RIGHT OF AN AGENT TO PRINCIPAL


Rights of Agent



1. Agent’s Lien

An agent is entitled to retain goods, papers and other property, whether movable or immovable, till the amount due to him for commission and disbursement etc in respect of the same has been paid.


2. Agent’s Right to Remuneration

The remuneration is generally specified in the agreement and may take the form of salary or commission or both.


3. Agent’s Right to an Indemnity

The agent may in the course of his duty incur liabilities or make payments of money for the principal, and he has a right to be indemnified against such liabilities and to recover any money paid.


4. Right of Compensation

He is entitled to be compensated by the principal in respect of injury caused to him by the principal’s neglect.


5. Right of Retaining

An agent has right to retain, out of any sums received an account of the principal in the business of the agency, 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. (Sect. 217)

Reading: Forms of Business Organization

6. Right of Commission after rendering the Services

The commission is generally of the services but if “an agent who is guilty of misconduct in the business of the agency is not entitled to any remuneration in respect of that part of the business which he has misconducted”. (Sect. 217)




Duties of an Agent

1. Conducting Principal’s Business

An agent is bound to conduct the business of his principal according to the directions given by the principal, or in the custom which prevail in doing business of the same kind at the place where the agent conducts such business. (Sect. 211)

2. Requirement of Skill and Diligence

The agent must carry out his work with ordinary skill and diligent. (Sect. 212)

Reading: Rights & Liabilities of Carrier

3. Submission of Accounts

An agent is bound to render proper accounts to his principal on demand. (Sect. 213)

4. Communicating with his Principal

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. (Sect. 214)

5. Separation of Accounts

The agent has a duty to keep the principal’s property separate.

6. Payment of Sum

The agent is bound to pay to his principal all sums received on his account. (Sect. 218)

7. In Compliance with Lawful Instructions

The agent is under a duty to obey the lawful instructions of his principal.
Reading: How to terminate Agency?

8. Undue Advantage

If the agent takes any secret profit or undue advantage or bribe, the principal has right to dismiss the agent without notice.

9. Fiduciary Duty Towards his Principal

The agent has a fiduciary duty towards his principal. The agent must not use his position for his personal benefit to the detriment of his principal, and he must not become a principal as against his employer.

Liabilities of an Agent

1. Liability in case of payment by mistake or fraud

Where an agent receives money by mistake or fraud from third parties, he can be sued there fore.

2. Liability in Case of Bill of Exchange

The general rule is that an agent is liable on a bill of exchange if the sign it without making it clear that he is signing on behalf of a named principal.

3. Liability in Case of Foreign Principal

Where as agent acts for a foreign principal, the presumption is that credit has been given to agent and not to the foreign principal. He can therefore, himself sue and be sued on the contract.

4. Liability in Case of Undisclosed Principal

The agent is also presumed to be intended to be personally liable where he acts for an “Undisclosed Principal”.

Reading: The Right way to Speak in Business Life

5. Third Party Insistence

Where the third party insists that the agent should accept the liability before he will make the contract. If the agent has a greed to do this, he will be liable a long with the principal. In other cases the agent may have agreed to be the principal’s guarantor.

6. Liability in case of Breach of Warranty

Where as agent exceeds his authority he is liable to the third party for breach of warranty of authority:
  • i. if the third party does not know of the lack of authority; and
  • ii. If the third party suffers loss as a result of this lack.

7. Liability for Dealing Person

In cases where the agent is personally liable, a person dealing with him may hold either him or his principal or both of them liable. (Sect. 233)

8. Liability of Pretended Agent

A person untruly representing himself to be the authorized agent of another, and thereby inducing a third person to deal with him as such agent, is liable, if his alleged employer does not ratify his acts, to make compensation to the other in respect of any loss or damage which he has incurred by so dealing. (Section 235)

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