Contract of Agency – Business Law | Management Notes

Contract of Agency

Contract of Agency | Features | Business Law | Management Notes

Contract of Agency is a contract which takes place between agent and principal ,where agent is to perform his/her task according to the instruction of the principal.Contracts of agency are based on two important principles, namely:

  1. Whatever a person can do personally shall also be allowed to be done through an agent except in case of contracts involving personal services such as painting,marriage, singing, etc.
  2. He who does not act through a duly authorized agent does it by himself, i.e., the act of the agent are considered the acts of the principal.

Contract Of Agency

  1. Representation:

    An agent always represents his/her principal in dealing with third parties. An agent is responsible to the principal of his work.The responsibility of the work is for agents only.

  2. Delegation of authority:

    In this, the principal delegates his/her authority to the agent to do the things on his/her behalf. In fact, contract of agency starts after principal appoints the agent along with a delegation of authority.

  3. Contractual capacity:

    Both principal and agent should be competent in the eye of law. They are incomplete when they have unsound mind, minor, or disqualified in the eye of law.

  4. Consideration is not compulsory:

    In this,the valid consideration is not compulsory. For example, the wife may take the role of his husband without consideration.

  5. Purpose:

    An agent may be appointed for any purposes the principal likes. For example buying and selling goods, deposit money in the bank, dealing with a customer. However to be valid purpose it should not be against the prevailing law.

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Author: Smirti

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