Agency contract

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 Contract of Agency: Definition, Creation, and Types

Agent

Definition: An agent is a person who performs services for another person, known as the principal, under an express or implied agreement. The principal has control or the right to control the manner and means of performing the services. An agent may act on behalf of the principal even without receiving compensation. The agency agreement may be oral or written.

Key Points:

  • Authority: An agent has authority to act on behalf of the principal as specified by the principal.
  • Power of Attorney: This is a common form of agency where the agent is granted the authority to act in specified matters on behalf of the principal.

Agency

Definition: Agency is an agreement, either express or implied, where the principal confides the management of some business to the agent, to be transacted in the principal's name or on their account. The agent assumes the responsibility to conduct the business and render an account of it.

Key Points:

  • Express Agency: Created by explicit agreement, either by deed, in writing not by deed, or verbally.
  • Implied Agency: Inferred from the relationship and the nature of the employment, without any express appointment.
  • Maxim: The legal principle "qui facit per alium facit per se" means "he who acts through another does the act himself."

Creation of Agency

An agency can be created through various means: express agreement, implied conduct, estoppel, necessity, or ratification.

Types of Agency Contracts:

  • Express Agency:
    • Creation: Can be made orally or in writing.
    • Example: Power of Attorney, which can be general (broad powers) or special (specific act).
  • Implied Agency:
    • Arises: From conduct, the situation of parties, or necessity.
  • a. Agency by Estoppel (Section 237):
    • Definition: Occurs when a principal allows a third party to believe that someone is their agent. The principal is estopped from denying the agency if third parties rely on this belief and enter into contracts.
    • Example: If a company allows its employee to act as an authorized representative, the company cannot later deny the employee's authority.
  • b. Wife as Agent:
    • Presumption: If a husband and wife are living together, the wife is presumed to have the authority to pledge the husband's credit for household necessities.
    • Rebuttal: The husband can avoid liability by proving:
      • He expressly warned tradesmen not to supply goods on credit.
      • He expressly forbade the wife to use his credit.
      • He already supplies the necessary articles.
      • He provides a sufficient allowance.
  • c. Agency of Necessity (Sections 188 and 189):
    • Definition: Arises when a person entrusted with another's property incurs unauthorized expenses to protect it.
    • Example: A railway company taking care of an animal in transit when the consignee is unavailable.
  • d. Agency by Ratification (Sections 169-200):
    • Definition: Occurs when a person acts without authority or beyond their authority, and the principal subsequently ratifies the action. This binds the principal as if the agent had been originally authorized.
    • Effect: Ratification makes the contract binding from the time of the original contract, not from the time of ratification.