Page 64 - DMGT407Corporate and Business Laws

Unit 3: Contracts of Bailment and Agency

3.4 Classification of Agents Notes

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.

3.4.1 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.
3.4.2 Mercantile or Commercial Agents

A mercantile or commercial agent may assume any of the following forms: broker, factor,
commission agent, del credere agent, auctioneer, banker, Pakka and Katcha Adatias and indentor.
A broker is a mercantile agent engaged to buy and/or sell property or to make bargains and
contracts between the engager and third party for a commission (called brokerage). A broker
has no possession of goods or property. He is merely a connecting link between the engager and
a third party. The usual method of dealing by a broker is to make entries of the terms of contract
in a book, called the memorandum book and to sign them. He then sends the particulars of the
same to both parties. The document sent to the seller is called the sold note and the one sent
buyer is called the bought note. A factor is a mercantile agent who is entrusted with the possession
of goods with an authority to sell the same. He can even sell the goods on credit and in his own
name. He is also authorised to raise money on their security. A factor has a general lien on the
goods in his possession. A factor, however, cannot barter the goods, unless expressly authorised
to do. Also, he cannot delegate his authority.
A commission agent is agent who is employed to buy or sell goods or transact business. The
remuneration that he gets for the purpose is called the commission. A commission agent is not
liable in case the third party fails to carry out the agreed obligation. A commission agent may
have possession of the goods or not. His lien in case of goods in his possession is a particular
lien. A del credere agent is one who, in consideration of an extra remuneration, called a del
credere commission, guarantees the performance of the contract by the other party. A del credere
agent thus occupies the position of a guarantor, as well as of agent. He is normally appointed in
case of deals with foreign nationals, about whom the principal may know nothing.

Did u know? An auctioneer is agent appointed to sell goods by auction. He can deliver the
goods only on receipt of the price. An auctioneer can recover the price from the highest
bidder (i.e., the buyer) by filing a suit in his own name. In any case, an auctioneer can sell
only by public auction and not by a private contract. His position differs from a factor in
as much as the auctioneer has a particular lien, whereas the factor has a general lien.

Though the relationship between banker and customer is ordinarily that of debtor and creditor,
he acts as his agent when he buys or sells securities on his behalf. Similarly, when he collects
cheques, bills, interest, dividends, etc., or when he pays insurance premium out of customer’s
account, as per customer’s mandate, he acts as his agent.

LOVELY PROFESSIONAL UNIVERSITY 57