principal’s capacity to contract is must. iv. Consideration not necessary: agency need not be supported by any special consideration.
  • 4. Consideration not necessary (agent’s consent) Consideration (not required) Deal Valid Contract
  • 5. Essentials: Agency v. Free consent: this agreement depends on the free consent of the parties (agent & principal) vi. Contractual relation: he represent his principal in dealing with third parties. vii. All essentials of valid contract
  • 6. AGENCY Principal Agent Client Owner Dealer Buyer Court Lawyer Eg:- Auctioneer, Stock-broker, Insurance-agent etc. Client
  • 7. Who is an Agent & a Principal ? Agent: (Section 182) A person employed to do any act for another/ to represent principal in dealing with 3rd party. Principal: (Section 182) The person who is represented in dealings with third party by an agent.
  • 8. Who may be a Principal ? Any person, who is competent to act for himself. Thus, a minor, lunatic or unsound mind can’t employ an agent. Who may be an Agent ? As between the principal & 3rd persons, anyone may become an agent. Even a minor/unsound mind because agency may created by an agreement not necessarily by a contract.
  • 9. Rules of Agency There are two fundamental rules:- i. What a person do himself, can get done through an agent: as it says, whatever a person can himself lawfully do, can get it done through an agent. But there are few exceptions:- a. Act is personal in character. Eg:- marriage b. Where lawful act is to be done personally Eg:- authority of magistrate by him only.
  • 10. Rules of Agency ii. Whatever a person does through another, does by himself: this rule means, the act of an agent are the acts of the principal. Or who acts through an agent is himself acting. Eg:- Mr. Roopesh Ms. Roopa Mr. Rupendra (money due 50k) (50k)(agent) Here, Ms. Roopa with authority to receive money on Mr. Roopesh’s behalf. Mr. Rupendra is discharged of his obligation to pay to principal.
  • 11. Creation of Agency 1). Agency by Express agreement 2). Agency by Implied agreement a. Agency by estoppel b. Agency by holding out c. Agency by necessity 3). Agency by Ratification 4). Agency by Operation by Law
  • 12. Creation of Agency 1). Agency by Express agreement A formal written document is required by law for creating such agency. Such documents known as “Power of Attorney”. This stamped document authorizes an agent by its principal. Ms. Smriti Ms. Irani appoints by written deed (agent)(principal)
  • 13. Creation of Agency An implied agency known by its conduct or relation of the parties. Mr. Ganesh Mr. Bhavesh manage shop Bhavesh is in habit of buying goods from Naresh in the name of Ganesh with his knowledge, for the purpose of the shop. (agent)(owner) 2). Agency by Implied agreement Mr. Naresh
  • 14. Agency by Implied agreement It means stops from denying. Sometimes a principal by his conduct makes an impression to 3rd party. Further principal can’t deny the relation with that agency. Mr. Burma Mr. Bisnu (agent) (owner) a. Agency by estoppel Mr. Mikesh (no objection) Here, Mikesh presume that Bisnu is an agent of Mr. Burma. So in future Mr. Burma denies, then Mikesh can stops him to do so.
  • 15. Agency by Implied agreement Sometimes a person by his conduct makes an impression to 3rd party & he (3rd party) presumes an agency between the both. Mr. Rajesh Mr. Rakesh (servant) b. Agency by holding out Mr. Roshan Here, Roshan presumes that Rajesh is the Principal of Rakesh. Rakesh can’t deny his agency with Rajesh. (sends)
  • 16. Agency by Implied agreement When certain circumstances force a person to act as an agent for another without his express authority. Mr. Narayan Mr. Murty (railway staff) c. Agency by necessary Horse Here, Murty feeds the horse when no one came to pick him from railways. So Murty can claim expenses from Narayan. (Pay)
  • 17. On ratification, unauthorized act becomes authorized & person ratifying the act becomes Principal & liable to the 3rd party. A < B < C Purchase Ratify (approve) Here, A is only authorized for 50k purchase, but he makes it to 80k. Further he convinced rest of his partners for additional 30k & gets ratification from them. Now firm is liable for the entire amount. (auth.) Creation of Agency 3). Agency by Ratification
  • 18. Here, Law presumes a person as an agent of the another. Eg:- Every partner is an agent of the firm, for the purpose of business of the firm. Creation of Agency 4). Agency by Operation of Law
  • 19. End of Part - 1 PPT by Sandeep Sharma