DUTIES OF AN AGENT

DUTIES OF AN AGENT – Where the relationship of agency exist, following are the duties of an agent which he need to perform  towards his  principal –

  • Duty to follow principal’s directions or customs (Sec. 211): The first duty of every agent is to act within the scope of the authority conferred upon him and perform the agency work according to the directions given by the principal. When the agent acts otherwise, if any loss be sustained, he must make it good to the principal, and if any profit accrues, he must account for it.
  • Duty to carry out the work with reasonable skill and diligence (Sec. 212): The 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 notice of his want of skill. Further, the agent must act with reasonable diligence and to the best of his skill.
  • Duty to Render Accounts (Sec. 213): It is the duty of an agent to keep proper accounts of his principal’s money or property and render them to him on demand, or periodically if so provided in the agreement.
  • Duty to communicate (Sec. 214):It is the duty of an agent, in cases of difficulty, to use all reasonable diligence in communicating with his principal, and in seeking to obtain his instructions, before taking any steps in facing the difficulty or emergency.
  • Duty not to deal on his own account (Sees. 215 and 216): An agent must not deal on his own account in the business of agency; i.e., he must not himself buy from or sell to his principal goods he is asked to sell or buy on behalf of his principal; without obtaining the consent of his principal after disclosing all material facts to him. If the agent violates this rule, the principal may repudiate the transaction where it can be shown that any material fact has been knowingly concealed by the agent, or that the dealings of the agent have been disadvantageous
  • Duty not to make any profit out of his agency except his remuneration (Sees. 217 and 218): An agent stands in a fiduciary relation to his principal and therefore he must not make any profit (secret profit) out of his agency. He must pay to his principal all moneys (including illegal gratification, if any) received by him on principal’s account. to the principal.
  • Duty on termination of agency by principal’s death or insanity (Sec. 209): When an agency is terminated by the principal dying or becoming of unsound mind, the agent must take, on behalf of the representatives of his late principal, all reasonable steps for the protection and preservation of the interests entrusted to him.
  • Duty not to delegate authority (Sec. 190): Subject to six exceptions stated below, an agent must not further delegate his authority to another person, but perform the work of agency himself.

 

DELEGAION OF AUTHORITY BY AGENTagent
As per Sec 190 “An agent cannot lawfully employ another to perform acts which he has expressly or impliedly undertaken to perform personally, unless by the ordinary custom of trade a sub-agent may, or from the nature of the
agency, a sub-agent must, be employed”. Accordingly an agent cannot delegate his power and duties to another unless he get the express authority of the principal, except in certain cases. Following are the cases in which agent can delegate his authority –
1. Where the principal has expressely permitted delegation of such power.
2. Where the principal has impliedly, by his conduct,allowed delegation of such authority. like, a broker may appoint a clerk to transact on behalf of his client
3. Whereby the ordinary custom of trade a sub-agent may be employed. Like, manager of a shop may appoint a sales agent.
4. Where the a acts to be done are fully ministerial and do not involve the exercise of discretion . e.g. clerical or routine work.
5. Where unforeseen emergencies arise which makes it necessary to appoint sub-agent.

6. Where the very nature of agency makes it necessary to appoint a sub-agent.

RIGHTS OF AN AGENT

  1. Right to receive remuneration (Sec 219)– unless agency is done gratuitously, agent is entitled to get his agreed remuneration once he has competed his work. An agent who is guilty of misconduct in the business of agency is not entitled to receive anu remuneration in respect of that part of business which he has misconducted (Sec 220).
  2. Right of retainer ( sec 217) –  Right of Retainer: According to section 217 of the Indian Contract Act the agent has the right to retain out of sums received on account of the principal the money due to himself/ herself in respect of his /her remuneration or advances made or expenses properly incurred by him in conducting the business of agency.
  3. Right of Lien: According to section 221 of the Indian Contract Act an agent has the right to retain goods, papers and other property, whether movable or immovable, of the principal received by him/her until the amount due to himself/herself for commission, disbursements and services in respect of the same has been paid or accounted for to him / her. The lien is a particular lien but by a special contract the agent may have a general lien
  4. Right to Compensation: According to section 225 the agent has the right to be compensated for injuries sustained by him/her due to the principal’s neglect or want of skill.
  5. Right of Stoppage of Goods in Transit: An agent can stop the goods in transit to the principal if he or she has purchased the goods either by incurring a personal liability or the principal has become insolvent.
  6. Right to be indemnified against consequences of lawful acts. (Sec222). An agent has also the right to be indemnified against all lawful acts done by him in the exercise of the authority conferred upon him. But as per sec 224 it may be noted that agent cannot claim indemnity in respect of acts which are apparently unlawful or criminal.
  7. Right to be indemnified against consequences of acts done by him in gooda faith, (Sec 223).
  8. Right to compensation for premature revocation of agency (Sec. 205): In case there is an express or implied contract, that agency should be continued for any fixed period of time, the principal is liable to pay compensation to the agent for a premature revocation.

 

Textbook source- M C Kuchhal & K R Bulchandani

http://www.shareyouressays.com/92181/eight-important-duties-of-an-agent-towards-the-principal