As per section 182, an agent is a person who brings his principal into the contractual relations with the third parties. The principal appoints or employs an agent under the contract of agency. Thus, an agent is the link that connects the principal to the third parties. An agent binds the principal by his acts. In other words, a principal is responsible for the acts of the agent to the third parties. When an agent acts for his principal, he has the capacity of his principal. There are 3 classes of agents: General agent, Special agent and Mercantile agent. Let us discuss the Classification of Agents in detail.
Classification of Agents
- General Agent
- Special Agent
- Mercantile Agent
1. General Agent:
The principal appoints a general agent to do anything within his authority in all transactions or in all transactions relating to a specific trade, business or matter. The principal grants the authority to the agent to act on his behalf.
It may be assumed by the third party that such an agent has the authority to do all that is usual for a general agent to do. Any private restrictions on the agent’s authority do not affect the third party.
2. Special Agent:
He is the one who is appointed or employed to do or perform only a specific act, task or function. Outside of this special act, task or function, he has no authority or power. In this case, the third party cannot assume that the agent has unlimited authority. Thus, any act of the agent outside his authority cannot bind the principal.
3. Mercantile Agent:
As per section 2(9) of the Sale of goods act, 1930, a mercantile agent is a person who in the customary course of business has an agent’s authority either to sell or consign the goods for the purpose of sale or to buy goods or to raise money on the security of goods. Thus, this definition covers the following:
A factor is a person who is appointed to sell goods which are put in his possession or to buy goods for his principal. He is the evident owner of the goods in his custody and can thus sell them in his own name and receive payment for them.
He also has an insurable interest in the goods in his custody and a general lien regarding any claim that he may have to arise out of the agency.
A broker is a person whose business is to make contracts with the other parties for the sale and purchase of goods or securities for brokerage.
He does not have the possession of the goods and acts in the name of the principal. Also, he has no lien over goods because he has no possession of goods.
c. Del Credere Agent:
A del credere agent is a person who ensures or guarantees his principal that the creditors of goods will pay for the goods they buy for extra remuneration. In the case of failure to pay by the third party, he needs to pay the due amount to his principal.
The relation between a banker and a customer is basically that of a debtor and creditor. However, when a banker buys or sells securities or collects cheque, dividends, interests, bills of exchange or promissory notes on behalf of his customer, he becomes the agent of his customer. Thus, he has a general lien on all the securities in his possession regarding the general balance due to him by the customer.
As per the Partnership Act, every partner is an agent as well as the principal of every other partner in a Partnership firm. Also, every partner is the agent of the firm for the business of the firm.
An auctioneer is a person who sells the goods by auction. An auction is a process by which goods are sold to the highest bidder in a public competition. He cannot warrant his principal’s title to the goods.
He is the agent of the seller until the goods are auctioned or knocked down. However, after the knockdown, he becomes the agent of the buyer. Also, he is evidence that the sale took place.
Solved Example on Classification of Agents
Who is a Sub-agent?
As per section 191, a sub-agent is a person employed by and acting under the control of the original agent. Thus, a sub-agent is the agent of the original or the primary agent. The original agent appoints a sub-agent and delegates the work of the principal to him. The relationship between a sub-agent and the original agent is that of the agent and principal.
A sub-agent is confined by all the duties of the original agent. However, he is not directly responsible to the principal except for committing any fraud and willful wrong. But, he is directly responsible to the original agent appointing him. Also, the original agent is responsible for the acts of the sub-agent to the principal. In the case of third parties, a sub-agent represents the principal and binds the principal for all his acts as if he is an original agent.