Page 73 - DMGT407Corporate and Business Laws

Corporate and Business Laws

Notes held personally liable if his acts are not ratified by the alleged principal. Further, agent
will be guilty of warranty of authority even where his authority is terminated without his
knowledge, e.g., by death or lunacy of the principal.
2. Where the agent expressly agrees to be personally bound. This sort of stipulation may be
provided particularly where principal does not enjoy much creditworthiness and the
third parties wish to ensure the payment or performance.
3. Where agent signs a negotiable instrument in his own name. In case agent signs a negotiable
instrument without making it clear that he is signing it as agent only, he may be held
personally liable on the same. He would be personally liable as the maker of the note,
even though he may be described in the body of the note as the agent (s.28, Negotiable
Instrument Act, 1881).
4. Agent with special interest or with a beneficial interest, e.g., a factor or auctioneer, can sue
and be sued personally.
5. When agent is guilty of fraud or misrepresentation in matters which do not fall within his
authority (s.238).
6. Where trade usage or custom makes agent personally liable.
7. Where the agency is one coupled with interest.

Task Analyse the rights and duties of the agents in insurance industry.

Self Assessment

Fill in the blanks:
13. Where agent acts either without any authority or exceeds his authority, he is deemed to
have committed breach of ……………….of authority in such a case.
14. Agent is only a connecting link between the principal and…………………….

3.8 Termination of Agency

3.8.1 Circumstances under which Agency Terminates or Comes to an
End (S.201)

1. On revocation by the principal: The principal may, by notice, revoke the authority of the
agent at any time. Where the agent is appointed to do a single act, agency may be revoked
any time before the commencement of the act. In case of a continuous agency, notice of
revocation is essential to the agent as well as to the third parties who have acted on the
agency with the knowledge of the principal.
Where agency is for a fixed period of time and the contract of agency is revoked without
sufficient cause, compensation must be paid to the agent (s.205). However, the agency is
irrevocable in two cases: (i) Where the authority of the agent is one coupled with interest;
i.e., the agent has an interest in the subject-matter of the contract. The principal cannot
revoke the authority given to his agent after the authority has been partly exercised so far
as regards such acts and obligations already done in the agency (s.204).

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