Description
An Agent is one who acts for, or in the place of, another, by authority from him; one entrusted with the business of another.
Agent, Agency and Principal
1
Agent, Agency and Principal
2
Case: Agents
X, a retail electrical shop, exclusively vends products of a popular brand. It buys the products from a wholesaler in the city. X describes the shop as an agency of the company whose products he is vending.
D is a business call centre. A credit card company gives it a list of credit card holders, whose payments are overdue. The task of D is to call up the persons and remind them that their payment is overdue. The executives of D represent themselves to be agents for the credit card company.
3
… Cond
C is a stock agent who has been asked by his client to sell certain stocks. The client has specified a ceiling price. What is the difference among the three situations?
4
Summary
Only the stock broker has the authority and capacity to find a buyer on his own. Acting for the seller, he will commit him to another person in a relationship of seller-buyer. Three parties: Principal- Agent and the third party
5
Contract Act: Principal and Agent
182. Agent and Principal defined.- 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".
6
Contract Act: Express and Implied
186. Agents authority may be expressed or implied.- The authority of an agent may be expressed or implied. 187. Definitions of express and implied authority.- An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, may be accounted circumstances of the case.
7
Contract Act: Consideration
185. Consideration not necessary.No consideration is necessary to create an agency.
8
Contract Act: Agent bind Principal
226. Enforcement and consequences of agents contracts.- Contracts entered into through an agent, and obligations arising from acts done by an agent, may be enforced in the same manner, and will have the same legal consequences, as if the contracts had been entered into and the acts done by the principal in person.
9
Delhi Electric Supply Undertaking v. Basanti Devi
10
Facts
It was a life insurance plan, in the name of individual employee. The employee, instead of paying directly to the LIC, under the scheme, authorised the employer to deduct the amount and pay it to the LIC.
DESU had deducted premium amount from the salary of Bhim Singh but not remitted it to the LIC. Bhim Singh died. The LIC disclaimed liability claiming that the policy had lapsed due to nonpayment of premium amount.
11
Judgement: Supreme Court
It is a matter of common knowledge that Insurance Companies employ agents. When there is no insurance agent as defined in Regulations and the Insurance Act, general principles of the law of agency as contained in the Contract Act are to be applied.
12
… Cond
… Under Section 185 no consideration is necessary to create an agency. … Under the agreement between LIC and DESU, premium was payable to DESU who was to deduct every month from the salary of Bhim Singh and to transmit the same to LIC. DESU had, therefore, implied authority to collect premium from Bhim Singh on behalf of LIC. There was, thus, valid payment of premium by Bhim Singh. Authority of DESU to collect premium on behalf of LIC is implied.
13
Chairman, Life Insurance Corporation v Rajiv Kumar Bhasker
14
Facts
BHEL had adopted the same scheme as DESU in the previous case. BHEL defaulted in remitting the premium.
15
Judgement: Supreme Court
An agency can be created expressly or by necessary implication. It may be true that the employers in response to the proposal made by the Corporation stated that they would act as agents of their employees and not that of the Corporation. … but keeping in view the fact that the Corporation did not make any offer to the employees nor would directly make any communication with them regarding payment or non-payment of the premium or any other matter … including the lapse of the policy, if any, it cannot be said that the employer had no role to play on behalf of the Corporation.
16
… Cond
It is well-settled that for the purpose of determining the legal nature of the relationship between the alleged principal and agent, the use of or omission of the word "agent" is not conclusive. If the employee had reason to believe that his employer was acting on behalf of the Corporation, a contract of agency may be inferred.
17
Snow White Industrial Corporation v. Collector of Central Excise
18
Facts
Manufacturers: Snow White Industrial Corporation are manufacturers of 'Supercem Waterproof Cement Paint' and other allied products in their factory at Madras. Buyer or Agent: Gillanders Arbuthnot and Co. Ltd., of Calcutta had an 'agreement of sale' with Gillanders Arbuthnot and Co. Ltd., of Calcutta for selling its products. Were they buyers of agents?
19
Judgement: Supreme Court
… it depends on the facts and circumstances of each case to determine the true nature of the dealings between the parties. In the instant case the most important fact suggesting agency was the clause which enjoined that the stocks left over unsold beyond two years from their receipt could be returned to the appellants who were bound to replace these. …
20
… Cond
This should be considered with the fact that the appellants (manufacturers) were to prefer all claims for recovery of damages from the carriers and any reduction in price during the currency of the agreement was to be duly reflected in the price of stock lying unsold with Gillanders and the obligation that on the termination of the contract by either the appellant (manufacturer) or Gillanders, unsold stocks lying with the latter were to be returned to the former. In the aforesaid light we are of the opinion that … this agreement as the agreement for sole selling agency and not as an outright sale.
21
Terence Correya v Maruti Udyog Limited
22
Facts
Terence Correya booked a car through Ras Motors. A deposited a bank draft made in favour of MUL. The draft was encashed but the car was not delivered for months.
23
Facts: Contention of MUL
MUL contended that there was no privity of contract between the MUL and Terence Correya and M/s. Ras Motors was not an agent. Their dealings were on principal to principal basis. The dealer used to purchase the vehicle from the MUL and then sell the same to the customers. MUL further contended that whatever amount was received from the customer through dealer, was duly credited in the account of the dealer and the cars were supplied to the dealer who alone was responsible to deliver such cars to the individual customer.
24
Judgement: Consumer Court
The Contract Act does not draw a fine distinction between different classes of agents and the Act is not exhausted and so far as the law relating to agency is concerned, it merely lays down general principles. In determining legal nature of relationship between the alleged principal and agent, the use or omission of the word "agent" is not conclusive. We must, therefore, examine the true nature of the agreement and the subsequent dealings amongst the parties and then decide whether it established relationship of agency under the law.
25
… Cond
The relationship of principal and agent may be constituted - (a) by express appointment by the principal; (b) by implication of law, from conduct or situation of the parties or from the necessity of the case; or (c) by subsequent ratification by the principal of the acts done on his behalf.
26
… Cond
… notwithstanding different wordings used in the agreement of dealership entered into between respondent No. 1 and respondent No. 2, the latter was clearly acting as an agent of the former in booking Maruti cars, accepting the booking amount and remitting the same to the former and making ultimate delivery of cars to the customers. Both the respondents were, therefore, jointly and severally responsible to either deliver the car or to refund the booking amount with interest to the complainant.
27
doc_253246998.ppt
An Agent is one who acts for, or in the place of, another, by authority from him; one entrusted with the business of another.
Agent, Agency and Principal
1
Agent, Agency and Principal
2
Case: Agents
X, a retail electrical shop, exclusively vends products of a popular brand. It buys the products from a wholesaler in the city. X describes the shop as an agency of the company whose products he is vending.
D is a business call centre. A credit card company gives it a list of credit card holders, whose payments are overdue. The task of D is to call up the persons and remind them that their payment is overdue. The executives of D represent themselves to be agents for the credit card company.
3
… Cond
C is a stock agent who has been asked by his client to sell certain stocks. The client has specified a ceiling price. What is the difference among the three situations?
4
Summary
Only the stock broker has the authority and capacity to find a buyer on his own. Acting for the seller, he will commit him to another person in a relationship of seller-buyer. Three parties: Principal- Agent and the third party
5
Contract Act: Principal and Agent
182. Agent and Principal defined.- 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".
6
Contract Act: Express and Implied
186. Agents authority may be expressed or implied.- The authority of an agent may be expressed or implied. 187. Definitions of express and implied authority.- An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, may be accounted circumstances of the case.
7
Contract Act: Consideration
185. Consideration not necessary.No consideration is necessary to create an agency.
8
Contract Act: Agent bind Principal
226. Enforcement and consequences of agents contracts.- Contracts entered into through an agent, and obligations arising from acts done by an agent, may be enforced in the same manner, and will have the same legal consequences, as if the contracts had been entered into and the acts done by the principal in person.
9
Delhi Electric Supply Undertaking v. Basanti Devi
10
Facts
It was a life insurance plan, in the name of individual employee. The employee, instead of paying directly to the LIC, under the scheme, authorised the employer to deduct the amount and pay it to the LIC.
DESU had deducted premium amount from the salary of Bhim Singh but not remitted it to the LIC. Bhim Singh died. The LIC disclaimed liability claiming that the policy had lapsed due to nonpayment of premium amount.
11
Judgement: Supreme Court
It is a matter of common knowledge that Insurance Companies employ agents. When there is no insurance agent as defined in Regulations and the Insurance Act, general principles of the law of agency as contained in the Contract Act are to be applied.
12
… Cond
… Under Section 185 no consideration is necessary to create an agency. … Under the agreement between LIC and DESU, premium was payable to DESU who was to deduct every month from the salary of Bhim Singh and to transmit the same to LIC. DESU had, therefore, implied authority to collect premium from Bhim Singh on behalf of LIC. There was, thus, valid payment of premium by Bhim Singh. Authority of DESU to collect premium on behalf of LIC is implied.
13
Chairman, Life Insurance Corporation v Rajiv Kumar Bhasker
14
Facts
BHEL had adopted the same scheme as DESU in the previous case. BHEL defaulted in remitting the premium.
15
Judgement: Supreme Court
An agency can be created expressly or by necessary implication. It may be true that the employers in response to the proposal made by the Corporation stated that they would act as agents of their employees and not that of the Corporation. … but keeping in view the fact that the Corporation did not make any offer to the employees nor would directly make any communication with them regarding payment or non-payment of the premium or any other matter … including the lapse of the policy, if any, it cannot be said that the employer had no role to play on behalf of the Corporation.
16
… Cond
It is well-settled that for the purpose of determining the legal nature of the relationship between the alleged principal and agent, the use of or omission of the word "agent" is not conclusive. If the employee had reason to believe that his employer was acting on behalf of the Corporation, a contract of agency may be inferred.
17
Snow White Industrial Corporation v. Collector of Central Excise
18
Facts
Manufacturers: Snow White Industrial Corporation are manufacturers of 'Supercem Waterproof Cement Paint' and other allied products in their factory at Madras. Buyer or Agent: Gillanders Arbuthnot and Co. Ltd., of Calcutta had an 'agreement of sale' with Gillanders Arbuthnot and Co. Ltd., of Calcutta for selling its products. Were they buyers of agents?
19
Judgement: Supreme Court
… it depends on the facts and circumstances of each case to determine the true nature of the dealings between the parties. In the instant case the most important fact suggesting agency was the clause which enjoined that the stocks left over unsold beyond two years from their receipt could be returned to the appellants who were bound to replace these. …
20
… Cond
This should be considered with the fact that the appellants (manufacturers) were to prefer all claims for recovery of damages from the carriers and any reduction in price during the currency of the agreement was to be duly reflected in the price of stock lying unsold with Gillanders and the obligation that on the termination of the contract by either the appellant (manufacturer) or Gillanders, unsold stocks lying with the latter were to be returned to the former. In the aforesaid light we are of the opinion that … this agreement as the agreement for sole selling agency and not as an outright sale.
21
Terence Correya v Maruti Udyog Limited
22
Facts
Terence Correya booked a car through Ras Motors. A deposited a bank draft made in favour of MUL. The draft was encashed but the car was not delivered for months.
23
Facts: Contention of MUL
MUL contended that there was no privity of contract between the MUL and Terence Correya and M/s. Ras Motors was not an agent. Their dealings were on principal to principal basis. The dealer used to purchase the vehicle from the MUL and then sell the same to the customers. MUL further contended that whatever amount was received from the customer through dealer, was duly credited in the account of the dealer and the cars were supplied to the dealer who alone was responsible to deliver such cars to the individual customer.
24
Judgement: Consumer Court
The Contract Act does not draw a fine distinction between different classes of agents and the Act is not exhausted and so far as the law relating to agency is concerned, it merely lays down general principles. In determining legal nature of relationship between the alleged principal and agent, the use or omission of the word "agent" is not conclusive. We must, therefore, examine the true nature of the agreement and the subsequent dealings amongst the parties and then decide whether it established relationship of agency under the law.
25
… Cond
The relationship of principal and agent may be constituted - (a) by express appointment by the principal; (b) by implication of law, from conduct or situation of the parties or from the necessity of the case; or (c) by subsequent ratification by the principal of the acts done on his behalf.
26
… Cond
… notwithstanding different wordings used in the agreement of dealership entered into between respondent No. 1 and respondent No. 2, the latter was clearly acting as an agent of the former in booking Maruti cars, accepting the booking amount and remitting the same to the former and making ultimate delivery of cars to the customers. Both the respondents were, therefore, jointly and severally responsible to either deliver the car or to refund the booking amount with interest to the complainant.
27
doc_253246998.ppt