Page 60 - DMGT407Corporate and Business Laws

Unit 3: Contracts of Bailment and Agency

2. Right to sell (s.169): When a thing which is commonly the subject of sale is lost, if the Notes
owner cannot with reasonable diligence be found or if he refuses, upon demand, to pay
the lawful charges of the finder, the finder may sell it. (i) when the thing is in danger of
perishing or of losing the greater part of its value; (ii) when the lawful charges of the
finder in respect of the thing found, amount to two-third of its value.

Self Assessment

Fill in the blanks:
3. A finder of lost goods is treated as the ………………of the goods found.
4. A finder of lost goods may retain the goods until he receives the compensation for money
spent in preserving the goods and amount spent in finding the…………………...

3.3 Definition of Agent and Agency and Kinds of Agencies

3.3.1 Meaning of Agent and Agency (S.182)

Agent is “a person employed to do any act for another or to represent another in dealings with
third person”. Thus, agent is a person who acts in place of another. The person for whom or on
whose behalf he acts is called the Principal. For instance, Anil appoints Bharat, a broker, to sell
his Maruti Car on his behalf. Anil is the Principal and Bharat is his agent. The relationship
between Anil and Bharat is called Agency. This relationship is based upon an agreement whereby
one person acts for another in transaction with a third person.
The function of agent is to bring about contractual relation between the principal and a third
party. The agent is only a connecting link between the principal and the third party and is
rightly called as ‘conduit pipe’. The acts of the agent, within the scope of the instructions, bind
the principal as if he has done them himself. The phrase ‘qui facit per alium facit per se’ contains the
principle of agency, which means, he who does through another does by himself. In simple
words, the act of agent is the act of the principal.

Agent must be distinguished from a servant. A servant acts under the direct control and
supervision of his master and is bound to carry out all his reasonable orders. Agent, on the other
hand, though bound to exercise his authority in accordance with lawful instructions of the
principal is not subject to his direct supervision and control. Agent, therefore, is not a servant;
though a servant, may for some purposes, be his master’s agent. Further, agent may work for
several principals at the same time, a servant usually serves only one master.
No consideration is necessary to create agency (s. 185). The fact that the principal has consented
to be represented by the agent is a sufficient detriment and consideration to support the promise
of the agent to act in that capacity. However, in case no consideration has passed to the agent, he
is not bound to do the agreed work, but once he begins, he must complete it to the satisfaction
of the principal.

Who can Employ Agent?

Any person who is of the age of majority according to the law to which he is subject and who is
of sound mind, may employ agent (s.183). No qualifications as such are prescribed for a person
to be agent except that he has attained majority and is of sound mind. Thus, a minor or a lunatic
cannot contract through agent since they cannot contract themselves personally either. If agent

LOVELY PROFESSIONAL UNIVERSITY 53