Law of Agency Indian Contract Act

The Law of Agency under Indian Contract Act: An Overview

The Indian Contract Act, 1872 defines the Law of Agency which regulates the relationship between principal and agent. The Act specifies the rights, obligations, and duties of both the parties involved in the agency relationship. This article provides an overview of the Law of Agency under Indian Contract Act.

What is Agency?

Agency refers to the relationship that exists between the principal and agent where the agent acts on behalf of the principal. An agent is a person who represents another in dealings with third parties. The principal is a person who authorizes the agent to act on their behalf.

Types of Agency

There are two types of agency:

1. Express Agency – An express agency is where the authority of the agent is expressly given and agreed upon by the principal and agent.

2. Implied Agency – An implied agency is where the authority of the agent is implied from the conduct of the parties or from the circumstances surrounding the agency relationship.

Duties of Agent

The duties of an agent towards the principal are as follows:

1. Duty of loyalty

2. Duty to act with reasonable care and skill

3. Duty to render accounts

4. Duty to communicate with the principal

5. Duty to obey instructions

Duties of Principal

The duties of a principal towards the agent are as follows:

1. Duty to compensate the agent

2. Duty to indemnify the agent

3. Duty to cooperate with the agent

4. Duty not to interfere with the agent’s actions

5. Duty to reimburse expenses

Termination of Agency

An agency relationship can be terminated in the following ways:

1. By agreement between the principal and agent

2. By operation of law

3. By notice

4. By breach of contract

Conclusion

The Law of Agency under Indian Contract Act provides a framework for the relationship between principal and agent. It is important for both the parties to understand their rights, obligations, and duties to ensure a successful agency relationship. A well-drafted agency agreement can help clarify the terms of the relationship and help prevent disputes.