Home | ARTS | Business Environment and Law | Rights And Duties Of Principal Towards Agent Rights Of Principal-Performance And Discharge Of Contracts

Business Environment and Law-Performance And Discharge Of Contracts

Rights And Duties Of Principal Towards Agent Rights Of Principal-Performance And Discharge Of Contracts

   Posted On :  08.05.2018 12:14 am

Rights And Duties Of Principal Towards Agent Rights Of Principal-Performance And Discharge Of Contracts

Rights And Duties Of Principal Towards Agent Rights Of Principal
(1)He can enforce the various duties of an agent. (2) He can recover compensation for any breach of duty by the agent. (3) He can forfeit agent’s remuneration where the agent is guilty of misconduct in the business of agency. (4) Principal is entitled to any extra profit that the agent has made out of his agency. This includes illegal gratification, if any. (5) Principal is entitled to receive all sums that the transactions, entered into, by the agent, on behalf of the principal were void or illegal.

Duties Of Principal

1. To Pay Remuneration.
2. Duty to Indemnify.
3. Compensation for injuries.
4. Should not prevent the agent from earning remuneration.

Principal’s Liabilities To Third Parties For The Acts Of The Agent

1. Liability for acts done by agent within authority.
2. Ratification of acts beyond the scope of his authority.
3. When an agent commits fraud or misrepresentation.

Liability for tort: If an agent commits a tort in the course of and within the scope of his agency, the principal may in certain cases be liable for the same.
1. Notice given to agent as notice to principal (Sec. 229)
2. Liability under the principle of estoppel
3. Liability when his name is not disclosed (Unnamed principal)
4. Liability when agent does not disclose his agency (undisclosed principal)

Agent And Third Parties

“In the absence of any contract to that effect, an agent cannot personally enforce contract entered into by him on behalf of his principal nor is he personally bound by them…’

If there is no contract providing for, or relieving the agent from, personal liability the agent would be liable in the following cases:
1. Foreign Principal
2. Unnamed Principal
3. Undisclosed Principal
4. Incompetent Principal
5. Where the agent exceeds his authority 
6. Where agent’s authority is coupled with interest
7. Custom of Trade
8. Money received by mistake or fraud

Termination Of Agency

The contract of agency would come to an end in any of the following circumstances:

1. By Agreement
2. By Revocation by the principal:
3. Renunciation by the Agent
4. Completion of business
5. Death or Insanity
6. Insolvency of the principal
7. Expiration of Time
8. Destruction of the subject matter
9. Dissolution of a company
10. Principal or agent becoming alien enemy

Partnership Act 1932

The law relating to partnership is contained in the Indian partnership Act, 1932. The Act came into force with effect from October 1, 1932. Prior to enactment of the aforesaid Act, partnership business used to be governed by the Indian Contract Act, 1872.
Section 4 of the Indian Partnership Act, 1932 defines ‘partnership’ as follows: “a business carried on by all or any of them acting for all.”
Essential elements of partnership:

1. Association of two or more persons,
2. Existence of a contract,
3. Carrying on a business,
4. Sharing of profits and
5. Prevalence of mutual agency.

But a partnership firm cannot create another partnership as it does not enjoy the status of the artificial legal person. There must exist a contract between persons who have agreed to form partnership. Such a contract may, however, be either expressed or implied, written or oral.
Partnership Deed : Partnership Deed is the document that defines the rights and obligations of partners. Besides names, address and occupation of partners, it lays down the duration of partnership, nature of business, profit sharing ratio, right to interest, salary, commission etc.

Registration Of Firms

The registration of partnership firm is discretionary. The provisions relating to registration of partnership firm are contained in Chapter 7, Sections 56 to 71 of the partnership Act.

Effect of Non-registration (Sec. 69)

An unregistered firm and its partners suffer from the following disabilities:

1. No Suit against other partners and firms
2. No suit against third parties
3. No claim of set off

Tags : Business Environment and Law-Performance And Discharge Of Contracts
Last 30 days 9170 views