Download VTU (Visvesvaraya Technological University) MBA 2nd Semester (Second Semester) 17MBA24-Business Law Law of Agency Important Lecture Notes (MBA Study Material Notes)
1. Nature and kinds of agency
2. Relations of principal with his agent
3. Relations of principal with third parties
4. Termination of agency
Why agents?
Agent : The person who acts on behalf of some other persons
Principal : The person on whose behalf the agent acts
Agency : The contract which creates the relationship of A & P
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Agency (Sections 182 to 238)
1. Nature and kinds of agency
2. Relations of principal with his agent
3. Relations of principal with third parties
4. Termination of agency
Why agents?
Agent : The person who acts on behalf of some other persons
Principal : The person on whose behalf the agent acts
Agency : The contract which creates the relationship of A & P
? Definitions u/s 182
? Agent : ? A person, employed to do any act for another, or to
represent another in dealing with third persons, is called agent.
? Principal: A person for whom such act is done or who is so
represented, is called principal.
? Definition seem to be very wide but?
? Emphasis on the powers of the agent to represent his principal in
dealings with the third parties
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Agency (Sections 182 to 238)
1. Nature and kinds of agency
2. Relations of principal with his agent
3. Relations of principal with third parties
4. Termination of agency
Why agents?
Agent : The person who acts on behalf of some other persons
Principal : The person on whose behalf the agent acts
Agency : The contract which creates the relationship of A & P
? Definitions u/s 182
? Agent : ? A person, employed to do any act for another, or to
represent another in dealing with third persons, is called agent.
? Principal: A person for whom such act is done or who is so
represented, is called principal.
? Definition seem to be very wide but?
? Emphasis on the powers of the agent to represent his principal in
dealings with the third parties
Essentials and legal rules
1. There should be an agreement between the
principal and the agent :Agreement may be:
Express or implied
2. The agent must act in the representative capacity.
3. The principal must be competent to contract.
4. The agent need not be competent to contract.
Why? But in the interest of the principal?
5. The consideration is not necessary.
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Agency (Sections 182 to 238)
1. Nature and kinds of agency
2. Relations of principal with his agent
3. Relations of principal with third parties
4. Termination of agency
Why agents?
Agent : The person who acts on behalf of some other persons
Principal : The person on whose behalf the agent acts
Agency : The contract which creates the relationship of A & P
? Definitions u/s 182
? Agent : ? A person, employed to do any act for another, or to
represent another in dealing with third persons, is called agent.
? Principal: A person for whom such act is done or who is so
represented, is called principal.
? Definition seem to be very wide but?
? Emphasis on the powers of the agent to represent his principal in
dealings with the third parties
Essentials and legal rules
1. There should be an agreement between the
principal and the agent :Agreement may be:
Express or implied
2. The agent must act in the representative capacity.
3. The principal must be competent to contract.
4. The agent need not be competent to contract.
Why? But in the interest of the principal?
5. The consideration is not necessary.
Principles of agency
1. Whatever a person can lawfully do himself, he
may also do the same through an agent : subject to
exceptions.
2. He who acts through another is considered to
have acted personally.
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Agency (Sections 182 to 238)
1. Nature and kinds of agency
2. Relations of principal with his agent
3. Relations of principal with third parties
4. Termination of agency
Why agents?
Agent : The person who acts on behalf of some other persons
Principal : The person on whose behalf the agent acts
Agency : The contract which creates the relationship of A & P
? Definitions u/s 182
? Agent : ? A person, employed to do any act for another, or to
represent another in dealing with third persons, is called agent.
? Principal: A person for whom such act is done or who is so
represented, is called principal.
? Definition seem to be very wide but?
? Emphasis on the powers of the agent to represent his principal in
dealings with the third parties
Essentials and legal rules
1. There should be an agreement between the
principal and the agent :Agreement may be:
Express or implied
2. The agent must act in the representative capacity.
3. The principal must be competent to contract.
4. The agent need not be competent to contract.
Why? But in the interest of the principal?
5. The consideration is not necessary.
Principles of agency
1. Whatever a person can lawfully do himself, he
may also do the same through an agent : subject to
exceptions.
2. He who acts through another is considered to
have acted personally.
Ways of creating agency ( Kinds of agency)
1. Agency by express agreement
2. Agency by implied agreement
3. Agency by operation of law
4. Agency by ratification
A. Agency by express agreement
Appointment in writing or by words of mouth
Usual form of a written agreement : Power of attorney ? General
power of attorney or Special PA
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Agency (Sections 182 to 238)
1. Nature and kinds of agency
2. Relations of principal with his agent
3. Relations of principal with third parties
4. Termination of agency
Why agents?
Agent : The person who acts on behalf of some other persons
Principal : The person on whose behalf the agent acts
Agency : The contract which creates the relationship of A & P
? Definitions u/s 182
? Agent : ? A person, employed to do any act for another, or to
represent another in dealing with third persons, is called agent.
? Principal: A person for whom such act is done or who is so
represented, is called principal.
? Definition seem to be very wide but?
? Emphasis on the powers of the agent to represent his principal in
dealings with the third parties
Essentials and legal rules
1. There should be an agreement between the
principal and the agent :Agreement may be:
Express or implied
2. The agent must act in the representative capacity.
3. The principal must be competent to contract.
4. The agent need not be competent to contract.
Why? But in the interest of the principal?
5. The consideration is not necessary.
Principles of agency
1. Whatever a person can lawfully do himself, he
may also do the same through an agent : subject to
exceptions.
2. He who acts through another is considered to
have acted personally.
Ways of creating agency ( Kinds of agency)
1. Agency by express agreement
2. Agency by implied agreement
3. Agency by operation of law
4. Agency by ratification
A. Agency by express agreement
Appointment in writing or by words of mouth
Usual form of a written agreement : Power of attorney ? General
power of attorney or Special PA
B. Agency by implied agreement
? Due to the conduct of the parties or the course of dealing
between the parties or the situation of a particular case.
? Agencies by an implied agreement includes:
1. Agency by estoppel
2. Agency by holding out
3. Agency by necessity
4. Husband and wife relations.
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Agency (Sections 182 to 238)
1. Nature and kinds of agency
2. Relations of principal with his agent
3. Relations of principal with third parties
4. Termination of agency
Why agents?
Agent : The person who acts on behalf of some other persons
Principal : The person on whose behalf the agent acts
Agency : The contract which creates the relationship of A & P
? Definitions u/s 182
? Agent : ? A person, employed to do any act for another, or to
represent another in dealing with third persons, is called agent.
? Principal: A person for whom such act is done or who is so
represented, is called principal.
? Definition seem to be very wide but?
? Emphasis on the powers of the agent to represent his principal in
dealings with the third parties
Essentials and legal rules
1. There should be an agreement between the
principal and the agent :Agreement may be:
Express or implied
2. The agent must act in the representative capacity.
3. The principal must be competent to contract.
4. The agent need not be competent to contract.
Why? But in the interest of the principal?
5. The consideration is not necessary.
Principles of agency
1. Whatever a person can lawfully do himself, he
may also do the same through an agent : subject to
exceptions.
2. He who acts through another is considered to
have acted personally.
Ways of creating agency ( Kinds of agency)
1. Agency by express agreement
2. Agency by implied agreement
3. Agency by operation of law
4. Agency by ratification
A. Agency by express agreement
Appointment in writing or by words of mouth
Usual form of a written agreement : Power of attorney ? General
power of attorney or Special PA
B. Agency by implied agreement
? Due to the conduct of the parties or the course of dealing
between the parties or the situation of a particular case.
? Agencies by an implied agreement includes:
1. Agency by estoppel
2. Agency by holding out
3. Agency by necessity
4. Husband and wife relations.
Agency by holding out
? More than estoppel ? positive or affirmative conduct of the
principal is required
Agency by necessity
? Due to extraordinary circumstances, person may be compelled to
act without requiring the consent or authority
? Conditions:
? There must be real emergency to act on behalf of the P.
? Agent not in a position to obtain instructions
? Acting honestly and in the interest of the P
? Adopting reasonable and practicable course of action
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Agency (Sections 182 to 238)
1. Nature and kinds of agency
2. Relations of principal with his agent
3. Relations of principal with third parties
4. Termination of agency
Why agents?
Agent : The person who acts on behalf of some other persons
Principal : The person on whose behalf the agent acts
Agency : The contract which creates the relationship of A & P
? Definitions u/s 182
? Agent : ? A person, employed to do any act for another, or to
represent another in dealing with third persons, is called agent.
? Principal: A person for whom such act is done or who is so
represented, is called principal.
? Definition seem to be very wide but?
? Emphasis on the powers of the agent to represent his principal in
dealings with the third parties
Essentials and legal rules
1. There should be an agreement between the
principal and the agent :Agreement may be:
Express or implied
2. The agent must act in the representative capacity.
3. The principal must be competent to contract.
4. The agent need not be competent to contract.
Why? But in the interest of the principal?
5. The consideration is not necessary.
Principles of agency
1. Whatever a person can lawfully do himself, he
may also do the same through an agent : subject to
exceptions.
2. He who acts through another is considered to
have acted personally.
Ways of creating agency ( Kinds of agency)
1. Agency by express agreement
2. Agency by implied agreement
3. Agency by operation of law
4. Agency by ratification
A. Agency by express agreement
Appointment in writing or by words of mouth
Usual form of a written agreement : Power of attorney ? General
power of attorney or Special PA
B. Agency by implied agreement
? Due to the conduct of the parties or the course of dealing
between the parties or the situation of a particular case.
? Agencies by an implied agreement includes:
1. Agency by estoppel
2. Agency by holding out
3. Agency by necessity
4. Husband and wife relations.
Agency by holding out
? More than estoppel ? positive or affirmative conduct of the
principal is required
Agency by necessity
? Due to extraordinary circumstances, person may be compelled to
act without requiring the consent or authority
? Conditions:
? There must be real emergency to act on behalf of the P.
? Agent not in a position to obtain instructions
? Acting honestly and in the interest of the P
? Adopting reasonable and practicable course of action
Husband and wife relations
? For the purposes of buying household necessaries
? Agency relationship may be discussed under:
a. Wife living with her husband
b. Wife living apart from her husband : on her own or without
any fault on her side
c. Agency by operation of law
e.g. The Partnership Act
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Agency (Sections 182 to 238)
1. Nature and kinds of agency
2. Relations of principal with his agent
3. Relations of principal with third parties
4. Termination of agency
Why agents?
Agent : The person who acts on behalf of some other persons
Principal : The person on whose behalf the agent acts
Agency : The contract which creates the relationship of A & P
? Definitions u/s 182
? Agent : ? A person, employed to do any act for another, or to
represent another in dealing with third persons, is called agent.
? Principal: A person for whom such act is done or who is so
represented, is called principal.
? Definition seem to be very wide but?
? Emphasis on the powers of the agent to represent his principal in
dealings with the third parties
Essentials and legal rules
1. There should be an agreement between the
principal and the agent :Agreement may be:
Express or implied
2. The agent must act in the representative capacity.
3. The principal must be competent to contract.
4. The agent need not be competent to contract.
Why? But in the interest of the principal?
5. The consideration is not necessary.
Principles of agency
1. Whatever a person can lawfully do himself, he
may also do the same through an agent : subject to
exceptions.
2. He who acts through another is considered to
have acted personally.
Ways of creating agency ( Kinds of agency)
1. Agency by express agreement
2. Agency by implied agreement
3. Agency by operation of law
4. Agency by ratification
A. Agency by express agreement
Appointment in writing or by words of mouth
Usual form of a written agreement : Power of attorney ? General
power of attorney or Special PA
B. Agency by implied agreement
? Due to the conduct of the parties or the course of dealing
between the parties or the situation of a particular case.
? Agencies by an implied agreement includes:
1. Agency by estoppel
2. Agency by holding out
3. Agency by necessity
4. Husband and wife relations.
Agency by holding out
? More than estoppel ? positive or affirmative conduct of the
principal is required
Agency by necessity
? Due to extraordinary circumstances, person may be compelled to
act without requiring the consent or authority
? Conditions:
? There must be real emergency to act on behalf of the P.
? Agent not in a position to obtain instructions
? Acting honestly and in the interest of the P
? Adopting reasonable and practicable course of action
Husband and wife relations
? For the purposes of buying household necessaries
? Agency relationship may be discussed under:
a. Wife living with her husband
b. Wife living apart from her husband : on her own or without
any fault on her side
c. Agency by operation of law
e.g. The Partnership Act
D. Agency by ratification
? A person does some acts on behalf of another person
without his knowledge or authority
? Another person subsequently accepts the acts Then: Agency
by ratification
? Also known as ex-post facto agency (agency arising after the
event)
? Conditions for valid ratification
1. The agent must act on behalf of the principal
2. The principal must be competent to contract and in
existence at the time of contract by the agent
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Agency (Sections 182 to 238)
1. Nature and kinds of agency
2. Relations of principal with his agent
3. Relations of principal with third parties
4. Termination of agency
Why agents?
Agent : The person who acts on behalf of some other persons
Principal : The person on whose behalf the agent acts
Agency : The contract which creates the relationship of A & P
? Definitions u/s 182
? Agent : ? A person, employed to do any act for another, or to
represent another in dealing with third persons, is called agent.
? Principal: A person for whom such act is done or who is so
represented, is called principal.
? Definition seem to be very wide but?
? Emphasis on the powers of the agent to represent his principal in
dealings with the third parties
Essentials and legal rules
1. There should be an agreement between the
principal and the agent :Agreement may be:
Express or implied
2. The agent must act in the representative capacity.
3. The principal must be competent to contract.
4. The agent need not be competent to contract.
Why? But in the interest of the principal?
5. The consideration is not necessary.
Principles of agency
1. Whatever a person can lawfully do himself, he
may also do the same through an agent : subject to
exceptions.
2. He who acts through another is considered to
have acted personally.
Ways of creating agency ( Kinds of agency)
1. Agency by express agreement
2. Agency by implied agreement
3. Agency by operation of law
4. Agency by ratification
A. Agency by express agreement
Appointment in writing or by words of mouth
Usual form of a written agreement : Power of attorney ? General
power of attorney or Special PA
B. Agency by implied agreement
? Due to the conduct of the parties or the course of dealing
between the parties or the situation of a particular case.
? Agencies by an implied agreement includes:
1. Agency by estoppel
2. Agency by holding out
3. Agency by necessity
4. Husband and wife relations.
Agency by holding out
? More than estoppel ? positive or affirmative conduct of the
principal is required
Agency by necessity
? Due to extraordinary circumstances, person may be compelled to
act without requiring the consent or authority
? Conditions:
? There must be real emergency to act on behalf of the P.
? Agent not in a position to obtain instructions
? Acting honestly and in the interest of the P
? Adopting reasonable and practicable course of action
Husband and wife relations
? For the purposes of buying household necessaries
? Agency relationship may be discussed under:
a. Wife living with her husband
b. Wife living apart from her husband : on her own or without
any fault on her side
c. Agency by operation of law
e.g. The Partnership Act
D. Agency by ratification
? A person does some acts on behalf of another person
without his knowledge or authority
? Another person subsequently accepts the acts Then: Agency
by ratification
? Also known as ex-post facto agency (agency arising after the
event)
? Conditions for valid ratification
1. The agent must act on behalf of the principal
2. The principal must be competent to contract and in
existence at the time of contract by the agent
3. The principal must have the full knowledge of all material facts
4. The ratification must be of the whole transaction
5. The ratification should not cause any damage to third person
6. The ratification must be made within a reasonable time
7. The acts to be ratified should be valid and lawful
8. The act to be ratified must be existing at the time of
ratification
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Agency (Sections 182 to 238)
1. Nature and kinds of agency
2. Relations of principal with his agent
3. Relations of principal with third parties
4. Termination of agency
Why agents?
Agent : The person who acts on behalf of some other persons
Principal : The person on whose behalf the agent acts
Agency : The contract which creates the relationship of A & P
? Definitions u/s 182
? Agent : ? A person, employed to do any act for another, or to
represent another in dealing with third persons, is called agent.
? Principal: A person for whom such act is done or who is so
represented, is called principal.
? Definition seem to be very wide but?
? Emphasis on the powers of the agent to represent his principal in
dealings with the third parties
Essentials and legal rules
1. There should be an agreement between the
principal and the agent :Agreement may be:
Express or implied
2. The agent must act in the representative capacity.
3. The principal must be competent to contract.
4. The agent need not be competent to contract.
Why? But in the interest of the principal?
5. The consideration is not necessary.
Principles of agency
1. Whatever a person can lawfully do himself, he
may also do the same through an agent : subject to
exceptions.
2. He who acts through another is considered to
have acted personally.
Ways of creating agency ( Kinds of agency)
1. Agency by express agreement
2. Agency by implied agreement
3. Agency by operation of law
4. Agency by ratification
A. Agency by express agreement
Appointment in writing or by words of mouth
Usual form of a written agreement : Power of attorney ? General
power of attorney or Special PA
B. Agency by implied agreement
? Due to the conduct of the parties or the course of dealing
between the parties or the situation of a particular case.
? Agencies by an implied agreement includes:
1. Agency by estoppel
2. Agency by holding out
3. Agency by necessity
4. Husband and wife relations.
Agency by holding out
? More than estoppel ? positive or affirmative conduct of the
principal is required
Agency by necessity
? Due to extraordinary circumstances, person may be compelled to
act without requiring the consent or authority
? Conditions:
? There must be real emergency to act on behalf of the P.
? Agent not in a position to obtain instructions
? Acting honestly and in the interest of the P
? Adopting reasonable and practicable course of action
Husband and wife relations
? For the purposes of buying household necessaries
? Agency relationship may be discussed under:
a. Wife living with her husband
b. Wife living apart from her husband : on her own or without
any fault on her side
c. Agency by operation of law
e.g. The Partnership Act
D. Agency by ratification
? A person does some acts on behalf of another person
without his knowledge or authority
? Another person subsequently accepts the acts Then: Agency
by ratification
? Also known as ex-post facto agency (agency arising after the
event)
? Conditions for valid ratification
1. The agent must act on behalf of the principal
2. The principal must be competent to contract and in
existence at the time of contract by the agent
3. The principal must have the full knowledge of all material facts
4. The ratification must be of the whole transaction
5. The ratification should not cause any damage to third person
6. The ratification must be made within a reasonable time
7. The acts to be ratified should be valid and lawful
8. The act to be ratified must be existing at the time of
ratification
Termination of agency
End of the relationship of a principal and his agent
Studied under:
1. Termination of agency by act of the parties
2. Termination of agency by operation of law
Termination of agency by act of the parties
1. Agreement between the principal and agent
2. Revocation by the principal : Revocation may be express or
implied ? There are conditions
3. Renunciation of agency by the agent
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Agency (Sections 182 to 238)
1. Nature and kinds of agency
2. Relations of principal with his agent
3. Relations of principal with third parties
4. Termination of agency
Why agents?
Agent : The person who acts on behalf of some other persons
Principal : The person on whose behalf the agent acts
Agency : The contract which creates the relationship of A & P
? Definitions u/s 182
? Agent : ? A person, employed to do any act for another, or to
represent another in dealing with third persons, is called agent.
? Principal: A person for whom such act is done or who is so
represented, is called principal.
? Definition seem to be very wide but?
? Emphasis on the powers of the agent to represent his principal in
dealings with the third parties
Essentials and legal rules
1. There should be an agreement between the
principal and the agent :Agreement may be:
Express or implied
2. The agent must act in the representative capacity.
3. The principal must be competent to contract.
4. The agent need not be competent to contract.
Why? But in the interest of the principal?
5. The consideration is not necessary.
Principles of agency
1. Whatever a person can lawfully do himself, he
may also do the same through an agent : subject to
exceptions.
2. He who acts through another is considered to
have acted personally.
Ways of creating agency ( Kinds of agency)
1. Agency by express agreement
2. Agency by implied agreement
3. Agency by operation of law
4. Agency by ratification
A. Agency by express agreement
Appointment in writing or by words of mouth
Usual form of a written agreement : Power of attorney ? General
power of attorney or Special PA
B. Agency by implied agreement
? Due to the conduct of the parties or the course of dealing
between the parties or the situation of a particular case.
? Agencies by an implied agreement includes:
1. Agency by estoppel
2. Agency by holding out
3. Agency by necessity
4. Husband and wife relations.
Agency by holding out
? More than estoppel ? positive or affirmative conduct of the
principal is required
Agency by necessity
? Due to extraordinary circumstances, person may be compelled to
act without requiring the consent or authority
? Conditions:
? There must be real emergency to act on behalf of the P.
? Agent not in a position to obtain instructions
? Acting honestly and in the interest of the P
? Adopting reasonable and practicable course of action
Husband and wife relations
? For the purposes of buying household necessaries
? Agency relationship may be discussed under:
a. Wife living with her husband
b. Wife living apart from her husband : on her own or without
any fault on her side
c. Agency by operation of law
e.g. The Partnership Act
D. Agency by ratification
? A person does some acts on behalf of another person
without his knowledge or authority
? Another person subsequently accepts the acts Then: Agency
by ratification
? Also known as ex-post facto agency (agency arising after the
event)
? Conditions for valid ratification
1. The agent must act on behalf of the principal
2. The principal must be competent to contract and in
existence at the time of contract by the agent
3. The principal must have the full knowledge of all material facts
4. The ratification must be of the whole transaction
5. The ratification should not cause any damage to third person
6. The ratification must be made within a reasonable time
7. The acts to be ratified should be valid and lawful
8. The act to be ratified must be existing at the time of
ratification
Termination of agency
End of the relationship of a principal and his agent
Studied under:
1. Termination of agency by act of the parties
2. Termination of agency by operation of law
Termination of agency by act of the parties
1. Agreement between the principal and agent
2. Revocation by the principal : Revocation may be express or
implied ? There are conditions
3. Renunciation of agency by the agent
Termination of agency by operation of law
Termination of agency by operation of law
1. Completion of agency business
2. Death or insanity of the principal or the agent : later
insanity ? company
3. Insolvency of the principal
4. Expiry of time
5. Destruction of the subject-matter of the agency
6. Subsequent event rendering the agency unlawful
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This post was last modified on 18 February 2020