What is Agent? The agent has been defined under section 182 of the Contract Act 1 872 as follows:
“An agent is a person employed to do an act for another or to represent another in dealings with the third person. The person for whom such act is done, or who is so represented, is called the principal. It is impossible for every person to do everything himself. The law allows him to be represented in the performance of his legal acts by another.
DEFINITION OF AGENT
DAVID-A-G-SARRE : An English author defines the Agent as’ follows:
“An agent is a person who is employed for the purpose of bringing his principal into contractual relations with third parties and the person who employs the agent is called Principal.
A sends 1000 units of his product to B to be sold for Rs. 10 each and he allows 5% commission to B on total sales. This will be treated as a contract of agency. A will be known as principal and B will be known as an agent.
KINDS OF AGENTS
The following are the major kinds of agents:
1. COMMISSION AGENTS
A commission agent is a person who buys and sells goods in the market, on behalf of his employer on the best terms and conditions and who receives a commission as remuneration for his services.
2. DEL-CREDERE AGENTS
A Del-Credere agent is a person who for extra remuneration provides a guarantee to his principal for the performance of the contract by the third party. He indemnifies his principal for any loss caused to him by the third party. If the third party (debtor) does not make payment or becomes insolvent, the Del-Credere Agent has to make payment to his principal.
Illustration: A who is the agent of B sells B’s goods on credit and accepts the responsibility that if the amount is not recovered from the credit customers, he will pay from his own pocket and for this service he gets extra commission. A is a del-creder agents.
A factor is a commission agent who is entrusted with the possession of goods and he can sell them with his own name. He looks like the real owner of the goods entrusted to him. He can also advance money by pledging the same goods.
Illustration: A the owner of the goods sends his goods to B to be sold on A’s behalf and allows B to get a commission from sales, B will stand as a factor.
He is also a commission agent. He is not entrusted with possession of goods and can not sell the goods with his own name. He brings together to the seller and buyer into contractual relations and if the transaction takes place, he is entitled to get a commission.
Illustration: A who is sitting at Bahawalpur, brings B and C into the contractual position who are sitting at Lahore and Karachi and gets a commission from B and C. In this case A is working as a broker.
An auctioneer is a person who sells goods to the highest bidder at a public sale for a commission. He is the agent of the buyer as well as the owner of the goods.
Where the agental authority is given to several persons without mentioning that any one or more of them shall be authorized to act in the name of the whole body, they have a joint authority and are called co-agents.
A sub-agent is a person employed by and acting under the control Of an original agent in the business of agency Sec. 191.
AGENT AND HIS RIGHTS
According to section 182. “An agent is a person employed to do any act for another or to represent another dealing with third persons”‘. So an agent is a person who is employed by the principal in order to represent him in business dealings with third parties.
RIGHTS OF AN AGENTS
The rights of agents against his principal are as under:
1. RIGHT TO RETAIN MONEY
An agent has right to retain, out of any sums received on account of the principal in the business of agency for any advances made, or expenses properly incurred by him in the business of agency or for any remuneration payable to him for acting as agent. Sec, 217.
2. RIGHT OF REMUNERATION
An agent is entitled to his remuneration in the absence of any special contract, after the completion of the business. But an agent is not entitled to any remuneration in respect of that part of the business which he has misconducted Sec. 220.
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 him for commission disbursements and services in respect of the same, has been paid or accounted for to him, Sec. 221.
4. RIGHT TO INDEMNITY
The employer of the agent is bound to indemnify him against the
consequences of all lawful acts done by such agent in the exercise of the authority conferred upon him Sec. 222.
5. RIGHT OF COMPENSATION FOR ACTIONS
An agent is entitled to be indemnified by the principal against the consequences of an act done by the agent in good faith, though they cause an injury to the rights-of third person. Sec. 223.
6. RIGHT OF COMPENSATION FOR PRINCIPAL’S NEGLECT
The principal must make a compensation to his agent in respect of injury caused to such agent by the principal’s neglect or want of skill.
DUTIES OF AN AGENTS
The duties of agents of his principal are as under:
1. TO CONDUCT BUSINESS
An agent is bound to conduct the business of his principal. according to the directions given by the principal or in the absence of any such directions according to which prevails in doing a business of the same kind at the place where agents conducts such business. Sec.211.
2. AGENT’S SKILL AND DILIGENCE
The agent is bound to conduct the business of the agency with as much skill as is generally possessed by person engage in similar business unless the principal has notice of his want of skill. Sec. 212.
3. AGENTS ACCOUNTS
An agent is bound to render proper accounts to his principal on demand. Sec. 213.
4. COMMUNICATION WITH PRINCIPAL
It is the duty of agents, in cases of difficulty, to use all reasonable diligence in communication with his principal in order to obtain his instructions. Sec. 214.
5. CANCELLATIONS TRANSACTION
When the agent deals, on his own account, in the 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 agents, or that the dealings of the agent have been disadvantageous to him.Sec7215.
6. RETURN OF PROFITS
If an agent deals in the business of agency without the knowledge of his principal, the agents is bound to return all the profit earned from any such transaction.
7. PAYMENT OF ALL SUMS
An agents is bound $0 pay to his principal all sums received on his account after deducting remuneration of his services etc.sec. 218.
Illustration: A is a driver of B’s delivery van. While returning from other city he carry the goods of a person on hire for Rs. 1000. Now he is bound to return this money to his principal (the owner of the van).
8. MISCONDUCT OF BUSINESS
An agents who is guilty of misconduct in the business of agency is not entitled to any remuneration in respect of that part of the buyness which he has misconduct. Sec. 220.
9. TO TAKE REASONABLE STEPS
When an agency is terminated due to the death or insanity of the principal, the agent is bound to take all reasonable steps in order to protect the interest of the legal representatives of the principal.
10. TO OBEY LAWFUL INSTRUCTION
An agent is bound to accept and obey all lawful instructions given by the principal from time to time for the business of the agency.
PERSONAL LIABILITIES OF AN AGENTS
Sections 230. 233 and 234 are relevant to the personal liabilities of an agents and he is personally liable under the following cases:
1. When the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad.
2. Where the agent does not disclose the name of his principal.
3. Where the name of the principal is disclosed but he can not be sued, for example, agents work for a minor.
4. When he enters into a contract where he is expressly declared to be personally liable.
5. When an agents enters into a contract for a principal who is actually not in existence. For example, promoters acting for the company which is yet to be incorporated.
6. When the agents act without having authority from his ‘ principal.
7. When the agents sign the contract in his own name without disclosing that he is signing on behalf of his principal.
8. When the agents pay or receive money by mistake or fraud.