AGENCYAn Agent is defined under section 182 of the Act. An Agent is a person employed to do any act for another, or to represent another in dealings with persons. The person for whom such act is done, or who is so represented is called the principal.Whatistheemphasis?Theemphasisisonthepowerof the Agent to represent his principal in dealing third persons. Is servant, or someody polishing the shoes on a street an agent? !o."ecausetheessenceofthematteristhattheprincipal authorised the agent to represent or act for him in ringing the principal into contractual relation with a third person.Essentials of Agency:Anagencybeingacontractofemploymentto bringtheprincipalintolegalrelationswithat thirdparty,thefrstrequisiteisthatthe principal should be competent to contractWho can employ an agenti! A ma"or person, and sound mind #herefore it meansaminorcannotappointanagent$ %ecause an agreement entered into by a minor is&&&&Aquestionariseswhetheraminorcan appointanagentbywayofapowerof attorney$Aninfantcannotappointanagenttoactforhim neither by means of a power of attorney, nor by any other means'f hepurports to appoint an agent, not onlyistheappointmentitself(oid,bute(erything done by the agent on behalf of the infant is also (oid and incapable of ratifcation)owe(erinasituationswhereaminoriscapableof binding himself by contract he may appoint an agent tocontractonhisbehalf*hate(erapersoncando personally he can do thru+ an agent#hereisnothingintheActwhichprohibitsthe guardianofaminorfromappointinganagentfor himWho may be an agent%etween the principal and third persons, any person may become an agent, but no person who is not of the age of ma"ority and of sound mind*hether a consideration is necessary$ No consideration is necessary to create an agency *hy$ %ecause generally an agent is remunerated by way of an commission for his ser(ices rendered but no consideration is to be immediately paid at the time of appointment,ustice %hagwati has (ery clearly e-plained the distinction between a ser(ant and an agent in the landmar. case of /a.smi Narayan 0am gopal ( )yderabad Go(t A'0 1234 5C 674The main points of distinctionare #1$ An agent has the authority to act on ehalf of the principal and to create a contractual relations etween the principal and the third party. This kind of power is not generally enjoyed by the servant.2$ A principal has right to direct what the agent has to do , ut a master has not only that right ut also the right to say how it is to e done. Thus the difference is that the servant acts under the direct control and supervision of his master and is ound to conform to all reasonale orders given to him inhis course of wor%. "ut an agent though ound to e&ercise his authority in accordance with all the lawful instructions ''' is not su(ect to its e&ercise to the direct control of supervision of the principal.)$ A servant is paid y way of salary, howeveran agent is paid y way of commission.*inds of AgentFactor: The word factor means an agent entrusted with the possession of 8f goods for the purpose of selling themA bro.er is also a .ind of mercantile agent )e is appointed to negotiate and ma.e contracts for the sale or purchase of property on behalf of his principal, but is not gi(en possession Del Crede Agent: )e is another type of mercantile agent'n ordinary cases the only function of an agent is to e9ect an contract between his principal and a third party #he agent+s role is then o(er, he drops out )e can neither sue noris he held laible for failure to perform by a third party%ut where an agent underta.es on payment of e-tra commissionto be liable to the principal for the failure of the third party to perform he contract )e is called a del crede agent and the e-tra commission is called the del crede commissionCreation of Agency : #he relation of agency arises whene(er one person called an agent has authority to act on behalf of another called the principal and consents so to act#he relationship has its genesis in a contractCreation of an Agency:Therelationshipetweenaprincipalandanagentmaye created in any of the following ways#1$"ye&pressappointment+,ec18-$i.ewhengivenywords or y writing.2$"yimpliedappointment.i.e"yconductorsituationofthe parties.)$ y necessity of the case +,ec 188$ .$ Agents authority in an emergency./$Bysubseuentratificationofanunauthori!edact."#ec $%&'()atification*eans+whentheagenthasdone so*ethingfortheprinciplebutwithouttheprincipal,s authority+theagent*ayadoptthebenefitsand conseuences of transactions. -arathwada .niv. v #eshrao Chavan A/) $%0% #C $102.0owever a %nowledge is re1uisite for valid ratification +,ec 128$Termination of agency +,ec 231$Termination of Agency can e y following ways."y the principal revo%ing his authority or ytheagentrenouncingtheusinessoftheAgencyorythe usiness of the agency eing completed or Theprincipalortheagentdyingorecomingofunsound mind or"ytheprincipaleingad(udicatedaninsolventunderthe provisions of any Act.Terminationofthe Agencywhereagenthasaninterestinthe propertywhichformsthesu(ectmatteroftheAgency. 0owever the agency cannot, in asence of an e&press contract e terminated to the pre(udice of such interest. +,ec 232$/llustrationAgivesauthorityto"tosell A4sland,andtopayhimself,outof theproceeds,thedetsduetohimfromA.Acannotrevo%ehis authority, nor can it e terminated y his insanity or death.ThereforeitcanesaidthatAuthoritycoupledwithinterest cannot e revo%ed.,ec2325Agentsdutyonterminationofagencyyprincipal4s deathorinsanity.5TheAgentisoundtota%eonehalfofthe representativeofthelateprincipalallreasonalestepsforthe protection and preservation of the interests entrusted to him.TheaovearetheinstancesinlawwhenAgentsauthorityis terminated6ther than the aove, the principal may revo%e agents authority in the following ways.7nder,ec23)'Atanytimeeforetheauthorityhaseen e&ercised so as to ind the principle.7nder,ec23.58evocationwhereauthorityhaseen partlye&ercised.Theprincipalcannotrevo%etheauthority giventohisagentaftertheauthorityhasbeenpartly e3ercisedsofarasregardssuchactsandoligationsas arise from the acts already done in the agency./llustration :1$ A authori9es B to uy, 1333 ales of cotton on account of A, and to pay for it out of As money remaining in B4s hands. Buys1333alesofcottoninhisownna*esoasto ma%e himself personally liale for a price. A cannot revoke Bs authority so far as regards payment for the cotton Aauthori9es"touy,1333alesofcottononaccountofA,andto pay for it out of As money remaining in B4s hands. B uys 1333 ales of cotton A,s na*eso as not to ma%e himself personally liale for a price. A can revoke B,s authority to pay for the cotton.!ow a 1uestion arises whether a compensation is payale?The same is dealt under ,ec 23/. 5 :ompensation for revocation y principal.4herethereise3pressori*pliedcontractthatan agency should be continued for any period of ti*e+ the principal *ust*akeco*pensationtotheagent+ortheagenttothe principal as the case *ay be+ for any previous revocation of the agencywithoutsufficientcause.;urtheritisnecessarythata noticehastobegivenforrevocationorrenunciation.+,ec23-$ The same may e e&press or implied +,ec 23al AI8 12/. ,: /33.,ec22)5Agenthastoeindemnifiedytheprincipalagainst conse1uencesofactdoneingoodfaith5The=rincipalisoundto indemnifytheagenteventhoughtheactsofthe Agentcausesin(uryto the right of the third persons as he has done the Act in good faith./llustration: A,adecreeholderandentitledtoe&ecutionof"4sgoods as%s the officer of the court to sei9e certain goods, representing them to e the goods of ". The officer sei!es the goods and is sued by C+ the true owner of goods. A is liable to inde*nify the officer for the su* whichheisco*pelledtopaytoC+inconseuenceofobeying A,s directions.,ec 22. 5 !on liaility ofa employer of agent to do a :riminal Act./llustration # A employs " to eat : and agrees to indemnify him against all conse1uences of the act. " thereupon eats :, and has to =ay damages to : for doing so. A is not liale to indemnify " for those damages. ,ec 22/ :ompensation to agent for the in(ury caused y the principal4s neglect. The =rincipal must ma%e compensation to his agent in respect of in(ury caused to such agent y the principals neglect or want of s%ill./llustration : A employs " as a ric%'layer in uilding a house, and puts upthescaffolding himself. Thescaffolding is uns%illfully put'upand " is in conse1uence hurt. A must ma%e compensation to ".,ec 22-. ?ffects of Agency on contracts with third parties.When is the principal ound y agents acts?/llustrations : A,eing"4sagentwithauthoritytoreceivemoneyonhisehalf receivesfrom:asumofmoneydueto".:isdischargedofhis oligation to pay the sum in 1uestion to ".,ec 22iaility of a principal inducing elief that agent4s unauthori9ed acts were authori9ed. When an agent has without any authority, done acts or incurred oligations to third parties on ehalf of his principal, the principal is ound y such acts or oligations if her has y his words or conduct induced such third person to elieve that such acts an oligations were within the scope of the Agents authority./llustration:A entrusts " with negotiale instruments endorsed in lan%. " sells them to : in violation of private orders from A. The sale is good.