Creation of Agency

 Creation of Agency- Indian Contract Act, 1872

Creation of Agency

- By express appointment

- By conduct or situation of the parties

- By necessity of the case; or

- By subsequent ratification of an unauthorised act

Express Appointment

Any person competent to contract may appoint agent. Such appointment be expressed in oral

or writing.

In Indian law, definition of S 182, is much wider. Does not limit agent to only one principal.

It will include employment by any authority authorised to make that employment.

Agent can have multiple Principals.

Where appointment is made by a deed, it is called power of attorney.

Syed Abdul Khader v Rami Reddy AIR 1979 SC 553

A person was authorised by power of attorney to be the caretaker of three agricultural lands

by their respective owner (principals). Argument three principals can appoint one agent by

single power of attorney.

Held : Co principals may jointly appoint an agent to act for them and in such case become

jointly liable to her and may jointly sue her.

An oral appointment is also valid even though the contract which the agent is authorised to

make has to be in writing.

Harshad J Shah v LIC of India

Under the law governing contracts of insurance the premium may be paid by assured to the

insurers or to an insurance agent on behalf of the insurers and if the agent has the authority

to receive it the payment binds the insurers. The authority need not be express authority; it

may be implied from the circumstances.

Implied Agencies

Implied agencies arise from the conduct, situation or relationship of parties. Whenever a

person places another in a situation in which that other is understood to represent or act for

him, he becomes an implied agent. Thus, where a woman allowed her son to drive a car for

her, she paying all the expenses of maintenance and operation, it was held that the son was

an implied agent of the mother and when he made a collision injuring his wife, the wife could

sue the mother for the fault of the agent. - Smith v Mose (1940) 1 KB 424.

Permission granted to a person to ferry a car makes her an agent for that limited purpose.

Employer allowed to collect premiums from employees and forward it to the organisation

makes her an implied agent.

Estoppel

One of the well known illustrations of implied agency is agency by holding out or estoppel.

“Where a principal has by his authority act placed an agent in such a situation that a person of

ordinary prudence, coversant with business usages and the nature of the particular business,

is justified in presuming that such agent has authority to perform a particular act and therefore

deals with the agent, the P is estopped as against such 3 rd parties from denying agent’s work.

Pickering v Busk (1812) KB 15

a purchaser of hemp allowed it to remain in custory of broker through whom she bought it. In

ordinary course of business broker buys and sells hemp. Broker sold good. Broker held not

liable.

“If a person authorises another to assume the apprent right of disposing of property in the

ordinary course of trade, it must be presumed that the apparent authority is the real authority.”

Kashinath Das v Nisakar Rout AIR Ori 164

Landlord appointed tahsildar to manage his agricultual lands. Tahsildar let out lands to

tenants on certain terms.

Held that the landlord, by appointing tahsildar incharge of lands, gave appearance of

apparent authority. In prevailing usages, such authority had right to let.

Agencies of necessity

Originated with Marine Adventures

The principle of agency of necessity was first applied to cases of marine adventures.

Unforeseen emergencies may arise in the course of a marine adventure which may threaten

the goods and the master of the ship is not able to communicate with the principal. In such

circumstances, the master gets the power and it is also his duty to sell the goods in order to

save their value. The sale will bind the cargo owner.

Sims and Co v Midland Rly Co. (1913) 4 KB 103

A quantity of butter was consigned with the defendant railway company. It was delayed in

transit owing to a strike. The goods being persishable the company sold them.

The sale was held binding on the owner. The company’s action was justified by the

necessities of the case and it was also not practicable to get instructions from owner.

Great Northern Railway Co. v Swafield. (1874) LR Ex 132.

A horse, having been consigned with the defendant comopany, was not received by anyone

at the destination. The company had no arrangement of its own to keep animals and therefore

placed the horse with a livery stable keeper.

The company’s action was held to be reasonably necessary in the circumstances and

therefore, company was allowed to recover charges of the stable-keeper.

And then it became Principle of General Application.

In case there is no pre-existing agency, it is to be treated as finder of goods – has right to lien.

Reflief of Injured Persons

When injured person is in need of medical attendance, any person acting on her behalf may

call the services of a doctor, or any doctor may volunteer her services.

Matheson v Smiley (1932) 2 DLR 781

Surgeon was entitled to recover from deceased mans estate reasonable remuneration for his

services when he had, without request, given aid to man who had attempted suicide.

Conditions for Application of Principle

-Inability to Communicate with Principal

- Act should be reasonably necessary