Contract of Agency is a two-party relationship in which one person acts as representative to the other in business dealing in order to create contractual relations between that other and third person.

1. Presented By:Pooja Ahlawat

2.  The Indian Contract Act, 1872 prescribes the law
relating to contracts in India and is the key act
regulating Indian contract law. The Act is based on
the principles of English Common Law. It is applicable
to all the states of India. It determines the
circumstances in which promises made by the parties to
a contract shall be legally binding.

3.  Contract of Agency is a two-party relationship in which one
person acts as representative to the other in business dealing in
order to create contractual relations between that other and
third person.
 An agency may be created to perform any act which the
creator of agency himself could lawfully do.
 Chapter X of the Indian Contract Act, 1872 deals with the
laws relating to Agency.

4.  The law of agency is based on the Latin maxim “qui
facit per alium, facit per se,” which means, “he who
acts through another is deemed in law to do it
himself“.

6.  Agent and principal are defined under Section 182 of the
Indian Contract Act, 1872. According to the section :-
 Agent:-“An agent is a person employed to do any act for
another or to represent another in dealings with third
persons.
 Principal:- The person for whom such act is done, or
who is so represented, is called the principal”
 In a contract of agency, an agent deals with the third
parties on behalf of his principal. He enters into contracts
with the third parties and is responsible for his acts to the
principal.

7.  A, a businessman, delegates B to buy some goods on
his behalf. Here, A is the principal and B is the agent,
and the person from whom the goods are bought is the
‘Third Person’.
 Lavanya lives in Mumbai, but owns a shop in Delhi.
She appoints a person Susan to take care of the dealings
of the shop. In this case, Lavanya has delegated her
authority to Susan, and she becomes a Principal while
Susan becomes an agent.

8. 1. Special Agent 2.General Agent 3. Universal Agent
(a) Appointed to
perform a
particular
transaction, e.g.
sale of a house
property.
(b) Agent has limited
authority
(c) Agent cannot bind
Principal for acts
other than for
which he is
employed.
(a)Appointed to do all
acts connected with a
particular trade,
business or
employment.
(b) Authority is wide
and continues till
agency is terminated.
(c) Principal may limit
his authority.
(d) Principal is bound
by all acts unless it is
beyond authority of
Agent
(a) Appointed to do all
acts for the
Principal.
(b) Authority is
unlimited
(c) All acts of Agent
bind his Principal
provided that his
acts are legal and
agreeable as per
law of land.

9. Commercial or Mercantile Agents Non – Mercantile Agents.
(a) One who is authorised to sell
goods or consign goods for the
purpose of sale or to buy gods
or to raise money on the
security of goods.
(b) Includes Banker, Auctioneer,
Broker, Commission Agent.
(a) Not engaged in business of
selling or buying goods, but act
in their respective professional
capacities. i.e. render
professional services for their
Principal
(b) Includes Attorneys, Insurance
Agents, etc.

10.  He must follow the directions of the
Principal.(Section211)
 Requirement of skill and diligence.(Section 212)
 Maintain the accounts.(Section213)
 Communicate with the Principal in order to receive
instructions.(section214)
 Duty to act within the scope of the authority.

11.  Pay remuneration to agent as agreed.
 Indemnify agent for lawful acts done by him as agent.
 Indemnify Agent for all acts done by him in good
faith.
 Indemnify agent if he suffers loss due to neglect or
lack of skill of Principal.

12.  Agreement:
There shall be an agreement between the
principal and agent.
 Consideration not necessary:
The contract shall be with or without
consideration. Section 105 clearly provides, 'no
consideration is necessary to create an agency’
 Intention to Act on behalf of the principal:
There shall be an intention of the agent to act on
behalf of the principal. When the agent enters
into a contract for himself, then the principal will
not be liable.

13.  Who can appoint an Agent?
According to Section 183, any
person who has attained the age of
majority and has a sound mind can
appoint an agent. In other words,
any person capable of contracting
can legally appoint an agent. Minors
and persons of unsound mind cannot
appoint an agent.
Who can be an agent?
 According to Section 184, the
person who has attained the age of
majority and has a sound mind can
become an agent. A sound mind and
a mature age is a necessity because
an agent has to be answerable to the
Principal.

14.  To conclude that the Contract of Agency is a
connecting link between the principal and the third
party and is based upon consent.
 The agent is a connecting link between the principal
and the third party. The acts of the agent bind the
principal to the third person or give the principal rights
against the third person.
 The rights of an agent are the duties of the principal
and the duties of an agent are the rights of the principal.
No consideration is necessary to create an agency or
agency agreement.

15.  books_4074_0.pdf
 Legal Aspect of Business By Ravinder Kumar
 http://lawtimesjournal.in
 https://indiankanoon.org/doc/722832/
 https://en.wikipedia.org/wiki/Indian_Contract_Act,_18
72