Eight Important Duties of an Agent Towards the Principal Essay Example for Free

Eight Important Duties of an Agent Towards the Principal Essay1. Duty to follow leadings directions or customs (Sec. 211) The first calling of every doer is to act within the scope of the authority conferred upon him and perform the theatrical work correspond to the directions given by the head. When the agent acts otherwise, if any loss be sustained, he must strain it good to the chief, and if any profit accrues, he must line for it. Illustrations (a) Where the principal instructed the agent to warehouse the goods at a particular place and the agent warehoused them at a different warehouse which was equally safe, and the goods were destroyed by fire without negligence, it was held that the agent was liable for the loss because any departure from the instructions makes the agent absolutely liable (Lilley vs Doubleday). (b) An agent being instructed to insure goods neglects to do so. He is liable to compensate the principal in the event of these being lost (Pannalal Jank idas vs Mohanlal).If the principal has not given any express or implied directions, then it is the duty of the agent to follow the custom prevailing in the same kind of business at the place where the agent conducts business. If the agent makes any departure, he does so at his own risk. He must make good any loss so sustained by the principal.Illustrations (Appended To Sec. 211) (a) A, an agent, engaged in bunking on for B a business, in which it is the custom to invest from meter to time at amour, the fundss which may be in hand, omits to make such investments. A must make good to B the interest usually obtained by such investments. (b) B, a broker, in whose business it is not the custom to sell on credit, sells goods of A on credit to C, whose credit at the time was very high. C, before payment, becomes insolvent. B must make good the loss to A, irrespective of his good intentions. 2. Duty to carry out the work with reasonable skill and diligence (Sec. 212) The agent must cond uct the business is generally possessed by persons engaged in alike business, unless the principal has notice of his want of skill. Further, the agent must act with reasonable diligence and to the best of his skill.If the agent does not work with reasonable care, skill (unless the principal has notice of his want of skill) and diligence, he must make compensation to his principal in respect of direct consequences of his own neglect, want of skill or misconduct. just he is not so liable for indirect or remote losses. Illustrations (Appended To Sec. 212) (a) A, a merchant in Kolkata, has an agent B, in London, to whom a sum of money is paid on As account, with orders to remit. B retains the money for a considerable time. A, in consequence of not receiving the money, becomes insolvent. B is liable for the money and interest from the day on which it ought tohave been paid, according to the usual deem, and for any further direct loss such as loss by variation of rate of exchange, but nothing further.(b) A, an agent for the sale of goods, having authority to sell goods on credit, sells to B on credit, without making the proper and usual enquiries as to the solvency of B. B, at the time of such sale, is insolvent. A must make compensation to his principal in respect of any loss thereby sustained. 3. Duty to Render Accounts (Sec. 213) It is the duty of an agent to keep proper accounts of his principals money or property and render them to him on demand, or periodically if so provided in the agreement. 4. Duty to travel by (Sec. 214) It is the duty of an agent, in cases of difficulty, to use all reasonable diligence in communicating with his principal, and in seeking to obtain his instructions, before taking any step in facing the difficulty or emergency. 5. Duty not to deal on his own account (Sees. 215 and 216)An agent must not deal on his own account in the business of agency i.e., he must not himself buy from or sell to his principal goods he is askedto sell o r buy on behalf of his principal without obtaining the consent of his principal after disclosing all material facts to him. If the agent violates this rule, the principal may repudiate the transaction where it can be shown that any material fact has been knowingly concealed by the agent, or that the dealings of the agent have been disadvantageous to the principal. The principal is also entitled to withdraw from the agent any benefit which may have resulted to him from the transaction. Illustrations (a) A, directs B to sell As estate. B buys the estate for himself in the name of . A, on discovering that B has bought the estate for himself may repudiate the sale, if he can show that B has dishonestly concealed any material fact or that the sale has been disavantageous to him. Illustration (a) Appended to prick 215 (b)A directs, B, his agent, to buy a certain house for him. B tells A that it cannot be bought and buys the house for himself. A may, on discovering that B has bought the house, compel him to sell it to A at the price he gave for it. Illustration appended to Section 2166. Duty not to make any profit out ofhis agency except his remuneration(Sees. 217 and 218)An agent stands in a fiduciaryrelation to his principal and thereforehe must not make any profit (secretprofit) out of his agency. He mustpay to his principal all moneys(including illegal gratification, if any)received by him on principalsaccount.He can, however, deduct all moneysdue to himself in respect of hisremuneration or/and expensesproperly incurred. If his acts are notbonafide, he will lose hisremuneration and will have toaccount for the secret profit to hisprincipal.7. Duty on death of agency byprincipals death or insanity (Sec.209)When an agency is terminated by theprincipal dying or becoming of spoiled mind, the agent must take,on behalf of the representatives ofhis late principal, all reasonablesteps for the protection andpreservation of the interestsentrusted to him.8. Duty not to de legate authority(Sec. 190)Subject to sextette exceptions statedearlier (under the heading Delegationof Authority), an agent must notfurther delegate his authority toanother person, but perform the workof agency himself.