This document discusses various aspects of agency law, including: 1) An agent can create a binding contractual relationship for the principal, and the principal can be vicariously liable for acts of the agent within the scope of employment. Different types of agents are discussed such as factors, brokers, and del credere agents. 2) Agency can be created expressly through an oral or written agreement, or implied through the conduct of the principal authorizing another to act as an agent. A principal can also ratify unauthorized acts of another and create an agency relationship retroactively. 3) Special types of agency relationships are discussed including directors as agents of a company according to corporate law, and partners being mutual agents for

1. Agency
 Agent creates binding contractual relationship for the principal. Principal can be
vicariously liable for acts of agent within scope of employment.
 Sec 185 : Consideration not needed for agency
 Can wife be an agent of the husband, and would ICA cover such an agency?
 President Agent of the Govt: Article 299 of the Constitution (However certain
functions of Prez/Gov cannot be delegated)
 Agency created by operation of law: NLSIU Act, 1986 may authorize Registrar or VC
to represent NLS to 3rd
persons on behalf of NLS, institute bound to 3rd
parties.
 Family Law: karta manager of joint Hindu family. Karta can represent family in
transactions relating to property to third parties: customary law.
 Articles of Association of a Company: Person other than director can be an agent
 Justinian Code: qui facit per alium facit per se: He who does any act through another
is deemed in law to do it himself.
 Agent must have ability to enter into contractual relations with third parties
 American Law Institute Restatement of Agency: Agency is fiduciary relationship
that arises when one person (a "principal") manifests assent to another person (an
"agent") that the agent shall act on the principal's behalf and subject to the principal's
control, and the agent manifests assent or otherwise consents so to act
Agent and servant: Lloyd v Grace Smith and Co
Defendant firm had employed managing clerk as conveyance manager who was authorized to
procure signatures. Clerk fraudulently induced conveyance from plaintiff for his own
personal benefit.
Held: If an agent commits a fraud purporting to act within the scope of authority or is held
out to do so, the principal is liable even though the act was committed for the agent’s benefit
i) Servant works under the direct supervision and control of the master, agent is
independent and has more discretion than servant
ii) Traditionally a servant unless expressly provided cannot contract with third
parties: An agent binds the principal vis a vis 3rd
parties for acts and commissions-
principal bound to perform contract. Servant cannot ordinarily do this-Master
bound only when vicarious liability arises

2. Agency and Independent Contractor e.g. Doctors.
1970’s US: Doctors held to be independent contractors has hospitals did not have direct
supervision over how work was conducted. Post 70’s position changed. Work done in
hospital, patient comes to hospital not doctor
Modern contracts: Franchise agreements, escrow: If contract mentions it is an agency, ICA
will govern it. If not pigeonholed, it is left to judicial discretion
‘Principal employer’ in Contract Labor (Regulation and Abolition) Act and Provident Fund
Act
Independent contractor voluntarily decides to take full liability: ‘Indemnity insurance’ in
doctor hospital contracts.
Other types of agents
 Factor: The expression “mercantile agent” shall mean a mercantile agent having in
the customary course of his 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-Factor’s Act 1889, England
 Section 2(9) Sale of Goods Act mercantile agent” means a mercantile agent having in
the customary course of business as such agent authority either to sell goods, or to
consign goods for the purposes of sale, or to buy goods, or to raise money on the
security of goods;
 Auctioneer
 Broker: Agent employed to make bargains and contracts in the course of trade and
commerce with other parties for a compensation called ‘brokerage’
 Del credere agent: Agent who is not only a broker but guarantees principal that the
buyer will make payment for the goods. If the buyer defaults, del credere agent will
be held liable (Not liable for non acceptance of goods or other circumstances where
transaction does not take place)
 Special agents: Directors under Companies Act and Partners under Partnership Act,
1932
 Modern agents: sports agent, film agencies

3. Agency by operation of law
Directors as agents of the company: Companies Act, sec 188: Agent cannot be appointed
without consent of Board of Directors.
Agency in Partnership: Partnership Act, 1932
Sec 4: "Partnership" is the relation between persons who have agreed to share the profits of a
business carried on by all or any of them acting for all.
Sec 18: Subject to the provisions of this Act, a partner is the agent of the firm for the
purposes of the business of the firm
Sec 19: Implied authority of partner: Subject to the provisions of section 22, the act of a
partner which is done to carry on, in the usual way, business of the kind carried on by the
firm, binds the firm.
Sec 22: In order to bind a firm, an act or instrument done or executed by a partner or other
person on behalf of the firm shall be done or executed in the firm name, or in any other
manner expressing or implying an intention to bind the firm.
Bank of Australasia v. Breillat: Every partner is, in contemplation of law, the general and
accredited agent of the partnership; or, as it is sometimes expressed, each partner is
praepositus negotias societatis; and consequently may bind all the other partners by his acts,
in all matters which are within the scope and objects.
Section 69: Effect of non registration of firm: Suit can be filed by partners against firm or by
firm against third parties only if registered.
However even registered firm not a legal person. Limited identity under Sec 4 only for
purposes of taxation law. Company is distinct from shareholders but not the same in the case
of a partnership.
Partners are mutual agents: One partner represents another partner to third parties.
However partners cannot bind each other in transactions among themselves. Partnership firm
not a legal entity.
Husband and wife (Scroll down)
Is Guardian an agent?

4. Sec 183: Who may employ an agent: Person who is of age of majority and sound mind
Power of Attorney: Delegation of authority by which one person is empowered to do an act
in the name of the other.
Powers of Attorney Act, 1882
Sec 1A: Power-of-Attorney includes any instruments empowering a specified person to act
for and in the name of the person executing it.
Vakalatnama: Creates agency between advocate and client
PA by Trustee: Section 47, Indian Trusts Act: Trustee cannot delegate authority unless
mentioned in trust deed, or in regular course of business
Registration Act, Sec 33: Where a person is unable to appear before the registering authority
to present the document for registration, he can execute a power of attorney authorising a
third person to do so on his behalf.
Rule of Interpretation of General Power of Attorney
Corporation Bank v Lalitha H Holla: Whether power of attorney executed in favour of a
bank authorizing it to collect rents from debtors’ property amounts to equitable assignment of
funds? (bank can appropriate rents for discharging debt due to it)
Held: Yes it can, provided the agreement refers to the grant of loan by the bank to the
company or to any agreement or arrangement between the bank and the company whereby
the bank is entitled to receive the rents by using the power of attorney and appropriate the
same towards the debt due by the company. Otherwise merely PoA simpliciter authorizing
bank to act as company’s agent for collecting rents
PoA cannot be oral. Governed by provisions of ICA. If PoA creates agency coupled with
interest and it is irrevocable under Section 202 of ICA.
Sec 201: PoA will terminate on death of principal. Personal delegation. (Diff between PoA
and Will)
General PoA: Delegation of wide powers to do whatever is mentioned in the deed. Specific
Power of Attorney: Only for a single specified transaction.

5. Can there be sale of immovable property through General PoA?: Suraj Lamp and Pvt. Ltd.
v/s State of Haryana-Transactions through GPA do not constitute a valid transfer of title in
property
Can Minor be an agent?
Gopimal Burga Das v. Jain Bank of India
Sec 30, Partnership Act: Minor cannot be partner but can be admitted to benefits of the
partnership. While share of minor can be liable for firm, minor cannot be personally liable.
Where principal is minor, agent is independently liable without making principal vicariously
liable and vice versa
Contract ‘of’ and ‘for’ service
Two Tests: Control and Organizational
Contract of: Master Servant relationship. Control test vis a vis that of employer and
employee, facts of case imp. Fiduciary relationship.
Higher the discretion given, more it tends towards being ‘for service’.
Organizational Test: Interpretation of terms, position of occupation, permanency in
employment
Distinction important for contractual liability, statutory protection (labour welfare), social
security.
Silver Jubilee Tailoring House v. Chief Inspector of Shops and Establishment: Workers
given cloth for stitching and told how to stitch. If not stitched according to instructions,
employer can not only ask to re stitch but deny giving further work. Sewing machine and
premises owned by employer.
Held: Control test no longer exclusive test. Where the services are performed on the
employer’s premises and the employer provides the equipment with which the worker works,
it is an indication that it is a contract of service. Employer’s right to reject end product if it
does not conform to instructions also provides element of control and supervision. Servant
need not exclusively work for one master/have full time employment.

6. Agent has higher degree of independence-brokers, del credere agent
Auctioneer does not work exclusively for one party, can determine rules of auction
Contract of Agency unless expressed otherwise is contract ‘of service’: Principal takes
liability for acts of agent under ICA-sec 226
Creation of Agency
Agency can be expressed or implied under Section 187. Can be through oral agreement,
implied agreement subjective in nature-Conduct of principal authorizing person to act as
agent.
Does sleeping partner have implied authority? It may not be expressed in partnership deed,
but implied authority inferred from circumstances-(partner does not take active part in
running of business but liable for all debts and contracts upto his share)
Is wife agent of husband?: Depends on case to case. Generally not an agent. Wife can be
agent where husband has given express or implied approval to be an agent. Where both live
together or where wife is deserted and husband does not provide adequate maintenance, wife
has right to pledge his credit for necessities of life.
The husband can prove to the contrary if he can show that
• He expressly warned the tradesman not the goods
• The wife was supplied with sufficient means to buy the articles in question other than
pledging the husband’s credit.
A husband has no implied power to act as an agent for his wife. It can happen only in case of
express consent or ratification by wife.
Agency by ratification: Section 196- 200
Sec 196 : Person may elect to ratify or disown acts done without his knowledge or authority
on his behalf by another
If principal does not ratify, acts not binding on principal, no representative authority exists
and hence no agency exists

7. Sec 235 : Liability of pretended agent If a person has untruly represented himself to be
authorized agent of another, and induces 3rd
party to deal with him is liable to compensate for
loss or damage incurred by such dealing unless alleged employer ratifies acts
Sec 197: Ratification may be expressed or implied
Expressed: words spoken or written
Implied: conduct of principal e.g. using goods supplied to the firm by the agent or
customary practice (historically prevalent, more binding than usual practice)
Principle of unjust enrichment: If you have benefited from such representation you will be
liable
Ratification is antecedent authority-Validating what was done in past.
Sec 198: No valid ratification can be made by a person whose knowledge of the facts of the
case is materially defective
Sec 199: A person ratifying any unauthorized act done on his behalf ratifies the whole of the
transaction of which such act formed a part.
Therefore principal cannot ratify only that which was beneficial to him
Ratification of agency: Difference between government created and private agency.
President cannot be held liable personally under Article 299/Article 361. Usually ratification
cannot take place and there cannot be implied ratification.
Promoters action and ratification: Association of persons has to be incorporated under
Companies Act to be recognized as a legal entity. Hence cannot enter into contracts pre-
incorporation: hence promoter enters into contracts on behalf of prospective company
Acts of promoter can later be ratified by Company/Board of Directors. However general rule
is that under Sec 196 power to ratify cannot be exercised by principal not yet in existence
Kelner v. Baxter: Promoters for hotel business entered into contract for purchase of wine.
This was ratified by company after it came into existence. However later company went into
liquidation. Promoters were sued. They argued that liability had passed to company by
ratification.

8. Held: There can be no ratification by entity not yet in existence when contract was
made. Company cannot undertake liability later due to doctrine of privity of contract.
Promoter can avoid personal liability if the company, after incorporation, and the third party
substitutes the original pre-incorporation contract with a new contract on similar terms
(Novation-Sec 62 ICA. Ratification is not novation but only creates continuing obligation)
Vali Pattabhimarama Rao v. Sri Ramanuja Ginning:
Position in India is different from that in England as per Specific Relief Act, 1963.
Sec 15(h)-Specific performance of a contract may be obtained for pre incorporation contracts
provided it is warranted by terms of incorporation. Provided that the company has accepted
the contract and has communicated such acceptance to the other party to the contract.
Sec 19(e): Specific performance can be obtained by third parties against the companies for
pre incorporation contracts. Provided that the company has accepted the contract and
communicated such acceptance to the other party to the contract.
Hence unlike England, new contract not needed to bind company for preincorporation
contracts. It was held that promoter is not agent or a trustee, but a kind of quasti trustee to
whim title of property passes after purchase from third person. Property acquired by a
promoter can become the property of the company by its acceptance and adoption after its
birth.
U.K. Contracts (Rights of Third Parties Act) 1999: Third party can have rights to a
contract even if it was not in existence when contract was made. Hence though promoter can
still be liable for preincorp contracts, company can sue and be sued on such a contract after
coming into existence
Surendra and Co v Liquidator
Ratification must be
i) By person competent to ratify : Agreement entered into by minor cannot be
ratified as it was void ab initio
ii) Ratification must be within valid time
iii) No illegal representation/void acts can be ratified
iv) Must be communicated to agent and third party

9. Keighley Maxeted and Co v. Durant: Agent bought wheat for higher price than he was
supposed to. He contracted in his own name and did not reveal that he was acting on behalf
of another. Later this was accepted by principal however both failed to take delivery. Held
there can be no ratification by an undisclosed principal.
(ICA position diff) Sec 231: If an agent makes a contract with a person who neither knows,
nor has reason to suspect, that he is an agent, his principal may require the performance of the
contract; but the other contracting party has, as against the principal, the same rights as he
would have had as against the agent if the agent had been principal
If the principal discloses himself before the contract is completed, the other contracting party
may refuse to fulfil the contract, if he can show that, if he had known who was the principal
in the contract, or if he had known that the agent was not a principal, he would not have
entered into the contract.
(Different from ‘unnamed principal’ Agent is disclosing that he is a representative but not
disclosing who the principal is)
Bolton Partners v. Lambert: Defendant offered to purchase plaintiff company. This was
accepted by managing director though he had no authority to do so. Later defendant
attempted to withdraw offer. However plaintiff subsequently ratified the contract. Held
ratification has retrospective effect hence it was valid.
Omino ratihabitio Retro Trahitur Et Mandatao Aequiparatur: Every subsequent ratification
has a retrospective effect, and is equivalent to a prior command.
Exceptions to Ratification
(1) Where a vested estate is divested;
(2) Where there has been forgery;
(3) Where the ratification is after the time when the act could be done.
Directors as agents
Albert Judah Judah v. Rampada Gupta and Another: Justice P.C. Mallick citing Lord
Selbourne in Great Eastern Railway Company v. Turner, (1872)

10. "The Directors are the mere trustees or agents of the company--trustees of the company's
money and property; agents in the transactions which they enter into on behalf of the
company."
Sec 166, Companies Act: Duties of directors as agents-director shall act in accordance with
articles of association, to promote best interests of company and exercise due diligence and
skill
Self appointed agents: English v. Dedham Vale Properties
Plaintiffs owned house and adjoining land which was ripe for development. However
planning authority did not grant permission. They decided to sell the property to defendants.
Defendants applied for planning permission in the plaintiff’s name but the same was not
communicated to them. This was accepted. Later property was sold to defendants. Plaintiffs
then sued the defendants.
Held: There was fiduciary relationship between parties which arises when purchaser does
anything likely to affect selling price and defendants were liable to pay profits incurred out
of purported agency due to grant of planning permission
Agency by Necessity
Sec 68: Claim for necessaries
Sec 189: Agent’s 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
Sims and Co v. Midland Railways: Butter being transported was in danger of becoming
useless due to delay in transit hence railways sold it at best available price. Held principal
was bound by the sale.
Sachs v Miklos: Defendant agreed to store plaintiff’s furniture. Later needed storage space
for his own use hence sold the furniture. Plaintiff sued for conversion. Held there was no
agency by necessity as there was no emergency and defendant sold goods for his own
convenience. If D’s house had been destroyed by fire and furniture was left in open, only then
would be justified in selling
China Pacific SA v. Food Corporation of India (The Winson): Defendant cargo owner
hired ship to carry wheat to Bombay. Ship stranded at Manila. Shipowner hired salvors to

11. preserve wheat. Salvors intimated owner but no reply given. Later when shipowners declared
they were abandoning voyage, cargo owner agreed to refund salvors for cost of preserving
wheat from that date, but not for time prior to that. Salvors claimed agency by necessity
Case was resolved on principles of bailment, though it was acknowledged necessity existed.
Conditions of agent’s authority in emergency
i) Action absolutely necessary
ii) Action bona fide in principal’s interest
iii) No express instruction to contrary
Agency by holding out/Estoppel
Sec 237: When an agent has, without authority, done acts or incurred obligations to third
persons on behalf of his principal, the principal is bound by such acts or obligations, if he has
by his words or conduct induced such third persons to believe that such acts and obligations
were within the scope of the agent’s authority
Holding out-Is what creates obligation on principal
Estoppel-Prevents principal from denying truth of holding out someone as agent
Sec 115, Indian Evidence Act: When one person has, by his declaration, act or omission,
intentionally caused or permitted another person to believe a thing to be true and to act upon
such belief, neither he nor his representative shall be allowed, in any suit or proceeding
between himself and such person or his representative, to deny the truth of that thing
Estoppel depends upon common prudent understanding, dependent on facts of the case.
Agency by holding out: Active involvement in inducing third person to believe agent is
authorized. E.g. If master habitually allows servant to buy goods on credit from local dealer
and later pays for them
Authority can be express or implied. Within implied two categories: usual and customary
(auctioneer, broker, ship master)
Implied Authority
Kucawar Lime and Stone Co v. Delhi Rahtas Light Railway Co Ltd: Colliery dispatched
coal by respondent railway which was consigned to the appellant company. The company did

12. not accept the consignment. Railway served a notice saying they intended to sell the coal and
sued the company for demurrage (Charge for keeping the goods for extra time) deducting the
sale proceeds. Held that where coal is consigned to a company under a control order, the
colliery acts as an agent of the company for the purpose of transport hence the company is
liable to pay demurrage. However Railway cannot detain the goods for an unreasonable
period of time after company has indicated its intention not to take delivery. It should sell the
goods through public auction w/o delay.
Harshad J. Shah v. L.I.C. of India: Appellant submitted premiums for life insurance
through a general agent of L.I.C. L.I.C later repudiated insurance claims on the grounds of
non payment of premiums. Letter of appointment of agent and LIC Regulations clearly forbid
general agents from collecting premiums.
Appellant argued doctrine of ‘apparent authority’. Where a principal represents another has
authority, he is bound against third party for acts of the person within that authority even if he
had not given such authority or limited authority by instructions not known to third party.
Essentially limited to relationship b/w principal and third party.”
Where there is no branch office of the LIC and the facility for depositing the premium with
the LIC is not available within a reasonable distance it had been the prevailing practice in the
LIC for the agents to collect the premium from the policyholders and to deposit the same at
the LIC office later.
Court held: Sec 237 would apply to apparent authority. No express or implied authority
in this case due to letter of appt and Regulations. No apparent authority either. Mere fact that
respondent deposited premiums with LIC does not mean that the LIC induced the insured to
believe that the agent had been authorised to receive premium, especially when there were
express provisions against the same.
Bhat: Judgment was criticized on the ground that the practice of agent to collect premiums is
widespread and known. Claim was made under LIC act or else judgment would have been
different.
Whether post office is an agent?
Indian Post Office Act, 1898
Sec 6: Exemption from liability for loss, misdelivery, delay or damage (unless it has been
done fraudulently or by wilful act or default)

13. Sec 34: Central Govt not liable for recovery of sums specified for value payable postal
articles
Even then courts have held liability
V Ramesh v Convenor, Eamcet: Appellant denied seat in engineering college as he was not
informed of date of interview for admission, telegram intimating this was not delivered.
Held: Post office is agent of the sender, not the addressee. Since post office was chosen as
agent by respondent to send telegram to the appellant, lapse of the telegraph department
resulting in noncommunication of the date for the interview to the appellant, and therefore
non appearance of appellant for interview has to be construed as the lapse of an agent of the
respondent and the Principal i.e., respondent must take the responsibility/liability of the lapse
of the agent. Therefore respondent has duty to provide seat to the appellant.
Sec 188: Agent having authority to do an act has authority to do every lawful thing necessary
in order to do such an act.
Ostensible Authority
Watteau v. Fenwick: Owner of brewery transferred interest to defendant. However
continued to work as manager. Sign and license bore his name. Only had authority to buy ale
and waters. Plaintiff supplied cigars to the brewery. Had at all times been unaware of
defendant’s involvement but sued defendant for unpaid amount.
Held: Defendants had held Humble out to the world as having general authority, and that they
were therefore liable for the claim because of the implied authority. Principal is liable for all
the acts of the agent which are within the authority usually confided to an agent of that
character, notwithstanding limitations-usual practice to sell cigars of that kind in breweries
However ‘apparent authority’ would not apply as principal was undisclosed. Compared
situation to that of sleeping partner who would be liable for acts within ordinary authority of
other partners.
Ishaq v Madan Lal: Plaintiff agreed to sell potatoes to defendant but defendant refused to
take delivery. Plaintiff sent agent to persuade defendant to take delivery. Agent agreed to sell
potatoes for lesser price. Though plaintiff accepted sales proceeds, sued defendant for
remaining amount. Held: Defendant entitled to presume agent has implied authority to accept

14. any consideration for the goods-as agent has power to take delivery of goods. Burden is on
plaintiff to show that there was a limitation on the agent’s authority and the same was known
to the defendant.
Kannelles v Locke: Person impersonating as hotel clerk stole plaintiff’s property. Held
where proprietor negligently allows an imposter to act ostensibly as an agent and induces
patrons of the hotel to believe the same, is estopped from denying lack of authority of such
imposter.
Agency and Companies
Doctrine of Constructive Notice: Negative application of Doctrine of Apparent authority.
Presumed anybody who wishes to enter into a transaction is aware of Memorandum of
Association and Articles of Association of a Company-why?-public documents. Hence
person expect to know scope of agent’s authority.
Section 610, Companies Act-There can be inspection and production of documents with
Registrar of Companies
Doctrine of Indoor Management: Exception to CN Rule
Royal British Bank v. Turquand: Company gave bond for 2000 pounds to bank. Later
when sued alleged that under Articles of Association, directors can only borrow if it is
authorised by a company resolution. A resolution had been passed but it did not specify how
much could be borrowed.
Held: There was constructive notice as AoA was registered with Companies House. But this
could not be applied to ordinary resolutions as these were not registered. Held bond was valid
and there was no obligation on persons to ensure that procedures of company were complied
with. Internal affairs of the company were the company’s problem.
Hence under indoor management rule if a third party trusts an agent of the company, the
company is bound whether or not party had power to bind the company.
Freeman and Lockyer v. Buckhurst Park Properties: Defendant company allowed one of
the directors to act as a Managing Director and give instructions to plaintiff to work on its

15. behalf. Later refused to pay on grounds that this was not authorized by Articles of
Association-All four directors were needed to take such an action.
Held: Doctrine of apparent authority was applied. Legal relationship which arises when
principal represents to contractor that another is agent and is authorized to act within scope of
‘apparent’ authority conferred on them which usually an agent is ‘actually’ authorized to do.
Corporation is then estopped from denying that agent was not authorized.
Sub delegation
delegeta potestas non potest delegari-what is delegated cannot be further delegated-Section
190 Agent cannot delegate what they have undertaken to perform personally unless by
ordinary custom/nature of agency sub agent may be implied
Section 192: Principal is bound by acts of sub agent to third parties as if agent originally
appointed by the principal
Union of India v. Mohd Nizam: Respondent filed suit for recovery of money for value
payable postal article from addressee in Pakistan which had not yet been delivered by postal
service in India as due to suspension of money order service postal authorities in Pakistan
could not send money to India. Held if Pakistan government were held to be a sub agent
payment to them would be as good as payment to Govt of India. However since they were
two sovereign powers could not be said to be acting for each other. Under Sec 34 of Indian
Post Office Act, Govt could not be held liable.
Sec 194-‘Substituted agent’-direct relationship to principal
Sec 211-Agent’s duty in conducting principal’s business. Agent must conduct business
according to directions of principal or ordinary business practice. Fiduciary duty in common
law.
Sect 212: Reasonable diligence and skill required. Contract Act enabling in this regard-
allows contract if broad principles met.
Standards of agent will be held to lex mercatoria - law made by merchants by way of
prevailing custom or practice/industry standards created by governing body of industry

16. Principle of remoteness of damage. Standard of ‘reasonable’ differs from case to case
Sec 213-Must render accounts to principal. Doesn’t mean just books of account but also
manner in which payment is received. Duty to pay interest/unused sums.
Sec 214-Agent should use reasonable diligence in seeking instructions from principal if he
does not have explicit instruction or has ambiguous instructions. Duty in common law as
well.
Sec 215-Cannot deal in own interest without principal’s consent.
World Duty Free Company Ltd v. Kenya: Company had concession to run duty free
airports in Kenya. Later filed arbitration proceedings against Kenya. However the
proceedings were dismissed as the Company admitted that contract had been obtained by
paying bribes to the Kenyan government. Hence contract was set aside.
Shiva: Agent is expected to do lawful acts-principal will not be held liable for illegal acts.
Sec 216: Principal can claim profits earned if agent deals on account-everything that is a
product of agency must go back to principal.
Sec 219-Agent’s remuneration not due till completion of entire act except in case of Sale of
Goods as transactions divisible.
Sec 220-Pro rata division-no remuneration for part of business misconducted-but bribery will
taint the entire transaction
Sec 221-Agent’s lien on principal’s property-Particular, possessory lien-only on property
received (unless general lien u S 171). (Sec 47, Sale of Goods Act-Unpaid Seller’s lien.)
Can money be retained under lien?
Section 8, Transfer of Property Act: Operation of transfer mentions ‘When the property is
money.’’ Therefore money is property.
Sec 222: Employer bound to indemnify agent for consequences of lawful acts in exercise of
authority conferred upon him-includes actual and ostensible authority. Only for direct and

17. consequential damages-commences as soon as liability arises. Statutory obligation cannot be
waived under contract.
Sec 224-No indemnification for criminal act. Contract void ab initio, principal has no
liability or criminal acts of agent.
Section 201, Companies Act-No indemnification for negligence or breach of duty/trust
towards company, however can be for defending proceeds in which one was acquitted.
Sec 226-qui facit per alium facit per se
Sec 227 and 228- Principle of divisibility. Quantum meruit- When a person employs another
to do work for him, without any agreement as to his compensation, the law implies a promise
from, the employer to the workman that he will pay him for his services, as much as he may
deserve or merit. Liability to be quantified on basis of contractual obligations and to what
extent principal is bound
Sec 230- Related to Sec 226.
Section 231-Consensus ad idem. If identity is critical feature as to why contract was entered
into, can be repudiated.