PRINCIPAL'S DUTY« 8I pur, under instructions from*A of Calcutta, contracts with C to deliver certain goods to him. A does not send the goods to B, and, C sues B for breach of contract. B informs A of the syit, and A authorizes B to defegd the suit. B defends the suit, and is compelled to pay damages and costs, and incurs expenses. A is hable to B for such damages, costs and expenses. (b) Where the principal employs an agent to do an act, and an the agent does the act in good faith, ind?) Etincipal is bound she principal is liable to ‘doen the UGsequerces of acis'done agent agaist the consequences of that an good faith; act, though it causes an injury to the right of third persons [Sec. 223]. Illustration: A, a decree-holder and entitled to execution of B’s goods, requires the officer of the Court to seize certain goods, yepresenting them to be the goods of B. ‘The officer seizes the goods, and is sued by C, the true owner of the goods. A is liable fo indemnify the officer for the sum which he is compelled to pay to C, in consequence of obeying A’s directions. . (c) Where the principal employs an agent to do a criminal _. act, the principal 1s not hable to the naff? Principal 3s “not agent to indemnify him against the ‘Agent against” conse. consequences of that act [See. 224]. quences of criminal act; Illustration: A employs B to beat C, and agrees to mderinify him against all consequences of the act. B thereupon beats C, and has to pay damages to C for so doing A is not liable to mdemnify B for those damages. (d) The principal must make compensation to his agent in eae respect of injury caused to such agent (d) Principal ra bound by the principal’s neglect or want of fo compensate Agent for Pin! sec. 225]. "Illustration: cipal's neglect etc. ; employs B as a bricklayer in building a house, and puts up the scaffolding him- Self. The scaffolding is unskilfully put up, and B is in conse- quence hurt. A must make compensation to B. § 7. Errecr oF AGENCY ON CONTRACTS WITH THIRD PERSONS. nc ‘The question of agency on contracts enetects, of Agency on with third persons may be considered under the following heads:— + (1) Agent’s acts enforceoble against Principal: Contracts . entered into through an agent, and obli- mn anton onetime © gations arising from acts done by an aa ice fen agent, may be, enforced in the same . manner and will have the sane legal 682 ELEMENTS OF COMMERCIAL LAW consequences, as if the contracts had been entered into and acts done by the principal in person [Sec. 226]. Illustration: A, being B’s agent with authority to receive money on his behalf, receives from C a sum of money dife to B.C is discharged of his obligation to pay the sum in question to B, SA (2) Agent acting in excess of authority: When an agent v2) When A does more than he is authorised to do, ; en Agent acts two things maj n viz., the part o: in “excran “of authority, what “he does within. his authority rincipal is not res- De ie thid wwrees «may, or may not, be separable Trespect of such acts. from the part which he — does beyond the scope of his authority. In the former case, so much of what the agent does within his authority is binding as bewween him and his principal while in the latter case, the principal is not bound to recognise the transaction [Sec. 227]. ilustrations: A, being owner of a ship and cargo, authorizes B to procure an insurance for 4000 rupees on the ship. B procures a policy on the ship, and another on the cargo. A is bound to pay the premium for the policy on the ship but not for the policy on the cargo. But if A authorizes B to buy 500 sheep for him, and B buys 500 sheep and 200 lambs for one sum of 6000 rupecs. A may repudiate the whole transaction. (3) Notice to agent: Any notice given to or information . obtained by the agent in the course an aaah ction, Agent of the business transacted by the to Puncipa agent for the principal, shall, as between the principal and third parties, have the same legal consequences as if it had been given to or obtained by the principal [Sec. 229]. Illustration: A is employed by B to buy from C certain goods, of which C is the apparent owner, and buys them accordingly. In the course of the treaty for the sale, A learns that the goods really belonged to D, but B is ignorant of that fact. B is not entitled to set-off a debt owing to him from C against the price of the goods. (4) Agent's personal right and liability: In the absence of 4) Agent’ nal 2NY contract to that, effect, an agent tinkitty He Pera cannot personally enforce contracts f entered into by him on bebalf of the principal, nor is he personally bound by them. Such a contract shall be presumed to exist in the following cases :-— (a) Where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad; (b) Where the agent does not disclose the name of his principal; and . .UNDISCLOSED PRINCIPAL 83 (c) Where the principal, though disclosed, cannot be sued e.g. Sovereigns, foreign ambassadors etc. (Sec. 230]. . (5) Undisclosed Princi- (5) Undisclosed Principal: The pal; Rights and liabilities provisions in cases where the principal of parties where Principal i: discl i of partes is ‘not disclosed “may be summarised (a) If an agent makes a contract with a person who neither knows, nor has reason to suspect, that he is an agent, his principal may require the performance of the contract; but the other contracting’ party has, as against the principal, the same rights as he would have had as against the agent if the agent had been principal. Illustration: B, an agent of A, contracts to buy some cotton from C. C does not know that B is A’s agent. In this case, B can sue C if C breaks the contract, and C can sue B if B breaks the contract. A also can sue C, and C also can sue A in case of breach. (b) If, in the above case, the principal discloses himself beforé the contract is completed, the other contract- ing party may refuse to fulfil the contract, if he can show that he would not have entered into the contract, if he had known who was the principal, or that the agent was not the principal [Sec. 231]. (c) ‘The undisclosed principal, if he requirés the per- formance of the contract, can only obtain such performance subject to the rights and obligations subsisting between the agent and the other contract- ing party [Sec. 232]. Illustration: A, who owes 500 rupees to B, sells 1000 rupees’ worth of rice to B. A is acting as agent for C but B has no knowledge of that. C cannot compel B to take the rice, without allowing him to set-off A’s debt. e (6) Right of person dealing swith agent personally Hable: In cases where the agent is personally nal) Weir’ MEME Pe able, a person dealing with ‘him may may hold both principal hold ‘either him, or his principal, or agent linble. both of them liable [Sec. 233]. Illus- tration: A enters into a contract with B to sell him 100 bales of cotton, and afterwards discovers that B was acting as agent for C. A may sue either B or C, or both, for the price of the cotton. .84 ELEMENTS OF COMMERCIAL LAW (7) Liability of pretended agent: A person untruly (7) Pretended agent. TePfesenting himself to be the authorized fiable to compensate’ agent of another, and thereby inducing . a third persoh to deal with him as such agent, is liable, if his alleged employer does not ratify his acts, to make compensation to the other. Again, the pretended agent is not entitled to the performance of the contract [Sec. 5 (8) Effect of misrepresentation etc by agent: Misrepresen- (8) Effect. of misre tations made, or frauds committed, by presentation etc, by agents, acting in the course of their agent. business for their principals, have the «same effect on agreements made by such agents as if such mis- representations or frauds had been made or committed by the principals; but misrepresentations made, or frauds committed, by agents, in matters which do not fall within their authority, do not* affect their principals [Sec. 238]. Illustration: A being B’s agent for the sale of goods, induces C to buy them by a misre- presentation, which he was not authorized by B to make, The contract is voidable, as between B and C, at the option of C. “% §°8 ‘Termination or Acency [Sec. 201]. ‘An agency may de terminated in the following ways— (i) Revocation by Principal: Renunctation by .tgent: An agency is terminated by the principal miikency may be efit, revoking his authority or by the agent ways! renouncing his business. — Revocation and Renunciation may be expressed or implied in the conduct of the principal or agent respectively as the case may be. Reasonable notice must be given of revocation or 1enunciation ; otherwise the damage resulting to the principal or the agent, as the case may be, must be made good to the one by the other. (ii) Completion of agency: Am agency is terminated by the business of the agency being completed. Gi) Death or insanity of the parties: An agency is terminated by either the principal or the agent ding or becoming of unsound mind. When an agency is terminated by the principal dying or becoming of unsound mind, the agent is bound to take, on behalf of the representatives of his late principal, all reasonable steps for the protection and preservation of the interests entrusted to him. . (iv) Insolvency of Principal: An Agency is terminated by the principal being adjudicated an insolvent. ,