Q-3: Discuss the Right and Duties of agent and Principal. OR Describe the duties of principal and rights of an agent. OR Define agent. Discuss its kinds and duties.
Under Section 182
“An agent is a person who is employed by the principal in order to represent in the business dealings.”
Following are the important kinds of an agent:
(1) Broker (2) Commission agent (3) Factor
(4) Deceredere agent (5) Co-agent (6) Sub-agent
RIGHTS OF AN AGENT
Following are the rights of an agent.
1. RIGHT OF REMUNERATION
It is the basic right of an agent that he should receive the agreed remuneration of his services. In the absence of agreement an agent has a right to receive the reasonable remuneration according to custom and usage.
2. Right Of Compensation
In case of injury caused to agent by the negligence of the principal may get compensation by the principal.
3. RIGHT TO RETAIN MONEY
In conducting the business if an agent advances or spends some money for the betterment of a business. He has also right to retain that amount from the total sum received by him on account of the principal.
4. RIGHT OF LIEN
An agent has also a right to retain the goods.or property of a principal until payment is due as received by him.
5. SO INDEMNITY RIGHT
Under Section 22
“An agent has a right to be indemnified against the liabilities falls on him”.
DUTIES OF AN AGENT OR RIGHTS OF A PRINCIPAL
Following are the duties of an agent.
1. OBEY THE INSTRUCTIONS
It is the basic duty of an agent that he obeys the lawful instructions of the principal. If he fails to obey the instructions then he will be liable for any loss sustained by the Principal.
Suppose the Principal asks to his agent to insure the goods, but the agent fails to do so due r.o his negligence, so he will be liable to compensate the Principal in events of goods lost.
2. CONDUCTING BUSINESS
It is the duty of an agent to conduct the business of his Principal according to the directions given by him. While performing the services he should keep in view the directions of the principal or prevailing customs in business.
3. KEEPING / SHOWING OFF ACCOUNTS
It is the duty of an agent that he should maintain the True accounts properly and submit it to the principal on his demand. He should keep the property and money of Principal separate from his own,
4. RETURN OF UNDUE PROFIT
If an agent has earned undue profit from the business, he should return it to the principal. He can however deduct all money due to himself in respect of remuneration and other expenses.
5. USE OF SKILL AND KNOWLEDGE
It is the duty of the agent that he should perform his duties with as much skill and knowledge as is generally shown by an ordinary prudence in similar business.
Suppose “A” an agent has the authority to sells the goods on credit. He sells the goods on credit to “B” without making the proper and usual enquiries as to the solvency of “B’\ “B” at the time of sale is insolvent. So A” is liable for any loss sustained by the principal.
6. COMMUNICATION WITH PRINCIPAL
It is the duty of the agent that he should gives all the information about the business to the principal. He should seek instructions from his principal. He should not keep any thing secret from his principal.
7. PAYMENT OF ALL SUM
It is the duty of an agent to pay his principal all the sums received on his account.
8. PRINCIPAL DEATH tASE
If principal dies or becayse insane it is the duty of the agent that he should protect or save the goods as he was doing in the life of principal. Now he will protect the interest of the legal heirs.
9. NOT TO DEAL IN HIS OWN ACCOUNT
An agent should not mix his account with the principal. It is his duty that he should keep the accounts of a principal separate.
10. PERFORMANCE WITH HONESTY
PERSONAL LIABILITIES OR GROUNDS ON WHICH AN AGENT CAN BE SUED
Following are the personal liabilities of an agent.
1- NOT DISCLOSE THE NAME OF PRINCIPAL
If agent does not show the name of principal then he himself becomes liable and also may
2- RECEIVING OF MONEY BY MISTAKE
If an agent receives money by mistake or fraud then he comes liable and also may be sued.
3- ACT WITHOUT AUTHORITY
If the agent acts without authority of the Principal then he becomes liable.
4- SIGNING OF CONTRACT WITH HIS OWN NAME
An agent is also liable when he signs the contract in his own name without telling that he is signing on behalf of his principal.
5- SIGNING OF BILL WITH HIS OWN NAME
If an agent signs the bill of exchange himself then he becomes liable.
6- ACCEPTANCE OF LIABILITY
If agent is also liable if he has agreed to accept the liability of the third party personally.
7- PERSONAL DEALING WITH THIRD PARTY
If an agent has personal dealing with third party then principal is not liable for any of his
8- CONTRACT WITH FOREIGNERS
If an agent makes a contract with a foreigner for the sale and purchase of goods then he comes liable himself for the performance of contract.