Page 128 - DMGT102_MERCANTILE_LAWS_I

Mercantile Laws-I

Notes
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
possession of the agent. The right of lien will, therefore, be lost where he parts with the
possession of goods or papers. But if the possession is obtained from the agent by fraud or
unlawful means, his lien is not affected by the loss of possession.

4. Right of stoppage in transit: The agent can stop the goods while in transit in two cases: (a)
where he has purchased goods on behalf of the principal either with his own funds, or by
incurring a personal liability for the price, he stands towards the principal in the position of
an unpaid seller. Like an unpaid seller, he enjoys the right of stopping the goods in transit if
in the meantime the principal has become insolvent. (b) Where agent holds himself liable to
his principal for the price of the goods sold, for example, del credere agent, he may exercise
the unpaid seller’s right of stopping the goods in transit in case of buyer’s insolvency.

5. Right of indemnification (Ss. 222-224): The principal is bound to indemnify agent against
the consequences of all lawful acts done by the agent in exercise of authority conferred on
him.

Examples:
(i) John, at Singapore, under instructions from Amin at Calcutta, contracts with Cooper to
deliver certain goods to him. Amin does not send the goods to John and Cooper sues John
for breach of contract. John informs Amin of the suit and Amin authorizes him to defend
the suit. John defends the suit and is compelled to pay damages and costs and incurs
expenses. Amin is liable to John for such damages, cost and expenses.
(ii) Bharat, a broker at Calcutta, by the order of Amin, a merchant there, contracts with
Cooper for the purchase of 10 casks of oil for Amin. Afterwards Amin refuses to receive the
oil and Bharat sues Cooper. Bharat informs Amin, who repudiates the contract altogether.
Bharat defends, but unsuccessfully and has to pay damages and costs and incur expenses.
Amin would be liable to Bharat for such damages, costs and expenses.
Section 223 further provides that agent shall have a right to be indemnifi ed against
consequences of acts done in good faith.

122 LOVELY PROFESSIONAL UNIVERSITY