Agent - Types, Right, Duties

Types of Agents

We have already seen that an Agent is a person appointed by Principal to do certain acts on behalf of the Principal. Depending on the extent of authority given by the Principal, the agents can be classified as follows:

a. General Agent: A general Agent is one who is employed to do all acts connected with a particular business or employment, e.g. a manager of firm. He can bind the Principal by doing any thing which falls within the ordinary scope of that business, whether he is actually authorised for any particular act or not, provided the third party acts bona fide.

b. Special Agent. A special Agent is one who is employed to do some particular act or represent his Principal in some particular transaction. For example, an Agent may be appointed to sell the car of the Principal. This is a particular act for which the Agent is appointed. Therefore, as soon as the act is done, the authority of the Agent comes to end. If a special Agent does any thing outside his authority, the Principal is not bound by it. c. Universal Agent. A Universal Agent is the one whose authority is unlimited i.e. who is authorised to do all the acts, which the Principal can lawfully do and delegate. He enjoys extensive powers to transact any kind of business on behalf of his Principal.

From the viewpoint of the nature of work performed by the Agents, they may be classified as under:

a. Mercantile agent.  A Mercantile agent is one who has authority either to sell goods or to buy goods or raise money on the security of goods. The various kinds of mercantile agents are – 1) Factor. A factor is a mercantile agent to whom goods are entrusted for sale. He enjoys wide discretionary powers in relation to the sale of goods. He sells the goods in his own name upon such terms as he thinks fit. He may also pledge the goods. 2) Commission agent. A commission agent is a mercantile agent who buys or sells goods for his Principal on the best possible terms in his own name and who receives commission for his labours. He may have possession of the goods or not. 3) Del credere agent. He is one who, in consideration of an extra commission, guarantees his Principal that the third persons with whom he enters into contracts on behalf of the Principal, shall perform their financial obligations, that is, if the buyer does not pay, he will pay. Thus, such agent occupies the position of a Surety as well as of an agent. 4) Broker. He is one who is employed to make contracts for the purchase and sale of goods. He is not entrusted with the possession of goods. He simply acts as a connecting link and brings the two parties together to bargain and if the transaction materializes, he is entitled to his commission called brokerage. He makes contracts in the name of the Principal. b. Sub agent. A sub agent is a person employed by, and acting under the control of, the original agent in the business of the agency. Thus, a person employed by an agent is called a sub-agent. A sub agent acts under the control of the original agent. The relation between the original agent and the sub-agent is that of Principal and agent. In other words, the original agent acts as Principal for the sub-agent. c. Substituted agent. When an agent has express or implied authority of his Principal to name another person to act for the Principal and the agent names another person accordingly, such person is not a sub-agent but a substituted agent of the Principal in respect of the business which is entrusted to him. Thus, an agent simply names or appoints a substituted agent at the request of the Principal and thereafter drops out altogether from the scene. The substituted agent is directly responsible to the Principal and a privity of contract is deemed between him and Principal. d. Non-mercantile agent. As the name suggests, they are the agents who are appointed for the purposes other than business purposes. They include advocates, insurance agents etc. 

Rights of Agent

An Agent has the following rights against his Principal:

1.  Right to receive remuneration. The Contract Act assumes that every agent is entitled to remuneration from the Principal, unless it is agreed otherwise in the contract of agency. In other words, an agent may agree to act without remuneration and such contract is a good contract. However, the agent is entitled to the remuneration which is agreed in the contract of agency and if nothing is mentioned in the contract, then to a reasonable remuneration. This right arises only when the work for which he is appointed is complete. It is not necessary that the contract, which he has entered into on behalf of the principal, should be actually acted upon. Thus, an agent shall be entitled to the agreed remuneration even if there is a breach of contract between the principal and the third party. An agent who is guilty of misconduct in the business of agency is not entitled to any remuneration. In addition, he is liable to compensate the Principal for any loss caused due to his misconduct. 2. Right of retainer. An agent has a right to retain that much portion of money, which is due to him as remuneration and other expenses, out of the sums received on account of the Principal. It is necessary that the agent retains only the agreed or reasonable remuneration and only those expenses which are properly incurred by him for carrying out his functions as agent. 3. Right of lien. An agent has the right to retain goods, papers and other property, whether moveable 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 right of an agent, however, is subject to contract to the contrary. 4. Right to be indemnified against consequences of lawful acts. An agent has also the right to be indemnified against the consequences of all lawful acts done by him in exercise of the authority conferred upon him. An agent acts for and on behalf of the Principal. He functions as per the directions and instructions given to him. If, as a result of the acts done by him in pursuance of such instructions, an agent has to incur any expenditure or suffer any loss, he has a right to be indemnified by his Principal for such expenditure or loss. However, it should be noted that this indemnity is not available when the act is apparently unlawful or criminal. 5. Right to be indemnified against consequences of acts done in good faith. An agent has a right to be indemnified against consequences of an act done in good faith though it turns out to be injurious to the rights of third persons. For the purpose of carrying out the instructions of the Principal, an agent may have to do certain acts, which may prove to be harmful to the rights of third persons. (not the acts which are apparently illegal) Under such circumstances, the liability incurred by the agent has to be indemnified by the Principal. 6. Right to compensation. The agent has a right to be compensated by his Principal for injuries sustained by him due to the Principal’s neglect or want of skill. 7. Right of stoppage of goods in transit. Just like an unpaid seller, an agent has a right to stop the goods in transit to the principal, if – 1) he has bought the goods either with his own money or by incurring a personal liability, and 2) the Principal has become insolvent.

Duties of Agent

An agent has the following duties and liabilities towards his Principal. 1. Duty to follow Principal’s direction or custom: The first duty of every agent is to follow the instructions of the Principal and act within the authority given by the Principal. In the absence of any instruction, an agent has to act as per the custom or practice, all the time giving paramount importance to the interests of the Principal. Any deviation by the agent from the clear instructions of the Principal will make the agent liable to pay the damages to the Principal for any loss sustained by him. For example, A appoints B as agent to carry on the business on behalf of A. It is a custom in the business that moneys in hand are invested from time to time at interest. B omits to make such investments. He is liable to make good to A the interest usually obtained by such investments. 2.  Duty to carry out work with reasonable skill and diligence. The agent must conduct the business of the agency with as much skill as is generally possessed by persons engaged in similar business, unless the Principal is aware that the agent does not possess the requisite skills. What is reasonable skill and diligence would depend on the facts of each case. If the agent does not work with reasonable care and diligence, he must make compensation to his Principal in respect of ‘direct consequences’ of his own neglect, want of skill or misconduct. However, he is not liable for any indirect or remote losses. 3. Duty to render accounts. It is the duty of an Agent to keep proper accounts of the Principal‘s money or property and submit the same to the Principal as and when demanded. If the agreement so provides, the Agent has to periodically render the accounts to the Principal. 4. Duty to communicate. It is the duty of an Agent, in cases of difficulty to use all reasonable diligence in communicating with the Principal and in seeking to obtain his instructions, before taking any steps in facing the difficulty or emergency. In other words, though it is the duty of an agent to use skill and diligence in cases of emergency, this discretion should not be contrary to the clear instructions of the Principal; and the absence of clear instructions exists when the Principal is not available to give clear instructions. Therefore, it is the duty of an Agent to use all reasonable diligence to communicate with the Principal to seek clear instructions. 5. Duty not to deal on his account. An Agent acts for the Principal. Therefore, he must not deal on his account in the business of agency, i.e. he must not himself buy from or sell to his Principal, goods, which he is asked to buy or sell on behalf of his Principal, without obtaining the consent of the Principal. If the agent violates this rule, the Principal may repudiate the transaction where it can be shown that any material fact has been knowingly concealed by the Agent or that the dealings of the Agent have been disadvantageous to the Principal. The Principal is also entitled to claim from the Agent any benefit, which he may have received from such transactions.6. Duty not to make any profit out of his agency except his remuneration.The relationship between the agent and his Principal is that of faith and trust. An Agent is therefore placed under a duty not to make any secret profits out of the agency. He must pay to his Principal all the moneys, including illegal gratifications, if any, received by him on Principal‘s account. If his acts are not bona fide, he will lose his remuneration and will have to account for the secret profits to his Principal.7. Duty on termination of agency due to Principal’s death or insanity. When the agency is terminated due to the death or insanity of the Principal, it is the duty of the Agent to take all the necessary steps to protect the interests of the legal representatives in relation to the assignments entrusted to him. 
Duty not to delegate authority. An Agent cannot delegate to another to perform acts, which he has expressly or impliedly undertaken to perform personally, unless according to the customs a sub-agent may be appointed. Therefore, it is the duty of an Agent not to further delegate his authority or appoint another person to do the acts for which he is engaged, unless he obtains the permission of the Principal in this behalf.