AGENT, AGENCY AND AGREEMENT-THE RELATION BETWEEN THREE

INTRODUCTION Today business world has become one

the most important thing in our lives Sometimes it is not possible to deal

with other people directly.

So what should we do then?

Should we stop dealing with those people and

loose business?

The answer to these questions is

We definitely cannot stop dealing with people to whom we cannot

interact directly!

The solution to these sorts of problems is the AGENCY AGREEMENT

or in other words the LAW OF AGENCY.

INTRODUCING THE MAIN TERMS

• Agreement:

An agreement of agency is the legal contract between the agent and the

principal and it binds these two parties legally and it also defines their role and the duties they have to perform. It also includes

the restriction upon the agent and sometimes the principal.

Agent: An agent is a person or even any other

company employed to do any act for another or to represent another in dealing with the third party and the agent is also authorized to represent or deal with the third party on the behalf of someone.

Sub agent: Sub Agent is a person employed and acting under the

control of the original agent. He is not responsible for his acts to the principal. He is only responsible to the agent.

Principal: A principal is a person or a company which an agent

represents or in other words it is the one which is represented to the third party by an agent.

Agency: An agency is the relationship between the agent and

the principal and this relationship of agency is governed by the agreement of agency.

THE LAW OF AGENCY In this law, a principal which is mostly a

company gets in to contract with an agent which is responsible to deal with the third party with

whom the principal cannot deal directly.

(FOR EXAMPLE)

Pepsi cannot provide their products to each and every customer directly so what they do is that they get into

contract with the agents and then these agents supply the products to different stores and restaurants. Sometimes

these agents hire sub agents which help the agents to supply the products to a particular customer.

THE RELATIONSHIP

The relationship between the

principal, agent and the third party is very important each one of them is

dependent on each other.

The relationship of a Principal and Agent is that the principal hires the agent and expects the agent to be loyal and to fulfill its duties properly

Principal relies on the agent e.g. for the effectiveness of the delivery of the products or sale of a particular products

If an agent hires a subagent then the agent is responsible for any act of the sub agent and the agent is accountable to the principal for this

The third party buys a particular product because of the agent and sometimes on the guarantee of the agent

(FOR EXAMPLE)

Foreign company hires an agent in Pakistan and he is supplying or selling the products of the principal so in that case the agent can be sued or held responsible for the dissatisfaction or damage of the customers

Relationship of the Principal and The third party, is somehow same as the agent and the third party.

The principal is equally responsible of the damage or harm to the third party as the agent is

But the principal cannot hold accountable only in one situation when the agent expressly wish to be liable for the damage or harm to the third party.

DUTIES OF AGENTS: (RIGHTS OF PRINCIPAL)

Duty to follow principal’s

directions or customs.

Duty to render accounts.

Duty not to deal on his

own account.

Duty not makes any profits out of his agency

except his remuneration.

Duty on termination of agency on the

death of the principal or his insanity

An agent cannot delegate the

authority further to

another person

THE RIGHTS OF AN AGENT: (DUTIES OF THE PRIMCIPAL)

Right to receive remuneration

Right to retain any amount of sums received on the account of the

principal if not paid commission yet

To retain the property or documents of the principal unless and until the commission

due is received.

Right to be indemnified against the consequences of all lawful acts done

by him in exercise of the authority

conferred upon him.

An agent can be indemnified by principal for

acts done in good faith

CREATION OF AGENCY: (GETTING INTO THE CONTRACT)

By express agreement

By implied agreement Agency by ESTOPPLE. Agency by Holding out. Agency by necessity.

By ratification

TERMINATION OF THE AGENCY CONTRACT

By the act of the parties: Agreement of the agency can be terminated at any time by

the mutual agreement between the principal and the agent. Revocation by the principal Renunciation by the agent

Termination by the operation of law: Completion of the business of the agency Expiry of time Death of the principal or the agent Insanity of the principal or the agent Insolvency or bankruptcy of the principal Destruction of the subject matter Dissolution of the company Principal and agent become alien enemies

SOCIAL AND BUSINESS IMPACT Contract of agency has a lot of good points as far as the

society and the business world.

Helps protect the rights of both the principal and the agent.

Helped the growth of the business on the whole because due to this law or agreement the companies can now reach to the market and customers which previously they couldn’t.

Helped a lot of people to save time be obtaining or hiring an agent to do a particular task which was out of their reach and this has provided the business world a huge opportunity to make it BIG!!!

I AM NOW OPEN FOR QUESTIONS!!!