26 February, 2016

Rights of an Agent against his Principal

An agent is a person employed to do any act for another or to represent another in dealing with third persons. The person for whom such act is done or who is so represented, is called the “principal”-Section 182 of the Indian Contract Act).
The principle of ‘Qui facit peralium facit per se’ is basis of the relation of agency. This principle means that the act of an agent is the act of the principal.
An agent has the following rights against his principal:-
1. Right to retainer:-An agent may retain out of sums received on principal's account, all moneys due to himself in respect of advances made or expenses properly incurred by him in conducting such business,  and also such remuneration as may be payable to him for acting as agent. (Section 217, Indian Contract Act).
2. Right to Remuneration:-An agent is entitled to his commission in the absence of any special contract, after the completion of the business (Section 219, Indian Contract Act). But he is not entitled to his remuneration in respect of that part of the business which he has misconducted. (Section 220, Indian Contract Act).    .
The remuneration is payable only in rupees when the work for which the agent was appointed accomplishes. Before the accomplishment of work no remuneration is payable to the agent. [Saraswati Devi v. Motilal, AIR 1982 Raj. 108].
3. Right of Lien:-In the absence of any contract to the contrary an agent is entitled to retain goods, papers and other property, whether movable or immovable, of the principal received by him, until the amount due to himself for commission, disbursement and services in respect of the same has been paid, or accounted for to him. (Section 221, Indian Contract Act).
Right of lien is meant to make good the expenses incurred by the agent during the exercise of his power. The right is extinguished in following three circumstances:-
(1) Immediately after the possession is lost, the right of lien comes to an end. Lien is a possessory right.
(2) It can be extinguished by waiver. It may be waived by way of an agreement express or implied.
(3) The agent's lien is subject to the contract to the contrary. If it has been excluded it cannot operate.
4. Right to be indemnified:-An agent is entitled to be indemnified by the principal against the consequences of all lawful acts done by the agent in exercise of the authority conferred upon him. (Section 222, Indian Contract Act).
5. Agent to be indemnified against consequences of acts done in good faith:-An agent is entitled to be indemnified by the principal against the consequences of acts done in good faith though they cause an injury to the rights of third person. (Section 223, Indian Contract Act).
A, a decree-holder is entitled to execution of B's goods requires the officer of the court to seize certain goods, representing them to be the goods of B. The officer seizes the goods, and is sued by C, the true owner of the goods. A is liable to indemnify the officer of the sum which he is compelled to pay to C in consequence of obeying A's direction.
An agent, who is employed to do some criminal act is, however, not entitled to be indemnified by the principal. (Section 224). [Firm of Pratap Chandra Nepali v. Firm of Venkat Sethi and Sons, AIR 1974 S. C. 1223].
A employs B to beat C, and agrees to indemnify him against all consequences of the act. B, thereupon beats C, and had to pay damages to C for so doing. A is not liable to indemnify B, for those damages.
6. Right to get compensation:-An agent is entitled' to be compensated by the principal for any injury caused to him by the principal's neglect or want of skill (Section 225, Indian Contract Act). But he has no right to get compensation where the injury results from his own negligence or acquiescence after knowledge of the risk of the agency, for the agent is presumed to undertake ordinary consequences of the risk incidental to the agency.
            A employs B as a bricklayer in building a house, and puts up the scaffolding himself. The scaffolding is unskillfully put up and B is consequently hurt. A must make compensation to B.
7. Agent cannot personally enforce, nor be bound by contracts, on behalf of principal (Section 230):--ln S.P.L. Ltd. v. Solar Turbines International Co., AIR 2007 (NOC) 82 Cal., it was held that ordinarily an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor he is personally bound by the same. But if there is a contract to that effect that an agent can enforce the contract entered into by him on behalf of his principal he can do so. Similarly he will be bound by the said contract entered into by him on behalf of the principal. Therefore, the precondition is while dealing with transaction the agent must have entered into a contract for and on behalf of the principal. If there is no such contract and if he acts otherwise, then under the situation under Section 230 of the Act, the implied bar to charge him or to enable him to charge is not available.

Courtesy:- Legal Point Foundation

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