Void Agreements

Performance
Discharge
Breach of Legal contract
Quasi Contract
Contract of Indemnity
Contract of Guarantee
Bailment and Pledge
Agency

-Antara Rabha (15026)

-Nishant Bhati (15101)
-Shubhangi Bhatia (15168)
-Tavishi Aggrawal (15184)
-Yatin Singh (15195)
What does void mean?

Void -Not binding by law.

According to Sec 2(G)

A void agreement refers to the agreement which is not
enforceable by law.
 Expressly Declared Void
agreements
Following are the agreements which have expressly declared to be
void contracts as per the Indian contract act, 1872:-

Restrain of
Made without Restrain of By way of trade
By minor or a consideration wager
legal
person of Contingent on
unsound mind proceeding impossible
Consideration events
or the object To do Meaning of
Made under impossible
is lawful which is Restrain of
bilateral acts uncertain marriage
mistake of
fact
Restrain of marriage (Section 26)

Every agreement in restrain of the marriage of any person, other than

the minor is void

Case: Rao Rani vs. Gulab Rani

A division bench of the Allahabad High Court looked into this case
wherein the two parties were the widows of the same man, Ram Adhar.
After the death of their common husband, a dispute had arisen at the
Revenue Court regarding the matter as to who would inherit a certain
zamindari land holdings. However, the dispute was amicably settled
by the two parties by signing a compromise deed wherein it was
stated that both of them would inherit equally but if anyone would re-
marry, the entire right over the property would shift to the other.
Subsequently, Gulab Rani married again and the property came under
the complete control of Rao Rani. However, years later, Gulab Rani
filed a suit to regain ownership of part of that property and, amongst
other contentions, claimed that the compromise deed Chief Justice
Ahmad delivered the judgment stating-
All that was provided was that if a widow elected to re-marry, she
would be deprived of her rights given to her by the compromise. In
other words, no direct prohibition to re-marry was imposed by the
compromise and the compromise was arrived at in order to preserve
the family properties and to ensure their proper management.
Agreements in restrain of trade
(Section 27)

Every agreement by which one is restrained from exercising

a lawful profession, trade or any kind of, is to that extend is
void

Case: Madhub Chander V Raj Coomar

(1874) 148 LR 76
In this case two people Madhub and Raj were neighbouring
shopkeepers. They were rivals. Raj agreed to pay Madhu an
amount of money for closing his business located near his
shop. Madhub closed his business. Raj refused to pay the
agreed amount. The court held that the agreement was
void.
 Exceptions: An agreement in restraint of
trade is valid in the following cases:

Sale of goodwill:
The seller of the 'goodwill' of a business can be restrained from carrying on a
similar business, within specified local limits, so long as the buyer, or any
person deriving title to the goodwill from him, carries on a like business
therein, provided the restraint is reasonable in point of time and space.

Partners' agreements:
An agreement in restraint of trade among the partners or between any
partner and the buyer of firm's goodwill is valid if the restraint comes within
any of the following cases:
(a) An agreement among the partners that a partner shall not carry on
any business other than that of the firm while is a partner
(b) An agreement by a partner with his other partners that on retiring from
the partnership he will not carry on any business similar to that of the firm
within a specified period or within specified local limits, provided the
restrictions imposed are reasonable
(c) An agreement among the partners, upon or in anticipation of the
dissolution of the firm that some or all of them will not carry on a business
similar to that of the firm within a specified period or within specified local
limits provided the restrictions imposed are reasonable
(d) An agreement between any partner and the buyer of the firm's
goodwill that such partner will not carry on any business similar to that of
the firm within a specified period or within specified local limits, provided
the restrictions imposed are reasonable.
Exceptions: An agreement in restraint of
trade is valid in the following cases:

Trade combinations:
An agreement, the primary object of which is to regulate
business and not to restrain it, is valid. Thus, an agreement in
the nature of a business combination between traders or
manufacturers e.g., not to sell their goods below a certain
price, to pool profits or output and to divide the same in an
agreed proportion, does not amount to a restraint of trade
and is perfectly valid (Fraser & Co. vs. Bombay Ice Company).
Similarly, an agreement amongst the traders of a particular
locality with the object of keeping the trade in their own
hands is not void merely because it hurts a rival in trade
(Bhola Nath vs. Lachmi Narain).

Negative stipulations in service agreements:

An agreement of service by which a person binds himself
during the terms of the agreement, not to take service with
anyone else, is not in restraint of lawful profession and is valid.
Thus a chartered accountant employed in a company may
be debarred from private practice or from serving elsewhere
during the continuance of service (Maganlal vs. Ambica Mills
Ltd.).
Agreements in restrain of legal
proceeding(Section 28)
Any agreement in restraint of legal proceedings void

Three kinds of agreements are void:

(a) An agreement by which a party is restricted absolutely from taking usual legal
proceedings, in respect of any rights arising from a contract.

(b) An agreement which limits the time within which one may enforce his contract
rights, without regard to the time allowed by the Limitation Act.

(c) An agreement which provides for forfeiture of any rights arising from a contract, if
suit is not brought within a specified period, without regard to the time allowed by
the Limitation Act.

Restriction on Legal proceedings:

(a) The Section applies only to rights arising from a contract. It does not apply to cases of
civil or criminal wrongs or torts.

(b) This Section does not affect the law relating to arbitration.

(c) The Section does not affect an agreement whereby parties agree not to file an
appeal in a higher court. Thus where it was agreed that neither party shall appeal
against the trial courts decision, the agreement was held valid.

CASE- Baroda spinning company ltd vs Satyanaryan Marine and fire insurance company
Uncertain agreements(Section 29)

Agreements, the meaning of which is not certain, or capable of

being made certain, are void

CASE

A agrees to sell to B a hundred tons of oil. There is nothing whatever to show what
kind of oil was intended. The agreement is void for uncertainty.

A, who is a dealer in coconut oil only, agrees to sell to B one hundred tons of oil. The
nature of As trade affords an indication of the meaning of the words, and A has
entered into a contract for the sale of one hundred tons of coconut oil.
 Wagering agreements(Section
30)
Wager is a game of chance in which the contingency of either
gain or loss is wholly dependent on an uncertain event.

Agreements by way of wager are void; and no suit shall be

brought for recovering anything alleged to be won on any wager,
or entrusted to any person to abide the result of any game or other
uncertain event on which any wager is made.

An event may be uncertain, not only because it is a future event,

but because it is not yet known to the parties. Thus a wager may
be made upon the result of the cricket match which is to take
place next month in Calcutta, or upon the result of an election
which is over, if the parties do not know the result.
Secondly, the parties to a wager must have no interest in the
events happening or non-happening except the winning or losing
of the bet laid between them.
It is here that wagering agreements differ from insurance contracts
which are valid because parties have an interest to protect the life
or property, and have, for that very reason, entered into the
contract of insurance.
Insurance contracts

Insurance contracts are valid contracts even though they

provide for payment of money by the insurer on the
happening of a future uncertain event. Such contracts differ
from wagering agreements mainly in three respects:

(a) The holder of an insurance policy must have an

insurable interest in the event upon which the
insurance money becomes payable. Thus contracts of
insurance are entered into to protect an interest.

(b) Contracts of insurance are based on scientific and

actuarial calculation of risks, whereas wagering
agreements are a gamble without any scientific
calculation of risks.

(c) Contracts of insurance are regarded as beneficial to

the public, whereas wagering agreements do not
serve any useful purpose.
Example of wagering
A and B mutually agree that if it rains today A
will pay B Rs 100 and if it does not rain B will
pay A Rs 100 or where C and D enter into an
agreement that on tossing up a coin, if it falls
head upwards C will pay D Rs 50 and if it falls
tail upwards D will pay C Rs 50, there is a
wagering agreement.

CASE- Carlill vs Carbollic smoke company

Agreement contingent on
impossible events (Section 36)
Contingent agreements to do or not to do anything, if
an impossible event happens, are void, whether the
impossibility of the event is known or not to the parties to
the agreement at the time when it is made.

Illustrations

(a) A agrees to pay B 1,000 rupees if two straight lines

should enclose a space. The agreement is void.

(b) A agrees to pay B 1,000 rupees if B will marry A's

daughter C. C was dead at the time of the agreement.
The agreement is void
Agreements to do impossible
acts(Section 56)
An agreement to do an impossible act is void

Illustration

An agreement to take tourists to Canada and bring them back

to India in 15 hours is an impossible task. The agreement is void.

When a person promises to do an act that is legal and

subsequently promises to do certain illegal acts, then the first
part of the agreement is valid but the second is void.

Restitution

When a contract is void, no party is required to perform it but if

a party has received a benefit, it must restore it or compensate
the other party. This rule is based on the principle of justice and
equity that no person should be allowed to get a benefit at the
expense of another.
 Performance of Contract

The term Performance of contract means that both, the promisor,

and the promisee have fulfilled their respective obligations, which
the contract placed upon them.

For instance, A visits a stationery shop to buy a calculator. The

shopkeeper delivers the calculator and A pays the price. The
contract is said to have been discharged by mutual performance.

Section 27 of Indian contract Act says that

The parties to a contract must either perform, or offer to perform,

their respective promises, unless such performance is dispensed with
or excused under the provisions of this Act, or any other law.
 Types Of Performance

Actual Performance

When a promisor to a contract has fulfilled his obligation in

accordance with the terms of the contract, the promise is said to
have been actually performed.

Actual performance gives a discharge to the contract and the

liability of the promisor ceases to exist.

Attempted Performance

When the performance has become due, it is sometimes sufficient if

the promisor offers to perform his obligation under the contract. This
offer is also known as tender.

The rationale being that when a person offers to perform, he is

ready, willing and capable to perform.
 Discharge Of A Contract

Discharge by performance
Discharge by agreement or consent
Discharge by impossibility of performance
Discharge by lapse of time
Discharge by operation of law
Discharge by breach of contract
 Discharge By Performance

Where both the parties have either carried out or

tendered (attempted) to carry out their obligations
under the contract, is referred to as discharge of the
contract by performance.
 Discharge By
Agreement Or Consent

A contract emanates from an agreement between the parties. The

contract must also be discharged by agreement.

Discharge by substituted agreement arises when a contract is

abandoned, or the terms within it are altered, and both the parties are
in conformity over it.

Eg: A and B enter into some agreement, and A wants to change his
mind and not to carry out his terms of the contract. If he does this
unilaterally then he will be in breach of contract to B. However, if he
approaches B and states that he would like to be released from his
liabilities under the contract then the latter might agree. In that case
the contract is said to be discharged by (bilateral) agreement.
 Discharge By Impossibility Of
Performance
If whatever happens to prevent the contract from being performed

1. has not been caused by either party

2. could not have been foreseen, and

3. its effect is to destroy the basis of the contract

Then the courts will, generality, state that the contract has become
impossible to perform.

Section 56 of the Indian Contract Act clearly provides that an

agreement to do an act impossible in itself is void
 Discharge By Lapse Of
Time
The limitation act 1963, clearly states that a
contract should be performed within a specified
time called period of limitation

If it is not performed and if the promisee takes no

action within the limitation time, then he is
deprived of his remedy at law
 Discharge By Operation Of Law
Death

Merger

Insolvency

Unauthorised Alteration Of The Terms Of A Written

Agreement : A party can treat a contract discharged (i.e.,
from his side) if the other party alters a term (such as quantity
or price) of the contract without seeking the consent of the
former.
 Discharge By Operation Of Law
Merger

A contract also stands discharged through a merger that

occurs when an inferior right accruing to party in a contract
amalgamates into the superior right ensuing to the same
party.

For instance, A hires a factory premises from B for some

manufacturing activity for a year, but 3 months ahead of the
expiry of lease purchases that very premises. Now since A
has become the owner of the building, his rights associated
with the lease (inferior rights) subsequently merge into the
rights of ownership (superior rights). The previous rental
contract ceases to exist.
 DISCHARGE BY BREACH OF
CONTRACT

Breach occurs where one party to a contract fails to perform its

contractual obligations, or the performance is defective.

Anticipatory Breach: occurs when one party states, before the

arrival of the date fixed for performance, without justification
that it cannot or will not carry out the material part of the
contractual obligations on the agreed date or that it intends
to perform in a way that is inconsistent with the terms of the
contract.

Actual Breach: refers to the failure to perform contractual

obligations when performance is due. Failure to perform
obligations is the most common form of breach, wherein a
seller fails to deliver the goods by the appointed time etc.
 Remedies Of Injured Party

A remedy is a means given by law for the

enforcement of a right
Following are the remedies
[1] Rescission of damages.
[2] Suit upon quantum meriut.
[3] Suit for specific performance.
[4] Suit for injunction.
Rescission
When a contract is broken by one party, the other
party may sue to treat the contract as rescinded and
refuse further performance. In such a case, he is
absolved of all his obligations under the contract.
The court may give rescission due to
1)contract is voidable
2)contract is unlawful
The court may refuse to rescind if
1)Plaintiff has ratified the contract.
2)Parties cannot be restored to the original position.
3)The third party has acquired for value.
4)When only a part is sought to be rescinded.(sec 27 of
specific relief act 1937)
Damages

Damages are a monetary compensation

allowed to the injured party by the court for
the loss or injury suffered by him by the
breach of the contract.
The objective of awarding damages for the
breach of contract is to put the injured party
in the same position as if he had not been
injured. This is called the doctrine of
restitution.
The fundamental basis is awarding damages
for the pecuniary loss.
Quantum Meriut

The phrase quantum meriut literally

means as much as earned.
A right to sue on a quantum meriut arises
when a contract, partly performed by
one party, has been discharged by
breach of contract by the other party.
This right is performed not on original
contract but on implied promise by other
party for what has been done.
Specific Performance
In certain cases of breach of contract damages
are not an adequate remedy. The court may, in
such cases, direct the party in breach to carry out
his promise according to terms of the contract. This
is a direction by the court for specific performance
of the contract at the suit of the party not in
breach

Cases for specific performance to be enforced

1. When the act agreed to be done is such that
compensation is not adequate relief.
2. When there is no standard for ascertaining the
actual damage
3. When it is probable that compensation cannot
be agreed to be done.
Injunction

When a party is in breach of a negative

term of contract the court may, by issuing
an order, restrain him by doing what he
promised him not to do. Such an order of
the court is called injunction
Court refuses grant of injunction
[1] whereby a promisor undertakes not to
do something
[2] which is negative in substance though
not in form
Quasi-Contracts: What is it?
It is an obligation, which the law creates in the
absence of the agreement. It can be described
as, certain contracts resembling those created
by the contract.

There will be no offer and no acceptance either

on express base or on implied base. The Court
creates contract between the parties artificially
in certain circumstances, and thus binds over the
parties.

It has been given in Section 68-72 of the Indian

Contract Act, 1872.
Quasi Contracts: Section 68
Section 68 - when necessaries are supplied:
When one party supplies necessaries to the other
(without request), a quasi contract comes into
force.
A case on this point is Chowal Vs Cooper: In this
case Xs husband becomes no more. She is very
poor and therefore not capable of meeting even
cost of cremation. Y, one of her relatives,
understands her position and spends his own
money for cremation. It is done so without Xs
request. Afterwards Y claims his amount from X
and X refuses to pay. Here court applies Sec. 68
and creates a Quasi Contract between them.
Quasi Contracts: Section 69
Section 69 - When expenses of one person are
paid by the other: When expenses which are to
be paid one party are paid by another party, the
parties are said to be under quasi contract.
A case on this point is Hazarilal Vs Navaranglal: In
this case B purchases A`s agricultural land. On
that land cess is in arrears for a longer period
which are actually to be cleared by A, But B pays
that amount. Here Court creates a quasi
contract between them under Section 69 and
thus capacitates B to recover that amount from
A.
Quasi-Contracts: Section 70
Section 70 - When one party is benefited by the
activity of another party: When one party
Conducts an activity and its benefit is attained
by another party, then also Court can create a
quasi Contract.
A Case on this point is Damodar Modaliar Vs
Secretary of State for India: In this case A is
resident of a Village. The local government
conducts repairs to the tank situated at A`s
village. As a result A gets benefited because the
surrounding lands belong to A. Here Court
creates a Quasi Contract and decides that A has
to bear cost of repairs.
Quasi-Contracts: Section 71
Section 71 - In case of finder of lost goods: Court
can create a quasi contract in case of finder of
lost goods.

Related case is Hallius Vs Fowler: In this case B

finds a diamond at A`s shop and hands it over to
A, requesting A to send the diamond to true
owner. True owner is not found. When true owner
is not found. Finder gets the title. No one can
claim share in it. Here court creates a bailment
contract between B and A and thus capacitates
B to get diamond back.
Quasi-Contracts: Section 72
Section 72 - When payment is made by mistake:
When ever payment is made by mistake or
goods are delivered by mistake , Court can
create a quasi Contract.

A case on this point is Khaniyalal Vs Sales Tax

Officer of the Banaras: In this case Mr. A pays
Sales tax by mistake though he is need to pay.
Here Court creates a quasi Contract and
capacitates A to recover that amount.
Contract of Indemnity
A contract where one party promises to save
the other from any loss caused to him by the
conduct of promisor himself or any other person
is called contract of indemnity, (Section 124)
Indian Contract Act, 1872.

Indemnity contract includes two parties namely;

Indemnifier and Indemnity holder. The person
who is promising to pay compensation is called
Indemnifier and the person who`s loss is
compensated is called Indemnity holder.
Contract of Indemnity:
Examples
There is a contract between X and Y according to which
X has to Sell a tape recorder (which is selected) to Y after
three months. On the next day of their contract Z has
come to X and has insisted on selling the same tape
recorder to him (Z). Here Z is promising to compensate X
for any loss faced by X, due to selling the tape recorder to
Z. X has agreed. Now the contract which has got formed
between X and Z is called indemnity contract, where Z is
indemnifier and X is indemnity holder.

Mr. Joe is a shareholder of Alpha Ltd. lost his share

certificate. Joe applies for a duplicate one. The
company agrees, but on the condition that Joe
compensates for the loss or damage to the company if a
third person brings the original certificate.
Contract of Guarantee
A contract to perform the obligation or to
discharge the liability of a third party in case of its
default is called contract of guarantee, (Section
126) Indian Contract Act, 1872.
Guarantee contract includes three parties namely;
Creditor, Principal Debtor and Surety. The person
who is granting the loan, the person who is utilizing
the amount of loan is principal debtor and the
person who is giving guarantee is called surety or
guarantor or favored debtor. In case of guarantee
contract there will be two types of liabilities namely;
Primary liability and secondary liability. Primary
liability will be with principal debtor and Secondary
liability goes to surety.
Contract of Guarantee:
Examples
Y is in need of Rs. 10000/-. Upon guarantee by Z,
Y has got the amount from X. Here X, Y and Z are
creditor, principal debtor and surety respectively.

Mr. Harry takes a loan from the bank for which

Mr. Joesph has given the guarantee that if
Harry default in the payment of the said amount
he will discharge the liability. Here Joseph plays
the role of surety, Harry is the principal debtor
and Bank is the creditor.
Contract of Indemnity Vs.
Guarantee
Number of Parties: Indemnity contract includes two
parties namely, indemnifier and indemnity holder. But
guarantee contract includes three parties namely
creditor, Principal debtor and surety

Number of Contracts: In case of indemnity contract, as

there are only two parties, there is possibility for
existence of one contract only. But a contract of
guarantee includes three sub-contracts.

Nature: As indemnity contract includes two parties and

one contract, it can be said that indemnity contract is
simple in nature. But guarantee contract includes
three parties and three sub-contracts and hence be
said that guarantee contract is complex in nature.
Contract of Indemnity Vs.
Guarantee
Liability: In contract of guarantee there will be two
types of liabilities namely; primary and secondary
liabilities which will be with principal debtor and surety
respectively. But in contract of indemnity there is no
classification and sharing of liability where the absolute
liability rests with indemnifier.

Recovery: In case of indemnity contract the

indemnifier, after compensating indemnity holder`s
loss, cannot recover that amount from any person. But
in contract of guarantee, if surety makes payment to
creditor, he (surety) can recover that amount from
principal debtor.

Interest of parties: Indemnity contract gets formed

upon indemnifier`s interest and guarantee contract
gets formed upon principal debtor`s interest.
 Bailment
According to Sec 148 of the Contract Act, 1872, A
bailment 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.

The person delivering the goods is called the bailor,

the person to whom they are delivered is called
the bailee and the transaction is called the
bailment.
Essentials of bailment
It is a delivery of movable goods by one person
to another (not being his servant). According to
Section 149 the delivery of goods may be actual
or constructive.
The goods are delivered for some purpose. When
they are delivered without any purpose there is
no bailment as defined under Sec 148
The goods are delivered subject to the condition
that when the purpose is accomplished the
goods are to be returned in specie or disposed of
according to the directions of the bailor, either in
original form or in altered form.
Duties of the bailee
(i) Duty to take reasonable care of goods
delivered to him [Sec 151]
(ii) Duty not to make unauthorized use of
goods entrusted to him [ sec 154]
(iii) Duty not to mix goods bailed with his own
goods [ Sec 155]
(iv) Duty to return the goods [ Sec 165]
(v) Duty to deliver any accretion to the
goods [Sec 163]
Duties of the bailor
i. Duty to disclose fault in the goods bailed
[Sec 150]
ii. Duty to repay necessary expenses in case
of gratuitous Bailment [Sec 158] eg
bailment of horse and expenses incurred
towards feeding and medical care of the
horse to keep it alive.
iii. Duty to repay any extraordinary expenses
in case of non-gratuitous expenses
iv. Duty to indemnify bailee [Sec 164]
Rights of bailee
(i) Enforcement of Bailors Duties
(ii) Right to deliver goods to one of
several joint owners
(iii) Right to deliver goods, in good faith,
to bailor without title, without incurring
any liability to the true owner
(iv) Right of Lien
Rights of the bailor
(i) Enforcement of Bailees Duties
(ii) Right to terminate bailment if the
bailee uses the goods wrongfully [ Sec
153]
(iii) Right to demand return of the goods
at any time in case of gratuitous
bailment [Sec 159]
Pledge or pawn
According to Sec 172, Contract
Act, 1872, The bailment of
goods for repayment of a debt
or performance of a promise is
called pledge.
The bailor in this case is called
the pawnor, the bailee is called
the pawnee.
Distinction between pledge and
bailment
Pledge Bailment
Pledge is the bailment Bailment is for a
for a specific purpose purpose other than
ie to provide security two under pledge ie
for a debt or for for repairs, safe
fulfillment of object. custody etc.
The pledgee has right
to sale on default after No right to sale. The
giving notice thereof bailee may either
to the Pledger. retain the goods or
the bailor for non-
payment of his dues
Essential features of a valid
pledge
Delivery of possession
Delivery should be upon a
contract
Delivery should be for the
purpose of security
Delivery should be upon
condition to return
Duties of Pawnor and
Pawnee
Pawnor:
Duty to repay the loan
Duty to pay expenses in case of
default
Pawnee:
Duty not use of pledged goods
Duty to return the goods
Rights of Pawnor and
Pawnee
Pawnor:
Right to redeem the goods pledged
Right to receive the increase
Pawnee:
Right to retain the pledged goods
Right to extra ordinary expenses
Right in case of default of the pawnor
Right to sell the goods
Agency
 An agent is a person employed to do any act for
another or to represent another in dealing with
third persons. The person for whom such act is
done or who is so represented, is called the
principal.

Essentially agency is defined as the relationship

which arises where one person known as the
agent acts for another known as the principal.
Through the acts of the agent, the principal and
a third party may be brought into a contractual
relationship.
Features Of Agency

The person who delegates the authority is

known as principal.
To whom the power is delegated is known as
agent.
The relationship that is created is known as
agency.
A person who act in place of another Agent
The person on whose behalf he acts -
Principal
 Principal is answerable to third parties for the acts of agent .

Consideration not necessary Section 185 of the act clearly lays down , No
consideration is necessary to create an agency

Principal must be competent to employ an agent Only a person who is competent

to contract can employ an agent (Major, Sound Mind)

A person does not become an agent on behalf of another merely because he gives
him advice in matters of business.

Every person who acts for another cannot be agent. Cobbler mending shoes of a man
,servant rendering services for us are not agents.
How to identify agents?

The essential condition is that whether

he is clothed with a necessary authority
by another ( principal ) to bind him &
make him ( principal ) answerable to
the third persons & thus establishing a
privity contract between that third
person & the principal.
If this condition is satisfied then a
person is considered as an agent.
Classification of Agents
Special Agents who is employed to do some particular
act or represent his principal in some particular
transaction. As soon as the act is performed the authority
of agent comes to an end. E.g. An agent engaged to sell a
house.
General Agent who is employed to do all such acts
which are connected with the business of trade of his
employer. If principal limits authority secretly, he himself
will be bound
Universal Agent is one who is employed to all such act
which a principal can lawfully do & can delegate. Agent
has unlimited authority.
1. By express agreement authority is given to
agent in written or by words of mouth. He can
bind the principal to the third parties by his acts
to the extent he is delegated with the authority.
2. By implied agreement

1. Agency by Estoppel Where a person permit

another to act on his behalf. Principal is estopped
from denying his agents authority.
For instance, A tell B in the presence of P that A is
the agent of P. P does not contradict the statement.
B enter into the contract with P on the belief that A
is Ps agent. In such case P would be bound by the
contract. He is not the agent. He ceases to be an
agent
3. Agency by holding out Some positive conduct of
the principal indicates that a particular person is his
agent. For instance, P sends A to buy goods on
credit from C. A buys goods on credit for himself &
refuses to pay. C sue P. P cannot plead that A had
no authority.

4. Agency by necessity When an agency is

created by the circumstances. The impossibility of
getting the instructions from the principal is the basis
of creation of agency by necessity.
For instance, X sent some horses to Y through a
railway company. But Y did not take the delivery of
the horses at the destination with the result the
railway company had to feed the horses. Held, the
railway co. was an agent of necessity & could
recover the amount spent on feeding the horses.
5. Agency by ratification Ratification

means subsequent adoption or acceptance by

a person of an unauthorized act done by
another on his behalf without any authority.
For instance, X buys 5 bags of wheat on behalf of
Y without his knowledge or authority. Y would be
bound by the contract, if he ratify or accept the
same.