BUSSINESS LAW

UNIT III
DUTIES OF AN AGENT

Malavika.M
Asst. Prof.
Dept. of Management Studies
Bhisop Heber College, Trichy
 DUTIES OF AN AGENT
Duty to act according to directions or custom
of trade (Section 211)
Duty to act with reasonable care & skill
(Section 212)
Duty to render account (Section 213)
Duty to communicate with principal & to
obtain principals instructions (Section 214)

Malavika.M, Asst. Prof., Dept. of Management Studies, Bishop Heber College, Trichy
2
 DUTIES OF AN AGENT.
Duty to disclose all material circumstances & to
obtain in principals consent in personal
dealings (Section 215 & 216)
Duty to pay sum received for principal (Section
217 & 218)
Duty to protect & preserve the interest
entrusted to him (Section 209)
Duty not to delegate (Section 190)
Malavika.M, Asst. Prof., Dept. of Management Studies, Bishop Heber College, Trichy
3
TO ACT ACCORDING TO THE DIRECTIONS OR
CUSTOMS OF TRADE (SEC 211)

To follow principals directions

An agent must act within the scope of the
authority conferred on him.
Example: An agent was instructed to insure goods.
He failed to do so. The goods were destroyed. He
was liable to compensate to the principal for the
loss made by him.

Malavika.M, Asst. Prof., Dept. of Management Studies, Bishop Heber College, Trichy
4
 TO ACT WITH REASONABLE CARE & SKILL
(SECTION 212)
Example: A, an agent for the sale of goods,
having authority to sell on credit, sells to B on
credit, without making the proper & usual
enquires as to the solvency of B. B at the time
of such sale, is insolvent. A must make
compensation of his principal in respect of any
loss thereby sustained.

Malavika.M, Asst. Prof., Dept. of Management Studies, Bishop Heber College, Trichy
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 TO RENDER ACCOUNT (SECTION 213)
To keep & render accounts to principal when
demanded.

TO COMMUNICATE WITH PRINCIPAL & TO

OBTAIN PRINCIPALS INSTRUCTIONS
(SECTION 214)
An agent is bound to use all reasonable
diligence to establish contact with his
principal to obtain his instructions.
Malavika.M, Asst. Prof., Dept. of Management Studies, Bishop Heber College, Trichy
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TO DISCLOSE ALL MATERIAL CIRCUMSTANCES
(SECTION 215 & 216)
Not to deal on his own account
If an agent wants to deal on his own account, he
must seek the consent of the principal first & must
acquaint him with all the material facts.
( Purchase )
Example: A directs B, his agent to buy a house for
him. B tells A it cannot be bought & buys the house
for himself. A after knowing this compel B to sell it
to him at the price B gave it for.
Malavika.M, Asst. Prof., Dept. of Management Studies, Bishop Heber College, Trichy
7
 TO PAY SUM RECEIVED (SECTION 218)

To pay sum received

He can deduct his remuneration & all expenses
incurred in conducting business.

Malavika.M, Asst. Prof., Dept. of Management Studies, Bishop Heber College, Trichy
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 TO PROTECT & PRESERVE THE INTEREST
(SECTION 209)

When an Agency is terminated by the principal

dying or becoming unsound of mind, the agent
has to take on behalf of the late principal to
protect & preserve the interests entrusted to
him.

Malavika.M, Asst. Prof., Dept. of Management Studies, Bishop Heber College, Trichy
9
NOT TO DELEGATE AUTHORITY (SECTION 190)

An Agent cannot lawfully employ another to

perform acts which he has undertaken to
perform personally unless the nature of agency
so requires.

Malavika.M, Asst. Prof., Dept. of Management Studies, Bishop Heber College, Trichy
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 PERSONAL LIABILITY OF AN
AGENT
In case of Foreign Principal (Section 230)
In case of Undisclosed Principal (Section 230)
In case of Incompetent Principal (Section
230)
In case of Principal not in Existence
In case of Acts not Ratified (Section 235)
In case of Acts in his Own Name
In case of Express Agreement
In case of custom or Usage of Trade.

Malavika.M, Asst. Prof., Dept. of Management Studies,

Bishop Heber College, Trichy 11