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Unit 9: Law of Agency

9. Ratification cannot be made so as to subject a third party to damages or terminate any right Notes
or interest of a third person (s.200).

Examples:
1. Amar, not being authorised thereto by Bharat, demands on behalf of Bharat, the delivery
of some property of Bharat, from Cooper, who is in possession of it. This demand cannot

be ratified by Bharat, so as to make Cooper liable for damages for his refusal to deliver.
2. Amar holds a lease from Bharat terminable on three months notice. Cooper, an unauthorised

person, gives notice of termination to Amar. The notice cannot be ratified by Bharat, so as
to be binding on Amar.

9.2.7 Agency Coupled with Interest

Agency is said to be coupled with interest when authority is given for the purpose of securing

some benefit to the agent. In other words, where the agent has himself an interest in the subject-
matter of the agency, the agency is one coupled with interest.

Examples:
1. Agent is appointed to sell properties of the principal and to pay himself out of such sale
proceeds the debt due to the agent. The authority of the agent is agency coupled with
interest.
2. A consigns 100 bags of rice to B, who has made advances to him on such rice and desires
B to sell the rice and to repay himself out of the price, the amount of his own advance. The
authority of B is an authority coupled with interest.

3. A sells the goodwill and book debts of his business to B and appoints B as his agent to
collect the debt.
It should be noted that, it is not the ordinary type of interest which every agent has such as the
remuneration, but it is that special type of interest which agent possesses that makes it agency
coupled with interest. In the case of agency coupled with interest, the agency cannot, unless
there is an express contract, be terminated to the prejudice of such interest (s.202). It becomes
irrevocable to the extent of such interest and does not terminate even by the insanity or death of
the principal.

9.3 Classification of Agents
Agents may be classified from different points of view. One broad classification of agents is:

(i) mercantile or commercial agents and (ii) non-mercantile or non-commercial agents. Another

classification of agents is: (1) general and (2) special.
9.3.1 Special and General Agents

A special agent is a person appointed to do some particular act or enter into some particular
contract. A special agent, therefore, has only a limited authority to do the specified act. If he does

anything beyond the specified act, he runs the risk of being personally liable since the principal
may not ratify the same. A general agent, on the other hand, is one who is appointed to represent

the principal in all matters concerning a particular business, e.g., manager of a firm or managing
director of a company.

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