Who is an agent and a principal? (Sec 182 of Indian Contracts Act) An agent is a person employed to do an act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the principal. The relationship between them is called agency. An agent, therefore, brings together his principal and the third person.
A appoints B to purchase a house for him. A is the principal, B an agent and the relationship between the two is that of agency.
Who can be appointed as an agent? – can a minor be appointed an agent? Any major person and of sound mind may become an agent to be responsible to the principal. A person who is not of full age, i.e. a minor, may also be appointed as an agent, but personally such a person is not responsible to the principal like an adult agent. As between the principal and third persons and person may become an agent, but no person who is not of the age of majority and of sound mind can become an agent, so as to be responsible to is principal (Sec 148).
Therefore, there is no bar to the appointment of a minor as an agent but a minor, however, cannot be held personally liable. A person with limited or no capacity to contract can also be appointed as an agent. Such persons like a minor can bind their principals but they themselves are not responsible to principals.
The concept of a servant may, in a sense involve an element of agency but on that account a servant is not to be regarded as an agent and an agent is never a servant.
The difference between the relations of master and servant and of principal and agent is that a principal has the right to direct what work the agent has to do; but a master has the further right to direct how the work is to be done. An agent has to be distinguished on the one hand from a servant and on the other from an independent contractor.
The distinction between a servant and an agent is that a servant acts under the control and supervision of the master and is bound to conform to all reasonable orders given to him in the course of his work. An agent though bound to exercise his accordance with all lawful instructions which may be given to him by his principal is not subject to the direct control or supervision of the principal.
Who can employ an agent? A person who is of the age of majority according to the law to which he is subject, and who is of sound mind, may employ an agent (Sec 183). No consideration is necessary to create an agency (Sec 185)
Every person has the right to appoint an agent for any purpose except where the act to be performed is personal in character or when it is annexed to a public office or to an office involving any fiduciary obligation.
An agent acts for and on behalf of the principal with third party. The principal becomes liable to third party on such contracts entered into by the agent. The agent does not incur any personal liability. The contract of agency is based upon the maxim – Qui facit per alium facit per se – i.e. he who does through another does by himself.
An act of an agent is the act of the principal. Section 226 therefore states – Contracts entered into through an agent and obligations arising from the acts done by an agent, may be enforced in the same manner and will have the same legal consequences, as if the contracts had been entered into and the acts had been done by the principal in person.
Test of agency: The test of agency is whether a person has the capacity to bind the principal by acts done on his behalf. When the agent can establish privity of contract between third party and his principal an agency exists. It is the power of an agent to make the principal answerable to third person that determines existence of agency. His representative capacity and his power to create legal relations between principal and third persons create agency. Therefore, a wife is not an agent of her husband. Similarly, a guardian is not an agent of the minor. —