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Indian Contract Act 1872

Rights and Duties of Agents

In a contract of agency, the principal appoints an agent to perform some specific task or business on his behalf. The principal is bound by the acts of his agent and is thus, responsible for his acts to the third parties. Let us now understand the Rights and Duties of Agents.

Rights and Duties of Agents

Rights of agents

1. Right to Remuneration

As per section 219, an agent has a right to receive the agreed remuneration or in absence of agreement, a reasonable remuneration for rendering the services to the principal that are not voluntary or gratuitous. He becomes eligible to receive the remuneration as soon as he completes the work that he undertook.

2. Lien on Goods

Some agents who have the possession of goods, securities or properties of their principal also have a lien on these goods, securities or properties regarding their remuneration and also for any expenses or liabilities that they incur. When he is an unpaid seller, he has a right to stop the goods in transit.

3. Right to be Indemnified

An agent represents his principal to the third parties. As per sections 222 and 223, an agent has a right to be indemnified by his principal for all charges, expenses, and liabilities that he incurs during the course of the agency.

Duties of agents

A principal has a right to sue his agent for damages in case of breach of duty by the agent. The duties of agents are:

  1. As per section 211, an agent shall act within the scope of authority that his principal confers upon him. Also, he shall strictly follow the directions of his principal. However, in the absence of express instructions from his principal, he shall follow the custom prevailing at the place where he carries out his business, in a similar type of business.
  2. Section 212 states that he shall work with reasonable skill and diligence. Also, where the nature of the agent’s profession requires him to possess a special skill, he shall exercise the skill that a member of that profession will exercise.
  3. An agent shall disclose properly any material information to his knowledge to the principal that can influence the making of the contract.
  4. As per section 213, an agent shall is under the duty not to disclose any confidential information of his principal.
  5. Section 215 states that an agent shall not compete with his principal. In other words, his interest shall not conflict with his duty.
  6. It is the duty of the agent to keep true and fair accounts and prepare them on a reasonable notice to render them.
  7. An agent shall not make any secret profit and shall disclose any extra profit he makes to the principal. Where the principal finds that the agent is making secret profits, he may dismiss the agent without notice, recover the amount of profit and also refuse to pay him his remuneration. He may also repudiate a contract where a third party is also involved in the fraud and recover the damages.
  8. He shall not appoint a sub-agent.

Rights and Duties of Agents

Source: freepik.com

Exceptions to the principle of Delegates non-protest delegate

The above principle means that a delegate cannot further delegate. Therefore, an agent cannot appoint a sub-agent. However, there are the following exceptions to this principle:

  1. When the principal allows delegation.
  2. Where it is the custom or usage of trade to delegate.
  3. When delegation is necessary for proper and efficient performance.
  4. Where it becomes essential due to some emergency
  5. When the principal knows that the agent’s intention is to delegate.
  6. Where the work is ministerial.

Solved Example on Rights and Duties of Agents

What is the extent of an agent’s authority?

Ans.

The extent of an agent’s authority depends on the terms of the agent’s appointment or the circumstances of the case. The contractual authority of an agent is the real authority. But, implied authority means all that is incidental to carry out the contractual authority. Thus, implied authority is the apparent or ostensible authority. Hence, an agent who has an authority to do a certain act also has the authority to do all that is lawful to perform this act. Also, an agent has an authority to do anything that prevents the principal from any loss or damages.

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