Page 79 - DMGT407Corporate and Business Laws

Corporate and Business Laws

Notes 3.10 Summary

The contract of bailment is defined as the delivery of goods by one person to another for
some purpose, upon an agreement that they shall, when the purpose is accomplished, be
returned or otherwise disposed of according to the directions of the person delivering them.
A contract of bailment terminates under certain circumstances.

Agent is a person employed to do any act for another or to be represent another in
dealings with third persons.
The person for whom or on whose behalf he acts is called the principal.

The function of an agent is to bring about contractual relation between the principal and
a third party.
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.
A contract of agency may be created by an express agreement or by implication or by
ratification.
Where agent is appointed to do a particular act, agency terminates when that act is done or
when the performance becomes impossible.

3.11 Keywords

Agent: He is a person who is employed to do any act for another or to represent another in
dealings with third persons.
Bailment: It is the delivery of goods by one person to another for some purpose, upon a contract
that they shall, when the purpose is accomplished, be returned or otherwise disposed of according
to the directions of the person delivering them.
Concealed Principal: Where an agent conceals not only the name of the principal but the very
fact that there is a principal, the principal is called a concealed principal.
Lien: It is a right in one person to retain that which is in his possession, belonging to another,
until some debt or claim is settled.
Power of Attorney: It is an instrument or a deed by which a person is empowered to act for and
in the name of the person executing it.
Principal: He is a person for whom or on whose behalf an agent works.
Sub-agent: He is a person who is a appointed by an agent to work in the matter of agency, and
therefore can bind the principal by his acts.
Undisclosed Principal: Where an agent, though discloses the fact that he is agent working for
some principal, conceals the name of the principal, such a principal is called an undisclosed
principal.

3.12 Review Questions

1. Every ratification relates back and becomes equivalent to a prior command. Comment.
2. A customer entrusts certain important documents for safe custody to his bank. The bank
keeps the documents in a wooden box. Later it is found that the documents were destroyed
by white ants. What is the bank’s liability to the customer?

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