Notes on Duties of Principal & Agent..

Laid down in S. 164 to 178 Contracts Act 1950:

S. 164 – agent’s duty in conducting principal’s business : must conduct the business of his principal according to the directions given by his principal & act according to the customs in the absence of any such directions.

S. 165 – an agent is bound to conduct the business of the agency with as much skill as is generally possessed by persons engaged in similar business & bound to act with reasonable diligence.

S. 166 – an agent is bound to render proper accounts to his principal on demand.

S. 167 – an agent’s duty to communicate with the principal in cases of difficulty, and use all reasonable diligence to obtain his instructions.

S. 168 – the principal may repudiate the transaction if an agent deals on his own account in the business of agency without obtaining the consent of his principal.

S. 169 – the principal is entitled to claim from the agent any benefit if an agent without his principal’s knowledge, deals with the business of the agency on his own account instead of on his principal’s account.

S. 170 – agent’s right of retainer out of sums received on principal’s account if he acts in his capacity as an agent.

S. 171- an agent is bound to pay to his principal all sums received on his account.

S. 172- an agent’s remuneration becomes due upon the completion of the act but the agent may detain monies received by him on account of goods sold although the whole of goods consigned to him for sale may not have been sold or the sale may not be actually completed.

S. 173 – an agent who is guilty of misconduct in the business of the agency is not entitled to any remuneration in respect of that part of the business which he has misconduct.

S. 174 – an agent is entitled to retain goods/ any property of the principal received by him until the amount due to himself for commission/ disbursements has been paid to him. (agent’s lien on principal’s property)

S. 175 – the principal is bound to indemnify his agent against the consequences of all lawful acts done by the agent in exercise of the authority conferred upon him.

S. 176 – agent to be indemnified against consequences of acts done in good faith though it cause an injury to the rights of 3rd party.

S. 177 – when the principal employs his agent to do an act which is criminal, the principal is not liable to the agent to indemnify him against the consequences of that act.

S. 178 – the principal must take compensation to his agent in respect of injury caused to the agent by the principal’s neglect.