Contract Of Agency

Question 1

2 situations when ratification will not be allowed

Answer 1

1. No valid ratification can be made by a person whose knowledge of the facts of the case is materially defective
2. Ratification will have the effect of subjecting a third person to damages or of terminating any right or interest of the third person

Question 2

Rules governing ratification

Answer 2

1. Contract mst be made by the agent on account of the principal and not on account of himself
2. Principal must be in existence at the time of act ( not a newly formed company- b4 it’s incorporation)
3. Void Abnitio no R
4. P can ratify only if at the time of ratification he himself could have done the act. ( insure for an already sunken ship)
5. Express or implied
6. No if knowledge of facts materially defective
7. Ratification pertains to the whole of the transaction
8. No if affecting the right of third party or damages
9. When time limited- within that time
10. When no time limit - within reasonable time
11. Ratification is retrospective in effect

Question 3

3 cases when agent is personally liable

Answer 3

1. When the contract is made by the agent for the sale or purchase of goods for a merchant resident abroad
2. When the agent doesn’t disclose the name of principal
3. When p is diclosed but cannot be sued

Other cases

1. Agency coupled with interest
2. when the contract so provides
3. Fixed by usage
4. Without and beyond authority
5. Fraud in matter beyond his authority
6. Pretends
7. Promoters of a company intended to be but in fact not yet

Question 4

2 sections for liabilty of a pretended agent

Answer 4

S 235 - untruly represents himself as agent - compensation or damage

236- 3rd party rt to compensation but has no rt to compel the performance of a contract

Question 5

Case or pretended agent

Answer 5

Collen vs wright

If honest- breach of warranty of authority
If knowingly- sue for deciet

Question 6

test of agency

Answer 6

1. lord herchel observed in Kennedy vs DeTafford- abused
2. Has he any power to represent the principal, ie making the principal answerable to 3rd person
3. Dinbai Wadia vs Farukh - test is not of physical control but right to control. If the principal has rt to control the agent wrt that act
4. Terminology used - no matter- “ agent” in contract, but not so in eyes of law if real relation is that of principal and principal

Question 7

Agency coupled with interest - 3 key points

Answer 7

1. Sec 202
2. Agent himself has interest in the property which forms the subject matter of agency , cannot be revoked unless an express contract to the contrary
3. Agents interest should be a substantial one and such that agency cannot be revoked without causing loss to the agent . In such cases revocation of contract would be equivalent to breach of faith against the agent
4. Mere prospect of remuneration is not INTEREST under this section

A gives b authority to sell land.. Pay himself the debts due to him from a

Question 8

Agents duty to principle

Answer 8

1. Direction, custom
2. Reasonable diligence, skill
3. Difficulty- communicate, direction.
4. Hide material fact, disadvantage
5. Pricipal had right to claim benifits from hidden business transaction
6. Proper accounts

Question 9

Contracts where principal is undisclosed

Answer 9

Where agent has authority but doesn’t disclose agency

1. Enforceable by/ against agent
2. 3rd person may sue at his option either p or a and conversely

But the rt of UP to sue 3 rd party - 3 limitations

1. Authority of agent must have existed at the time of the contract
2. if The personality of the agent in the circumstances a matter of vital importance , then p not allowed to intervene
3. Met with all the defences of the 3 rd party against agent

Question 10

Contract of agency - husband and wife

Answer 10

1. Generally not. But via contract, holding out , ratification
2. Liable for wife’s debt only if he has given E or I sanctioned what wife dues

Presumption of agency - goods for household purpose

3. Wife agent of necessity - pledge husbands debt for necessities of life
4. When lives apart for no fault of husband

But liable to tradesman who was induced to deal with wife, failure of husband to give due notice

Question 11

Liablity of subagent towards principal is not direct, except in case of fraud and wilful wrong

Answer 11

1. Delegatus non potest delegare-
   Rule embodied in sec 190- cannot lawfully employ another ..unless
   - custom - may
   - nature - must
2. Rationale - confidence in the honesty and working capacity of agent
3. Principal and subagent
   - when properly appointed - responsible for and represented by
   - when not properly appointed - p not reperesented or responsible for acts of SA, SA not responsible to P unless for fraud and wilful wrong, agent repository both to p and 3rd party
4. Summan Singh vs NC bank of new York
   Directed NC bank to transfer money to a particular person. Bank instructed its Bombay branch. Bombay bank appointed Punjab national bank to do the act. PNB delivered money to wrong person. Plaintiffs action against pnb failed on the principle that SA not liable to P
5. In case of fraud and wilful wrong plaintiff can bring action against the SA ( nensukdas vs birdichand )

Question 12

Section for substituted agent

Answer 12

194

Question 13

Points of comparison between agency by ratification vs agency by estoppel

Answer 13

1. Act of principal
2. Knowledge of principal
3. Authority of agent at the time of action
4. Time when principle is bound

Question 14

Sections dealing with ratification

Answer 14

196-200

Question 15

Effect of ratification

Answer 15

Ratification relates back to contract of agency ie its retrospective in effect.

Write the case of BOLTON vs LAMBERT. Is b entitled to specific performance. Bs ratifiction relates back to the moment A and C signed the contract. Hence As revocation is inoperative

Question 16

When can principal revoke contract of agency without incurring breach of contract

Answer 16

A principal may unilaterally cancel an agency without incurring liability for breach of contract under the following instances:
1. misconduct or habitual intoxication of the agent which interferes with his/her employment,
2. the refusal of the agent to obey reasonable instructions or to permit the principal to make a proper audit of his/her accounts,
3. serious neglect or breach of duty by the agent,
4. dishonesty or untrustworthiness of the agent,
5. the agent’s failure to pay an indebtedness owing to the principal,
6. disloyalty of the agent like using the agency to make secret profits.

Question 17

5 ways in which agency is terminated under article 201. What are the other ways

Answer 17

1, when principal revokes
2. Agent renunciation
3. Death or insanity of agent or principal
4. Insolvency of principal ( not agent )
5. Business of agency is completed

201 not exhaustive . Other reasons
1. Destruction of subject matter of agency
2. Other incapacity of principal or agent
3 agreement between principal or agent
4. Efflux of time mentioned in the contract
5. When principals authority over subject matter comes to an end

Question 18

Rules of revocation.

Answer 18

1. 203 - at any time ( unless agency coupled with interest ) before authority exercised so as to bind the principle
2. Cannot revoke if partly exercised ,
3. If contract is for a specific period of time, must give compensation if revocation is without sufficient cause
4. Sufficient notice to be given before revocation ,otherwise the principal should make good for the damage incurred by the agent
5. Termination of an agency doesn’t occur wrt agent until it’s known to him and wrt third part until it’s known to them
6. The termination of an agent causes termination of authority of all subagent appointed by him

Question 19

Rights of agent

Answer 19

1. Right of retainer
2. Renumeration
3. Lien of goods paper and other property obtained in the course of agency
4. Indemnity
   - for any lawful act done in the course of agency
   - for an act done in good faith which causes injury to third person

Question 20

Fraud of agents

Answer 20

1. Fraud on principal
2. 238
3. Qui facit per alium facit per she
4. Pollock - not because authorised by me or represents me, but because he handles my affairs and I am duty bound to see that my affairs are done with due regard to safety of others
5. Lloyd vs grace smith
6. Also torts - agent employed to collect evidence for principal in a pending law suit, offers bribe to witness

Question 21

Agency by estoppel

Answer 21

1. Art 237- when an agent does an unauthorised act, principal bound by the act , when he by his word or conduct induced a third person to believe that such acts were within the scope of agents authority

Ex: a consigns b with goods to be sold not below a reserved price

Lord ellenbrough - acts of the people and external Indica of property, and not to pvt communications which may pass between principal and his broker