Frequently Asked Questions (FAQs)
1. What is the test of agency?
Answer:
(a) Whether the person is in the capacity to bind the principal and the principal is answerable to the third party for his acts.
(b) Whether he can establish a privity of contract between the principal and third party.
If answer to the above two statements is yes, only then contract of agency is established between the agent and the principal.
2. What is Agency by Estoppel?
Answer:
When a person, by his act or statement, willfully leads another person to believe that a person is his agent then he is estopped or prevented from denying the truth of agency in such circumstances. The provisions of agency by Estoppel is provided under section 237 of the Indian Contract Act.
3. What are the essentials of Agency by Necessity?
Answer:
- There should be an actual and definite necessity for acting on behalf of the principal;
- Within the available time it should be impossible to obtain the principal’s instructions;
- The person acting as agent must have acted banafide.
4. Can the agency be revoked?
Answer:
Yes, agency can be revoked in the following ways:
- Revocation
- Renunciation by Agent
- Completion of Business
- Death or Insanity
- Principal’s Insolvency
- On Expiry of Time
5. What is Sub-Agent?
Answer:
Sub agent is a person who is appointed by the original agent in the business of agency on his direction and control and being responsible to the principal for acts of a sub-agent.
Contract of Agency : Meaning, Characteristics, Methods and Types
An Agency agreement establishes the legal relationship between the agent and its principal. It ensures that both parties understand their roles and responsibilities in a contract, which helps to create mutual awareness that the agent shall bind the principal for his acts done within his ambit of authority. The Contract of Agency also establishes the rights and obligations of an agent in a contract of agency, and it also defines the circumstances under which the agent shall be personally liable for his acts on behalf of the principal along with the legal position of the agent, the principal and any other third parties involved.
Geeky Takeaways:
- Contract of Agency can be observed very easily in business as business houses use the services of agencies to expand their operations and also to focus on their key operations.
- Some examples include appointing a human resource professional to hire individuals or attorneys for legal representation or using the services of a stockbroker.
- The provisions regarding the Contract of Agency are contained in Sections 182 to 238 of the Indian Contract Act, 1872.
Table of Content
- What is Agency?
- Characteristics of an Agency
- Methods of Creating Agency
- Types of Agent
- Conclusion
- Frequently Asked Questions (FAQs)