Contract of Agency and Contract Part -2

Submitted To: Submitted By:

Prof. Prakash Gehani Group-2
Ashish Thakkar
Ashwini Iyer
Binto A Ulahannan
Chandini Ruparelia
Chirag Goyal
Chirag Punjabi
Aditi Singhal
 Contract Of Agency
Agency is a relationship between two people where one is called the principal and the other is called the agent.
According to Section 182 of the Indian Contract Act 1872, an agent is a person employed to do any act for
another or to represent another in dealings with third persons. The person for whom such act is done, or who
is so represented, is called the principal.

Who can be a Principal?

The principal should have contractual capacity. Therefore the following two conditions must be fulfilled: The person
should be of the age of majority according to the law to which he/she is subject. The person should be of sound
mind.

Who can be an Agent?

One can become an agent even without having contractual capacity, therefore even a minor or a person of unsound
mind can become an agent. Whether the agent has the contractual capacity or does not have the contractual capacity,
it is the principal who would be held liable to the third party for the acts of the agent. However it is the agent with
contractual capacity who would be responsible to the principal for his/her acts and not the agent without contractual
capacity. Therefore it is in the interest of the principal to appoint only those agents who have contractual capacity.
 Characteristics of an Agency
1. Agreement between Principal and Agent.
2. Intention of the Agent to Act on Behalf of The Principal.
3. Whatever the Principal can do Personally he/she can do through his/her Agent.
4. No Consideration Required for Agency.
5. Principal is liable to the third party for the acts done by the Agent.

Creation of an Agency
1. Express Agreement
2. Implied Agreement
3. Estoppel
4. Holding out
5. Ratification
 Types of Agent
1. Special Agent
2. General Agent
3. Co-agent
4. Subagent
5. Substituted Agent
6. Mercantile Agent
7. Auctioneer
8. Broker
9. Commission Agent
10. Delcredere Agent
11. Factor Agent
 Duties of Agent
1. To conduct business according to the directions of the principal.
2. He must have required skills and diligence.
3. He should render proper accounts.
4. He must communicate with the principal in case of any difficulty.
5. He must obtain consent and pay the sums to principal.
6. He should protect and preserve the interest of the principal.
7. He cannot make secret profits.
8. There are restrictions to delegate authority.
9. Duty on termination of agency due to principal's death or insanity.

Rights of Agent
1. Right of retention.
2. Right to receive remuneration.
3. Right to lien.
4. Right to be indemnified.
 SPECIAL CONTRACTS
INDEMNITY
Promisor promises to save the promisee for any loss occurred due to the conduct of the
promisor or third person.
The party who promises to pay is called the Indemnifier and to whom it is paid is called the
Indemnified or Indemnity Holder.

FEATURES
Two parties to the contract.
Essentials of a valid contract.
Expressed or implied
Loss or damage by human conduct only
GUARANTEE
Helps in discharging the liability of third person in case of any default.
3 parties to contract i.e. Guarantor, Principal debtor and Creditor.

FEATURES
Three parties
Three agreements
All essentials of a valid contract
Liability of surety is secondary and is dependent on principal debtors default.
Can be oral or written
KINDS OF GUARANTEE
Specific or simply guarantee
Continuing guarantee
BAILMENT
Goods are delivered from one person to another with some specific purpose.
When the purpose is solved, goods are returned to the bailor or disposed off as per
the directions.
Person delivering the goods is called the Bailor and the person receiving the goods is
called the Bailee.
PLEDGE

According to Sec 172, contract Act, 1872, The bailment of goods for
repayment of a debt or performance of a promise is called `pledge`.
The bailor in this case is called the pawnor, the bailee is called the
pawnee.
 PLEDGE
Pledge is the bailment for a
specific purpose i.e. to provide
security for a debt or for
fulfilment of object.
The pledge has right to sale on
default after giving notice thereof
to the Pledger.
BAILMENT
Bailment is for a purpose other
than two under pledge i.e. for
repairs, safe custody, etc.
No right to sale. The bailee may
either retain the goods or the
bailor for non-payment of his
dues.
 Sale of Goods Act, 1930
Extent and Commencement
Definition
Basic Requirements of Contracts applies to it
Essentials of Contract of Sale
Two Parties
Transfer or Agrees to Transfer
Property
Goods
Price

Caveat Emptor
Meaning
Doctrine
Exception
 Goods

Existing Future Goods Contingent

Specific Ascertained Unascertained

 Price
Modes of Determining Price (Sec. 9(1))
Consequences of not Determining Price (Sec. 9(2))
Consequences of not Fixing Price by Third Party (Sec.
10(1))
Right of Party not at fault (Sec. 10(2))
 Conditions & Warranties
Meaning
Difference Essential V/s Collateral, Right in case of
Breach, Treatment
Condition to be Treated as Warranty (Sec. 13)
Express and Implied
Implied Conditions Implied Warranties
As to Title (Sec. 14(a)) As to Quiet Possession
In case of Sale by Description (Sec. 15) Of Freedom from Encumbrances
In case of Sale by Sample (Sec. 17) As to Disclosure of Dangerous Nature of the
Goods
As to Quality or Fitness (Sec. 16(1))
Exception to Sec. 16(1)
As to Merchantable Quality (Sec. 16(2))
Implied by Custom (Sec. 16(3))
 Transfer of Property
Meaning Rules Relating to Transfer of
Importance Property
Specific or Ascertained Goods
Rules
Unascertained Goods
Performance of the Contract
Goods sent on Approval or Sale on
Delivery Return
Acceptance
Passing of Property
Section (18 24)
Transfer of Ownership in different stages
of specific goods
 Unpaid Seller and His Rights

Unpaid Seller Meaning

Rights of Unpaid Seller Rights of Unpaid Seller
against Goods against Buyer
Lien, Suit for Price,
Stoppage in Transit, Suit for Damages of Non
Resale, Acceptance,
Withhold Delivery Suit for Interest