Monday, January 4, 2016

Introduction to Agency

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Modern business, due to it’s widen coverage and nature, is becoming complex with the pace of time. Due to vast expansion, it is not possible for a person to carry on all the businessman transactions him/herself. The circumstance requires a businessman necessarily depend on other persons to carry on all the business and even carrying out the several transactions. It is necessary to delegate powers to another for performing the contractual work. Another person who acts on behalf of the businessman is known as agent. The person to whom the act is done, or who is so represented is called principal and agent called a contract of agency. A appoints B to sell his land on his behalf and B sells the land of A on behalf of A. Here, A is principal and B is his agent. The relationship between A and B is called agency. In other words, here is a contract of agency between A and B for performing certain work.
The contract of agency is a special nature of contract. It governs the special relationship between the two persons, namely the principal and agent. The matter of contract of agency is governed by the Commercial Regulation, 1993 in England, Contract Act 1872 in India. In Nepalese context Nepal Agency Act 2014 B.S Nepal Agency Regulation 2019 B.S and Contract 2000 are relevant. Basically the Contract Act 2000 has made some provision in relation to the contract of agency.
The Contract Act 2000 has defined the term contract of agency under the Chapter 8. The section 56 of the Act defines it as any person may appoint any other person as his/her agent to do anything on his/her behalf, except connected to anything his/her personal skills or to conduct his/her agent of may transaction with a thirdperson on his behalf or to represent himself to such person, or toestablish any kind of legal relation with the person appointing an agent and a third party, and incase an agent is so appointed a contract relating to agent shall be deemed to have been concluded.

General Rules of Agency

1.       Whatever a person competent to contract may do himself, he do through an agent, except for acts involving personal skills and qualifications. In fact, where the work to be done is absolute personal, no agent can be employed.
2.       He, who does through another, does himself. In other words, the act of agent are, for all legall purpose, the acts of principal.


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