JAIIB LRAB Unit 45 - Contracts Of Agency

An agent, is a person employed to do any act for another person or to represent another person in dealings with some third person.

 

The person for whom such act is done (or who is represented) is called the principal.

 

MEANING OF AGENCY

 

The person should be authorised to do an act for a person in such a manner, as to bind that person, i.e. to make him answerable for such acts done on his behalf. The agent creates contractual relations between two separate persons when he enters into a contract on behalf of one of the parties.

 

NORMAL RULES OF CONTRACT

 

The contract between the principal and his agent is a contract in itself and that is also governed by the normal rules of contract.

 

PERSONS TO BE MAJORS AND OF SOUND MIND

 

Any person who is a major according to the law of which he is subject, and who is of sound mind, may employ an agent. Any person can become an agent, if he is a major and of sound mind.

 

CONSIDERATION

 

No consideration is necessary to create an agency.

 

AUTHORITY OF AN AGENT

 

The authority of an agent may be expressed or implied. An authority is said to be expressed, when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case.