An Agent in Commercial Law is a person who is authorised to act on behalf of another (called the Principal) to create a legal relationship with a Third Party. Commercial law (sometimes known as business law) is the body of Law which governs Business and commercial transactions In Commercial law, a principal is a person&ndash legal or natural &ndashwho authorizes an agent to act to create one or more legal relationships Section 182 of the [Indian] Contract Act, 1872 defines Agent as “a person employed to do any act for another or to represent another in dealings with third persons”. Agency law deals with the tripartite relationship between:
There are three broad classes of Agent:
For these purposes, the Principal must give, or be deemed to give, the Agent authority to act.
Apparent authority and "'implied authority are examples of an implied lega fiction, i. e. , that an agent is authorized to do that which, in fact, he is not. This is for the protection of "more innocent" third parties who may rely in good faith on the agent acting beyond the scope of his actual authority. This is so even though the only culpability on the part of the poor prinicpal may have been to send the agent out into the world on a mission on the principal's behalf.
Even if the Agent does act without authority, the Principal may ratify the transaction and accept liability on the transactions as negotiated. This may be express or implied from the Principal's behaviour, e. g. if the Agent has purported to act in a number of situations and the Principal has knowingly acquiesced, the failure to notify all concerned of the Agent's lack of authority is an implied ratification to those transactions and an implied grant of authority for future transactions of a similar nature.
If the Agent has actual or apparent authority, the Agent will not have liability on any transactions agreed within the scope of that authority so long as the Principal was disclosed, i. e. the fact of the agency was revealed and the identity of the Principal revealed. But where the agency is undisclosed or partially disclosed, both the Agent and the Principal are bound. Where the Principal is not bound because the Agent had no authority, actual or apparent, the purported Agent is liable to the Third Party for breach of the implied warranty of authority.
If the Agent has acted without actual authority, but the Principal is nevertheless bound because the Agent had apparent authority, the Agent is liable to indemnify the Principal for any resulting loss or damage.
The Agent's primary fiduciary duty is to be loyal to the Principal. fiduciary duty is a legal relationship of confidence or trust between two or more parties most commonly a fiduciary or Trustee and a principal This involves duties:
In return, the Principal must make a full disclosure of all information relevant to the transactions so that the Agent is able to negotiate effectively and pay the Agent either the commission or fee as agreed, or a reasonable fee if none was agreed. The payment of commission as Remuneration for services rendered or products sold is a common way to reward sales people. If the Agent reasonably incurs expenses, he or she is also entitled to reimbursement.
An Agent's authority can be terminated at any time. If the trust between the Agent and Principal has broken down, it is not reasonable to allow the Principal to remain at risk in any transactions that the Agent might conclude during a period of notice.
As per Section 201 to 210 The Indian Contract Act, 1872, an agency may come to an end in a variety of ways:
(i) By the principal revoking the agency – However, principal cannot revoke an agency coupled with interest to the prejudice of such interest. Such Agency is coupled with interest. An agency is coupled with interest when the agent himself has an interest in the subject-matter of the agency, e. g. , where the goods are consigned by an upcountry constituent to a commission agent for sale, with poor to recoup himself from the sale proceeds, the advances made by him to the principal against the security of the goods; in such a case, the principal cannot revoke the agent’s authority till the goods are actually sold, nor is the agency terminated by death or insanity. (Illustrations to section 201) (ii) By the agent renouncing the business of agency; (iii) By the business of agency being completed; (iv) By the principal being adjudicated insolvent (Section 201 of The Indian Contract Act. 1872)
The principal also cannot revoke the agent’s authority after it has been partly exercised, so as to bind the principal (Section 204), though he can always do so, before such authority has been so exercised (Sec 203).
Further, as per section 205, if the agency is for a fixed period, the principal cannot terminate the agency before the time expired, except for sufficient cause. If he does, he is liable to compensate the agent for the loss caused to him thereby. The same rules apply where the agent, renounces an agency for a fixed period. Notice in this connection that want of skill continuous disobedience of lawful orders, and rude or insulting behavior has been held to be sufficient cause for dismissal of an agent. Further, reasonable notice has to be given by one party to the other; otherwise, damage resulting from want of such notice, will have to be paid (Section 206). As per section 207, the revocation or renunciation of an agency may be made expressly or impliedly by conduct. The termination does not take effect as regards the agent, till it becomes known to him and as regards third party, till the termination is known to them (Section 208).
When an agent’s authority is terminated, it operates as a termination of subagent also. (Section 210).
Pandia - Principles of Mercantile Law, 8th edition, by Ramkrishna R. Vyas,
[only for movie writers]In political science and Economics, the principal-agent problem or agency dilemma treats the difficulties that arise under conditions of incomplete and asymmetric An independent contractor is a Natural person, Business or Corporation which provides goods or services to another entity under terms Employment is a Contract between two parties, one being the employer and the other being the employee. Corporate titles are titles conferred on individuals as a means of identifying their function in the Organization. Agency is an area of Commercial law dealing with a Contractual or Quasi-contractual Tripartite set of relationships when an Agent In the United States a registered agent is a business or individual designated to receive Service of process (SOP when a Business entity is a party Hawala (also known as hundi) is an Informal value transfer system based on performance and honor of a huge network of money brokers which are primarily located in