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Commercial Law

Notes 7. Not entitled to remuneration for misconduct: Agent who is guilty of misconduct in the
business of agency is not entitled to any remuneration in respect of that part of the business
which he has misconducted.

Examples: (i) Amar employs Bharat to recover ` 50,000 from Cooper and to lay it
out on a good security. Bharat recovers the amount and lays out ` 30,000 on good security,
but lays out ` 20,000 on security which he ought to have known to be bad whereby Amar
loses ` 5,000. Bharat is entitled to remuneration for recovering Rs 50,000; and for investing
` 30,000. He is not entitled to any remuneration for investing ` 20,000 and he must make
good the ` 5,000 to Amar.
(ii) Amar employs Bharat to recover ` 10,000 from Cooper. Through Bharat’s misconduct
the money is not recovered. Bharat is not entitled to any remuneration for his services and
must make good the loss.

8. Not to disclose confidential information supplied to him by the principal.
9. To take all reasonable steps for the protection and preservation of the interests entrusted
to him when the principal dies or becomes of unsound mind (s.209).

Rights of Agent

Agent has a number of rights. These are:
1. Right to remuneration (Ss. 219-220): Agent is entitled to his agreed commission or
remuneration and if there is no agreement, to a reasonable remuneration. But the
remuneration does not become payable unless he has carried out the object of agency,
except where there is a contract to the contrary. When the object of agency is deemed to
have been carried out or the act assigned to the agent is completed would depend on the
terms of the contract. Further, the transaction for which the agent claims remuneration
should be the direct result of his services.

Example: Pawar appoints Amar, a broker. Amar is entitled to his commission
when he has procured a party who is willing to negotiate on reasonable terms and to
desirous of entering into a contract with Pawar.
Agent, however, is not entitled to any remuneration in respect of that part of the business
which he has misconducted (s.220).
2. Right of retainer (S.217): Agent may retain, out of any sums received on account of the
principal in the business of the agency, all moneys due to himself in respect of advances
made or expenses properly incurred by him in conducting such business and also such
remuneration as may be payable to him for acting as agent. This is known as agent’s right
of retainer. However, the right of retainer can only be claimed on moneys received by
him in the business of agency. He cannot, therefore, retain sums received by him in one
business for his commission or remuneration in an other business on behalf of the same
principal.
3. Right of lien (S.221). In the absence of any contract to the contrary, agent is entitled to
retain goods, papers and other property, whether movable or immovable of the principal
received by him, until the amount due to himself for commission, disbursements and
services in respect of the same has been paid or accounted for to him. This lien of the

agent is a particular lien confined to all claims arising in respect of the particular goods
and property. By a special contract, however, agent may get a general lien extending to
all claims arising out of the agency. Since, the word ‘lien’ means retaining possession; it
can be enjoyed by the agent only where the goods or papers are in actual or constructive

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