Describe the duties of principal and rights of an agent

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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.

Ans:    AGENT

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

(7)        Auctioner

 

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.

EXAMPLE

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.

EXAMPLE

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

be sued.

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

dealing.

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. 

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