25 February, 2016

Define Agency, Agent and Principal and Give Essentials of Agency

Agency-According to Anson, "Although as a general rule one person cannot, by contract with another, confer rights or impose liabilites on a third person, yet, he may represent another for the purpose of bringing him into legal relation with a third party. Employment for this purpose is called agency." For Example- A authorises B to let his houses to tenants, to recover the rents from them and to maintain the houses 10 good order. Here it will be said at A is  the principal B is the agent and the relation between A and B will be called agency.
The term "Agency" is no where been defined under the Indian Contract Act. But according to one judicial decision A contract of agency is the employment of a person by another in order to bring the later into legal relation with third person."
 In  the modern age due to commercial business a person can neither contacts with another nor can be enters in to transactions himself alone. He gets his works done through his servant’s representatives or agents and this process or medium is called agency.
Definition of Agent and Principal- According to S. 182 an "agent" is a person employed to do any act for another, or to represent" another in dealings with third persons. The person. For whom such act is done, or who is so represented, is called 'Principal'.
Essentials of Agency -
1.      Principal must be competent to contract-So 183 lays down that, Any person who is of the age of majority according to the law to which he is subject, and who is of sound mind, may. employ. an agent." Thus, it follows from S 183 that a minor cannot appoint an agent to act for himself. The appointment of an agent involves a contract and a minor’s contract is void. Thus, it is clear that a minor himself cannot employ an agent and the appointment of an agent by a minor will be void. Thus, an agent may be appointed only by a person who is competent to Contract.
2.     Agent need not be competent-S. 184 clearly provides that, “As between the principal and third persons, any person may become an agent, but no person who is not of the age of majority and of sound mind can become an agent, so as to be responsible to his principle
3. No consideration is necessary to create an agency- S. 185 provides “ no consideration is necessary to create agency.” Although an agent is generally remunerated by way of commission for services rendered yet no consideration is immediately necessary at the time  of his appointment.
Courtesy:- Legal Point Foundation

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