Question

1.What are the duties of agents and principals in an agency relationship? Make sure to briefly describe each of these duties. 2. What is the liability of agents and principals in agency relationships?

Answer 1

Ans) Agent is defined as a person employed to do any act for another or to represent another in dealings with third persons in a contract of agency .And the act of agent is on behalf of a person called Principal.Hence Principal is a person on behalf of him the agent act.An agent is bound to conduct the business of his principal according to the directions given by the Principal .If any loss is sustained, he must make it good to his principal,any if any profit accrues,he must account for it.

An agent is bound to conduct the business of the agency with as much skill as generally possessed by persons engaged in similar business unless the Principal had notice of his want of skill.An agent is bound to render proper accounts to his principal on demand.An agent should not set up an adverse title to the goods which he receives from the Principal as an agent. An agent should protect and preserve the interest of the Principal in case of his death or insolvency. An agent must not use confidential information entrusted to him by his principal for his own benefit or against the Principal.An agent must not delegate his authority to a sub- agent. The duties of Principal are he should bound to indemnify the agent against the consequences of all lawful acts done by such agent in exercise of the authority conferred upon him as in contract of agency hence if he is acting on behalf of his Principal if he suffered a loss than he should be compensated and if any act is done in good faith by an agent on behalf of Principal than agent has a right to be compensated on behalf of the Principal.The principal should compensate for any injury caused to agent acting on his own behalf.It is the duty of the Principal to pay remuneration to the agent.The liabilities of agent and Pr8ncipal are as follows.An agent is personally liable where the agent has agreed to be personally liable to third party . Also in the below given cases the agent is personally liable to when the agent acts for a principal residing abroad and when he acts for an undisclosed principal and also when he acts for a principal who cannot be used e.g if he a minor and in case he acts for the Principal who is non existence .In case where a principal has by his words or conduct induced a third person to believe that the act of the agent is within the scope of his authority ,then in such an event the principal will be held liable. The principal will be liable for the act done within the scope of the agent's authority.Also the Principal is bound by the notice given or information obtained by the agent in course of the Principal business.