Agent: Kinds of Agents and their Powers and Duties

In legal terms, an Agent is a person employed to do any act for another, or to represent another in dealings with third persons. The person who is represented is the Principal.

This relationship is unique because the agent has the power to change the Principal's legal position—essentially, when an agent signs a contract, it is as if the Principal signed it themselves.

1. Kinds of Agents

Agents are classified based on the extent of their authority or the nature of the business they perform.

Based on Authority

• Special Agent: Appointed for a specific, one-time task (e.g., an agent hired to sell one particular house). Their authority ends once the task is finished.

• General Agent: Authorized to do all acts related to a specific trade or business (e.g., a manager of a retail store).

• Universal Agent: Has unlimited authority to do everything the principal could do themselves. This is usually created through a broad "Power of Attorney."

Based on Nature of Business (Mercantile Agents)

• Broker: An agent whose job is to bring the buyer and seller together. They do not have possession of the goods.

• Factor: A mercantile agent entrusted with the possession of goods. They have the power to sell them in their own name and exercise a lien on them.

• Commission Agent: Buys or sells goods for the principal at the best possible price in exchange for a commission.

• Del Credere Agent: A special type of agent who, for an extra commission, guarantees that the third party will pay the principal. If the third party defaults, the Del Credere agent pays the loss.

• Auctioneer: An agent authorized to sell goods at a public sale to the highest bidder.

2. Duties of an Agent

An agent owes several "fiduciary" duties to their principal under the Indian Contract Act, 1872:

1. Duty to Follow Instructions (Section 211): The agent must act according to the directions given by the principal. In the absence of directions, they must follow the custom of the trade.

2. Duty to Act with Skill and Diligence (Section 212): An agent must perform their work with the same skill that a person in that profession usually possesses.

3. Duty to Render Accounts (Section 213): On demand, the agent must show proper financial records and accounts to the principal.

4. Duty to Communicate (Section 214): In cases of difficulty, the agent must use all reasonable diligence to communicate with the principal and get instructions.

5. Duty Not to Deal on Own Account (Section 215 & 216): An agent must not compete with the principal or make secret profits. If they make an undisclosed profit, the principal can claim that money.

6. Duty to Pay Sums Received (Section 218): The agent must pay the principal all sums received on their account, after deducting their own commission and expenses.

3. Powers (Rights) of an Agent

To perform their duties effectively, the law grants agents certain rights:

• Right to Remuneration (Section 219): Unless the agency is gratuitous, the agent is entitled to receive the agreed-upon commission or salary once the act is complete.

• Right of Retainer (Section 217): An agent can "retain" (keep) money received on behalf of the principal to cover their own expenses, advances, or commission.

• Right of Lien (Section 221): An agent has the right to keep the principal’s goods, papers, or property until the commission or expenses due to them are paid.

• Right to Indemnity (Section 222 & 223): The principal must compensate the agent for all legal acts and expenses incurred during the agency.

• Right to Compensation (Section 225): The principal must compensate the agent for any injury caused by the principal’s neglect or lack of skill (e.g., providing a dangerous workspace).