Relationship where an AGENT is authorized to act/represent a PRINCIPAL toward third parties.
Governed by Contracts Act 1950 (Part X)
• Agent: S. 135 – "person employed to do any act or represent another."
• Principal: person for whom such act is done.
Dual contractual links:
• Principal ↔ Agent (agency contract)
• Principal ↔ Third party (resulting contract)
Formation of Agency
Express appointment → oral / written (S. 140).
Implied appointment (S. 140):
• From conduct/circumstances.
• Husband–wife (necessaries).
• Partnership: every partner is agent of firm (Partnership Act 1961, S. 7).
Ratification (S. 149–153): principal later approves unauthorised act.
• Must meet 9 conditions incl. existing principal, full knowledge, whole-contract ratification, reasonable time, no injury to 3rd party, etc.
• Effect: binds principal retrospectively (Bolton & Partners v. Lambert).
Agency by Necessity (S. 142): emergency acts to preserve principal’s property; conditions: real emergency, entrusted property, impossible to obtain instructions, good faith (Great Northern Rly v. Swaffield).
Agency by Estoppel (S. 190): principal’s words/conduct induce 3rd party to rely on supposed authority; principal then precluded from denying (Freeman & Lockyer v. Buckhurst Park Properties).
Classification of Agents
By authority scope:
• Universal – unlimited power.
• General – ordinary course of business.