MUHAMMAD ALI ASIF

O1-11182-056

SUMMARY OF LECTURE 7

Let’s start with basic meaning of whole concept if there is a person who cannot perform all of his
business activities by himself he can appoint agent for doing his dealings on behalf of him. And
that person who authorized an agent is principal and that contract between both of them is called
agency. Now there are some basic essentials for agency contract which must be fulfilled. There
must be an agreement between agent and principal in which principal must be bound by agent. It
necessary for the agent to make in order to accomplish the purpose of the agency. In order to be
competent principal must be of sound mind and major as well.
Agent can be anyone who can contract must fulfill basic requirements for contract. In agency
contract consideration is not necessary as mention in section 185. And the last thing for agency
contract is intention agent must intend to act on behalf of principal sonly then principal is liable.
Now agents can be characterized according to their roles. A general agent can only perform
lawful acts regarding that business for which he is hired. A special agent can only perform
particular act for which he is appointed. A universal agent can do any act on behalf of principal.
A commission agent buys and sells goods for company on his name for behalf of principal for
certain commission. Broker is also an agent who makes contract of sales and purchase of shares
on behalf of clients. Auctioneer is also an agent who sells goods on behalf of others in auction.
Banker is also a type of agent because he can also collect cheques and pay dividends on behalf of
customers. Advocate can also perform acts on behalf of clients.
An agency can be created by two types of agreements: Express agreement and an implied
contract. The difference between the two is that, in express Principal signs a power of attorney in
agent’s favor. And implied contract is created when two or more parties have no written contract.
According to circumstances implied contract can be divided in to types. If Agent acts on
principal’s behalf without principal’s authority, but later principal approves this act this is
Agency of Ratification and if Ali is a director of a company and acts on company’s behalf this
is Agency by Operation of Law.
Agent and principal both have some rights and duties. Duties of agent are mention in following
sections of contract law 1872 Sections.211, 212, 213, 214, 215, 216, 217, 218 section 190. The
duties of an agent are following direct orders, working to the best of his abilities, being
transparent and communicating all relevant facts as well as making sure not to delegate this
given authority. The rights of agents are mention in sections 127, 219, 221, 222, 223, 225, and
228. Following are the rights of agent the right to retain the claims of sum received on principal’s
behalf, to get compensated financially for his performed services, the right to be compensated for
any injury caused by the negligence of Principal.
An agency can be terminated in following cases by reaching its expiry of time, when the
business been completed, or by the mutual agreement of both parties. However, there are certain
other cases which can lead to termination, such as – Revocation by either principal or agent as
long as it is done prior to the exercise of authority, agency gets automatic termination on death or
insanity of either party or the termination occurs when the main subject matter of the contract is
destructed on which is happening i.e. the business.