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.
The
agent has the following duties towards his principal:
1. Duty to follow directions or
customs:-An agent is bound to carry out the business-
entrusted to him according to the directions of principal. In the absence of
his directions the agent must follow the customs prevailing in the business of
the same kind at the place. If the agent makes any departure from the
instructions of the principal or the custom, he does so at his own risk.
(Section 211, Indian Contract Act). The agent is, however, not bound to take
any separate or special care (Padam Parshad v. The Punjab National Bank Ltd.,
AIR 1974 P & H 22).
Illustration
A,
an agent engaged in carrying on for B, a business in which it is the custom to
invest from time to time at interest, the moneys which may be in hand, omits to
make such investments. A must make good B, the interest usually obtained by
such investment.
2. Duty to take reasonable care and
skill:-An agent must conduct the business of the agency
with as much skill as is generally possessed by persons engaged in similar
business unless the principal has a notice of his want of skill. The agent is
always bound to act with reasonable diligence. The agent will have to make
compensation to his principal for any direct loss or damage arising from his
own neglect, want of skill or misconduct (Section 212, Indian Contract Act).
3. Duty to keep accounts:-An
agent is bound to render proper accounts to his principal on demand (Section
213, Indian Contract Act).
4. Duty to behave like a man of
ordinary prudence:-An agent is bound, in cases of
difficulty, to use all reasonable diligence in communicating with his
principal, and in seeking to obtain his instruction. (Section 214, Indian
Contract Act). In case there is no time to consult the principal, he may act
with the discretion of an ordinary prudent man.
5. Duty to avoid conflict of
interests:-When an agent deals, on his own account,
in business of agency without principal's consent the principal may repudiate
the transaction if the case shows either that any material fact has "been
dishonestly concealed from him by the agent or that the dealings of agent have
been disadvantageous to him (Section 215, Indian Contract Act).
Illustration
A
directs B to sell A's estate. B buys the estate for himself, in the name of C.
A on discovering that B has bought the estate for himself, may repudiate the
sale if he can show that B has dishonestly concealed any material facts, or
that the §ale has been disadvantageous to him.
6. Duty to hand over secret profits
or duty not to earn' secret profits:-If the agent, without
the knowledge of his principal, deals in the business of the agency on his own
account the principal is entitled to claim from him any profit which has
resulted from the transaction (Section 216, Indian Contract Act).
7. Duty to give all sums received
under agency:-An agent is bound to pay to his
principal all sums received on his account subject to deduction, such as, money
due to himself in respect• of advance made or expenses properly incurred, and
also the remuneration due to him (Section 218, Indian Contract Act).
8. Duty not to delegate:-As
a general rule an agent has no right to delegate his authority to a third
person without the consent of his principal except in cases where the very
nature of the business may require the delegation of authority. (Section 190,
Indian Contract Act).
9. Duty to protect the interest entrusted
to him on death or insanity of principal:-An agent is
bound to take on behalf of the representatives of his late principal all
reasonable steps for the protection and preservation of the interest entrusted
to him when an agency is terminated by the death or insanity of the principal
(Section 209, Indian Contract Act).
Courtesy:-
Legal Point Foundation
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