Authority of an Agent

The authority of an agent may be express or implied. (Section 186, Indian Contract Act). An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case and things spoken or written in the course of dealing may be accounted for, from circumstances of the case. (Section 187, Indian Contract Act). The power to sell will not authorise the agent to borrow money or to pledge the goods. (Timblo lmos Ltd. v. Jorge Anioal Mates Sequira, (1977) 3 SCC 474).

Illustration

            A owns a shop in Serampore, living himself in Calcutta and visiting the shop occasionally. The shop is managed by B and he is in the habit. of ordering goods from C in the name of A for the purposes of the shop and paying for them out of A's funds with A's knowledge. B has an implied authority from A to order goods from C in the name of A for the purposes of the shop.

            In Ram Lakhan v. Mukhdeo, AIR 1982 Pat. 19; the parties agreed for filing of the award in the court. The award which was registered one, was handed over to one of the parties by the authorities. It was held that the party must be deemed to have implied authority of the arbitrators for filing the award in the court on their behalf under Section 186 of the Contract Act.

Extent of agent's authority.-An agent who has an authority to do an act has authority to do every lawful thing which is necessary in order to do such act.

An agent having an authority to carry on a business has authority to do every lawful thing necessary for the purpose, or usually done in the course of conducting such business (Section 188, Indian Contract Act).

Illustration

A constitutes B his agent to carry on his business of a ship builder. B may purchase timber and other materials, and hire workmen, f-or the purposes of carrying on the business.

 Agent's authority in an emergency.-An agent has authority, in an emergency, to do all such acts for the purposes of protecting his principal from loss as would be done by a person of ordinary prudence, in his own case, under similar circumstances, (Section 189, Indian Contract Act).

The leading case on the question of agency by necessity is Hari Kishan Singh v. National Bank of India Ltd., (1941) 191 I C 273. It was held that Section 189 was intended to protect the agent, if for the purposes of safeguarding the interests of his principal he does certain acts without 11 any instruction from his principal. In such a case the agent is exempted from all liability provided he acts like a man of an ordinary prudence and the acts are performed by him at the time of emergency.

Illustration

            A consigns provisions to B at Calcutta with directions to send them immediately to C at Cuttack. B may sell the provisions at Calcutta if they will not bear the journey of Cuttack without spoiling.

Agency by estoppel:-- This arises when one person puts another in such a position as to lead other persons to think that they are entitled to treat the second person as authorised to act as agent for the first in respect of certain class of business. In such a case the first person is estopped from denying to those who have acted on the belief which he has by his conduct thus, induced, that the second person was in fact his agent. This is illustrated by the relation of factor to their principals. If a principal entrusts goods to factor and does not authorise him to sell, the principal is estopped from denying that the factor had no authority, if the factor sells the same to someone who buys bona fide without notice of the limitation of the factor's authority.

Partnership is based on the mutual agency between the partners. When anyone of the partners retires he should give information of this effect to the persons who deal with the partnership firm. Otherwise the rest of the partners as well as the outgoing partner will be made liable on the basis of holding out or estoppel.

Illustration

If a master allows his servant to purchase goods for him of B habitually upon credit. B becomes entitled to look to the master for the payment for such things as are supplied in the ordinary course of dealing.

Husband and wife:-The legal presumption in the case of husband and wife is that the wife has an authority of an agency for all domestic matters ordinarily entrusted to a wife, as a reasonable. supply of goods and service. But it must satisfy following conditions:

(1) The married couple must be co-habiting together.

(2) They must be living together in their own domestic establishment.

(3) The wife has the authority to pledge her husband's credit only for necessaries,

(4) Where the husband gives a reasonable allowance to his wife and also duly pays it this presumption would not be available.

(Girdhari Lal v. Crawford, (1885) 9 All 147).

Courtesy:- Legal Point Foundation