Chapter 4 : Agency
In agency, there are in effect two contracts: a) The first contract made between the principal and the agent which the agent derives his authority to act and on behalf of the principal; and b) The second contract made between the principal and the third party through the work of the agent. Who can become a principal? A person who is: S136 CA 1950 – any person who is 18 years old and above and who is of sound of mind.
Who can become an agent? A person who is: S137 CA 1950 – an agent need to be a major or sound mind. If he/she is a minor or unsound mind, he/she would not be liable towards his/her principal for acts done as agent.
4.3
FORMATION OF AGENCY
Like any other contract, a contract of agency can be expressed or implied from the circumstances and the conduct of the parties. In other words, the authority of an agent may be expressed (i.e. given by words spoken or written) or implied (i.e. inferred from things spoken or written or from the ordinary course of dealings). Section 130 Contract Act 1950 states ‘no consideration is necessary in order to form a contract of agency’. Generally, an agency may arise in the following ways: o By express appointment by the principal o By implied appointment by the principal o Ratification by the principal o By necessity o By the doctrine of estoppel 4.3.1 By Express Appointment by the Principal
An agent may be appointed expressly either in written or oral form. According to Section 140 Contract Act 1950, an authority is said to be express when it is given by words spoken or written. The provision also states that,
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