Basic Principles of an

agency
1. The agent is responsible to his principal according to the
Provisions contained in the law of agency act.
2. The authority of an agent may be express or implied. An
authority is said to be expressed when it is given by words,
spoken or written. Implied authority is inferred from the
circumstances of the case.
3. An agent who has been authorized by the Principal to do an
act on his behalf has the authority to do every lawful thing,
which is necessary in order to do such act.
4. While carrying out the work delegated to him, the Agent
can not do anything illegal nor go beyond the limits of the
authority delegated to him, nor anything beyond the
powers of his Principal.
5. However, in an emergency, he can do all legally permissible
Kinds of Agencies
1. On the basis of extent of authority;
Agents can be classified into the following ways.
I. Universal Agents hold broad authority to act on
behalf of the Principal e.g. they hold a power of
attorney or have a professionals relationship such as
between a lawyer and his client. Such Agents have
exclusive rights and unlimited authority.
II. General agents hold more limited authority to
conduct a series of transaction over a continuous
period of time. General agents carry out general
acts such as buying or selling goods for a company.
I. Special agents are authorized to do some particular
act or carry out a particular transaction on behalf of
the Principal such as sell a house.
2. On the basis of nature of work’

Agents can be classified as Mercantile or Non-mercantile Agents

according to the nature of work they carry our on be half of the
Principal.
a) Mercantile Agents represents the Principal in commercial and
monetary transaction. The following are Mercantile Agents.
i. Broker- A broker negotiates and makes contracts between the
Principal and third Parties. The broker sells and buys goods on
behalf of the Principal but does not have lien over the goods. He
does not have possession of the goods nor can he sell them in his
own name.
ii. Factor- A factor is a mercantile agent who is given a general right
of lien on the goods entrusted to him for selling. He is authorized
to buy and sell goods in his own name.
iii. Auctioneer- A person authorized by the Principal to have
possession over goods and to sell them at a public auction in
return for a commission is called auctioneer.
iv. Commission agent- It is a general term that refers to
broker as well as factors.
v. Del-credere agent- A del-credere agent guarnantees
to the Principal that the third persons with whom he
has entered into a contract will perform his
obligation under the contract. He gives such
guarantee for an extra fee called Del-credere
commission.
vi. Banker- A banker acts as an agent by providing all
banking services to the customers by collecting
cheques, drafts or sell securities etc on their behalf.
b) Non-mercantile Agents do not deal with
commercial or monetary transaction on behalf of the
Principal. Their job is to carry out such acts which are
connected to the rights and obligation of the Principal
eg. A lawyer advising on legal matters, insurance
agents, election agents etc.