Types of Agents Under Indian Contract Act

A 'Contract of Agency' is formed when a person employs another person to do an act for him or to represent him in dealings with third parties. The person who is so represented is known as the 'principal,' and the representative who is so employed is known as the 'agent' (Sec. 182). The agent's duty is to enter into legal relations with other parties on behalf of the principal.

So far, by doing so, he does not become a party to the contract, nor does he incur any liability under that contract. The principal is responsible for all of his agent's actions as long as they do not exceed the scope of his authority.

Types of Agents

Major types of agents are −

Special Agent

A Special Agent is an agent who has been appointed to do a single specific act.

For Example, Babu is appointed as a special agent to sell a bike. If Babu exceeds his authority, the principal is not bound by it, and third parties do not need to assume that Babu has unlimited powers.

General Agent

A General Agent is an agent who is appointed to do all general aspects relating to a specific job.

For Example, A management of a firm can bind the principle by all acts done within the typical business process. It makes no difference whether the manager is authorised to perform a specific act or not, as long as the third party acts honestly.

Sub-Agent

A sub-agent is an agent who is appointed by another agency. Due to severe work pressure or the need to meet deadlines, an agent may delegate the tasks delegated to him by the principal at times. Ordinarily, an agent is not supposed to delegate to another person the task that he is supposed to perform himself (delegatus non potest delegare), unless he is bound to do so by necessity.

Delegatus non potest delegare

In ordinary circumstances, an agent cannot and should not delegate the task that was delegated to him. The concept is that when a principal appoints an agent, he puts his trust in the agent and may not have the same faith, trust, or confidence in another person's work.

Sub-agent vs. Substituted Agent

There is a basic difference between a sub-agent and a replacement agent. When a person performing in the capacity of an agent is asked to name someone for a specific task, the person whose name is provided does not become a sub-agent to the principal but rather a substituted agent.

Illustration

Jaya asks that her solicitor appoint an auctioneer to sell her vintage Mercedes. Mehnaz is hired as an auctioneer by her solicitor. Mehnaz is not a sub-agent in this case, but a substituted agent for this deal.

Co-Agent

Co-agents are agents who are jointly appointed to perform acts.

Factor

A factor is an agent who is appointed for a reward in the form of commission (and who seems to be the owner of the things in concern). He is an agent who is given possession of goods. The principal entered into a contract with him for the sale of goods to the latter. He may sell the items on credit, negotiate the price, and give the buyer a discount.

Broker

A broker is someone who is employed to make contracts for the purchase and sale of goods on behalf of a principal. He is not in possession of any goods. He acts as a connecting link between the parties, bringing them to the negotiating table, and if the circumstances are favourable, he is entitled to his brokerage commission.

Auctioneer

In an auction, the auctioneer acts as a seller for the principal and invites bids.

Commission Agent

A commission agent is appointed to buy and sell goods at the best price and terms for his principal.

Del Credere

Del Credere is a broker who also acts as a salesperson. He often acts as the principal’s guarantor. He guarantees the buyer's credit line. He is the person who guarantees his principal that the third party will discharge his financial obligations in return for an extra commission.

Pucca Adatia

A pucca adatia is a person who has the right to profit from his own goods.Section 182 of the Indian Contract Act of 1872 gives a broad definition.

In Shivnarayan Kabra v. The State of Madrasi, the appellant released an advertisement presenting himself as a pucca adatia. Many were interested in entering into forward contracts after reading the advertisement. He assured them that he operated his business in accordance with the pucca adatia system. The respondent accused the appellant of making a false representation.

He was not a member of any association and was not authorised to do such business. The question before the Madras High Court was whether the appellant was guilty under Section 420 of the IPC. The court held that the appellant will be held liable under Section 420 of the IPC for creating a false representation about its ability to conduct forward contract business.

Conclusion

The Indian Contract Act of 1872 makes no difference between various classes of agents. A principal may appoint an agent, and employment by any authority allowed by law to make employment is considered agency.

The agent has certain duties under Indian law. The provisions of the contract obligate an agent. He shall conduct his principal's company in accordance with the directions given by the principal or, in the absence of such directions, in accordance with the existing customs. Every agent should follow his principal's instructions. To be eligible for his reward, the agent must have performed all of the duties expected of him under the agency and met all of the conditions imposed by the Indian Contract Act.

Frequently Asked Questions (FAQ)

Q1. What is contract of agency?

Ans. An agency contract might be made orally or in writing. A Power of Attorney is an example of a written contract between an agency and its principal that grants the agency the authority to act on behalf of the principal in accordance with the terms and conditions included therein.

Q2. What are the principles of agency?

Ans. According to the Principle of Agency, if it would be good for something to happen naturally, we may take action to make it happen.

Q3. What is agent definition and kinds?

Ans. An agent is a person who works for an insurance company and sells insurance products on its behalf. In general, there are two categories of such agents that contact prospective users who are interested in purchasing insurance. There are two types of agents: independent agents and captive or exclusive agents.