law

1. Law of AgencyLaw of Agency
Agent:Agent: is a person employed to do any act foris a person employed to do any act for
another or to represent another in dealings withanother or to represent another in dealings with
third personsthird persons
Principal:Principal: the person for whom such act is donethe person for whom such act is done
or who is so represented is called the Principalor who is so represented is called the Principal
Function of a agentFunction of a agent: is to bring his principal into: is to bring his principal into
contractual relations with third personscontractual relations with third persons
Essentials of relationship of agencyEssentials of relationship of agency
1. Agreement between the principal and the agent1. Agreement between the principal and the agent
2. Intention of agent to act on behalf of the principal2. Intention of agent to act on behalf of the principal

2. Kinds of AgentsKinds of Agents
Based on Extent of authorityBased on Extent of authority
•Special agentSpecial agent
•General agentGeneral agent
•Universal agentUniversal agent
Nature of Work performedNature of Work performed
Commercial or mercantile agentCommercial or mercantile agent
FactorFactor
AuctioneerAuctioneer
BrokerBroker
Commission agentCommission agent
Del credere agentDel credere agent
BankerBanker
 Non-mercantile agentsNon-mercantile agents

3. Duties of a AgentDuties of a Agent
To carry out the work undertaken according to the directionsTo carry out the work undertaken according to the directions
given by the principalgiven by the principal
To carry out the work with reasonable care, skill andTo carry out the work with reasonable care, skill and
diligencediligence
To render proper accounts to his principalTo render proper accounts to his principal
To communicate with the principal in the case of difficultyTo communicate with the principal in the case of difficulty
Not to deal on his own accountNot to deal on his own account
To pay sums received for the principalTo pay sums received for the principal

4. Duties of a AgentDuties of a Agent (Contd..)(Contd..)
To protect and preserve the interests of principal in case ofTo protect and preserve the interests of principal in case of
death or insolvencydeath or insolvency
Not to use information obtained in the course of agencyNot to use information obtained in the course of agency
against principalagainst principal
Not to make secret profit from AgencyNot to make secret profit from Agency
Not to set up an adverse titleNot to set up an adverse title
Not to put himself in a position where interest and dutyNot to put himself in a position where interest and duty
conflictconflict
Not to delegate authorityNot to delegate authority

5. Rights of AgentsRights of Agents
Right of “Retainer”Right of “Retainer”
Right to receive RemunerationRight to receive Remuneration
Right of lienRight of lien
Right to receive compensationRight to receive compensation

6. Duties of PrincipalDuties of Principal
To Indemnify the agent against the consequences of all lawful actsTo Indemnify the agent against the consequences of all lawful acts
To indemnify the agent against the consequences of acts done in goodTo indemnify the agent against the consequences of acts done in good
faithfaith
To indemnify agent for injury caused by principal’s neglectTo indemnify agent for injury caused by principal’s neglect
To pay agent the commission or other remuneration agreedTo pay agent the commission or other remuneration agreed
Rights of PrincipalRights of Principal
ToTo recover damagesrecover damages
To obtain an account of secret profits and recover them and resist aTo obtain an account of secret profits and recover them and resist a
claim forclaim for remunerationremuneration
 To resist agent’s claim for indemnity against liability incurredTo resist agent’s claim for indemnity against liability incurred

7. Creation of AgencyCreation of Agency
 By Express agreementBy Express agreement
 By Implied agreementBy Implied agreement
• Agent by estoppelAgent by estoppel
• Agency by holding outAgency by holding out
• Agent by necessityAgent by necessity
 By operation of LawBy operation of Law
 By RatificationBy Ratification

8. Requisites for valid ratificationRequisites for valid ratification
 Agent must propose and is identifiableAgent must propose and is identifiable
 Principal must be in existence at the time of contractPrincipal must be in existence at the time of contract
 Principal should have contractual capacityPrincipal should have contractual capacity
 Ratification must be with full knowledge of factsRatification must be with full knowledge of facts
 Must be done within reasonable time of act proposedMust be done within reasonable time of act proposed
 Act to be rectified must be lawfulAct to be rectified must be lawful
 Whole transaction must be ratifiedWhole transaction must be ratified
 Ratification must be communicatedRatification must be communicated
 Ratification must be of acts which the principal had the powerRatification must be of acts which the principal had the power
to doto do
 Should not put a third party to damageShould not put a third party to damage

9. Termination of AgencyTermination of Agency
 Act of PartiesAct of Parties
 By mutual agreementBy mutual agreement
 By Revocation by the principalBy Revocation by the principal
 By Renunciation by the agentBy Renunciation by the agent
 Operation of LawOperation of Law
 By PerformanceBy Performance
 By Death of partyBy Death of party
 By insolvency of either of the partyBy insolvency of either of the party
 By expiry of timeBy expiry of time
 By insanity of either partyBy insanity of either party
 By destruction of subject matterBy destruction of subject matter
 By Principal becoming an alien enemyBy Principal becoming an alien enemy
 By dissolution of the companyBy dissolution of the company
 By termination of sub agent’s authorityBy termination of sub agent’s authority

10. Bailment:Bailment:
" A bailment is the delivery of goods by one person to" A bailment is the delivery of goods by one person to
another person for some purpose, upon a contract thatanother person for some purpose, upon a contract that
they shall, when the purpose is accomplished, bethey shall, when the purpose is accomplished, be
returned or otherwise disposed of , according to thereturned or otherwise disposed of , according to the
directions of the person delivering them.”directions of the person delivering them.”
The person delivering the goods is called theThe person delivering the goods is called the BailorBailor
The person to whom they are delivered is called theThe person to whom they are delivered is called the
BaileeBailee

11. Essentials of BailmentEssentials of Bailment
 Contract for delivery of goods and taking back the goodsContract for delivery of goods and taking back the goods
 Delivery of goods by the Bailor to BaileeDelivery of goods by the Bailor to Bailee
 Entrustment of goods should be for some purposeEntrustment of goods should be for some purpose
 Bailment relates only toBailment relates only to ChattelsChattels (i.e., movable property)(i.e., movable property)
ConsiderationConsideration
 In the form of moneyIn the form of money
 In the form of benefit derived by each otherIn the form of benefit derived by each other

12. Classification of bailmentClassification of bailment
 For the exclusive benefit of Bailor (for safe custody of goods)For the exclusive benefit of Bailor (for safe custody of goods)
 For the exclusive benefit of Bailee (Lending without charge)For the exclusive benefit of Bailee (Lending without charge)
 For mutual benefit of both the parties (repairing)For mutual benefit of both the parties (repairing)
Types of bailmentTypes of bailment
 Gratuitous bailment Eg. lending book to a friend without chargeGratuitous bailment Eg. lending book to a friend without charge
 Non- Gratuitous bailment Eg.lending something for chargesNon- Gratuitous bailment Eg.lending something for charges

13. Duties of BailorDuties of Bailor
 Disclose known faults pertaining to the goodsDisclose known faults pertaining to the goods
 To bear extra ordinary expenses of bailmentTo bear extra ordinary expenses of bailment
 To indemnify the Bailee for any loss on account of prematureTo indemnify the Bailee for any loss on account of premature
termination of bailmenttermination of bailment
 To receive back the goods bailedTo receive back the goods bailed
 To indemnify the BaileeTo indemnify the Bailee
Rights of BailorRights of Bailor
 To enforce terms of contract and rights conferred under statuteTo enforce terms of contract and rights conferred under statute
 Right of avoidance of contractRight of avoidance of contract
 To demand the Bailee to return the goods lent gratuitouslyTo demand the Bailee to return the goods lent gratuitously
 Right to file a joint suit for compensation against a wrong-doerRight to file a joint suit for compensation against a wrong-doer

14. Duties of the BaileeDuties of the Bailee
 Proper care for goodsProper care for goods
 Not to make unauthorized use of goodsNot to make unauthorized use of goods
 Not to mix bailed goods with his own goodsNot to mix bailed goods with his own goods
 Paying compensation for the damages (in case of mixing of bailed goodsPaying compensation for the damages (in case of mixing of bailed goods
with own goods)with own goods)
 Not to setup adverse titleNot to setup adverse title
 Duty to return accretion of goods eg.delivery of cow with calfDuty to return accretion of goods eg.delivery of cow with calf
 Bailee to return goodsBailee to return goods
Rights of the BaileeRights of the Bailee
 Deliver goods to one of the joint bailorsDeliver goods to one of the joint bailors
 To deliver goods to Bailor, even if the Bailor has no titleTo deliver goods to Bailor, even if the Bailor has no title
 Right to apply to the courtRight to apply to the court
 Right of action against trespassersRight of action against trespassers
 Right of Bailee’s lien or particular lienRight of Bailee’s lien or particular lien

15. Termination of Bailment
 On the expiry of the periodOn the expiry of the period
 On the achievement of objectOn the achievement of object
 Inconsistent use of goodsInconsistent use of goods
 Destruction of subject matterDestruction of subject matter
 Gratuitous bailmentGratuitous bailment
 Death of bailor or baileeDeath of bailor or bailee

16. Pledge:
The bailment of goods as security for payment of a debt or
performance of promise
Bailor- pledger or pawnor
Bailee- pledgee or pawnee
Difference between Pledge & Bailment:
Purpose
Right to sell Goods
Right to use goods

17. Rights of PawneeRights of Pawnee
 Right of retainerRight of retainer
 Right of retainer for subsequent advancesRight of retainer for subsequent advances
 Right of extraordinary expensesRight of extraordinary expenses
 Right against true owner, when pawnor’s title is defectiveRight against true owner, when pawnor’s title is defective
 Rights where pawnor makes defaultRights where pawnor makes default
*file suit against pawnor*file suit against pawnor
* sell goods* sell goods
*Recover from pawnor (deficiency arising after sale)*Recover from pawnor (deficiency arising after sale)
 Right to sue for loan advancedRight to sue for loan advanced

18. Rights of pawnorRights of pawnor
 Right to get back goodsRight to get back goods
 Right to redeem debtRight to redeem debt
 Preservation and maintenance of goodsPreservation and maintenance of goods