Contracts Of Agency: Jaiib/DBF Paper 3 (Module D), Unit-6

Contracts Of Agency: Jaiib/DBF Paper 3 (Module D), Unit-6

Dear bankers,

As we all know that is Contracts Of Agency for JAIIB Exam. JAIIB exam conducted twice in a year. So, here we are Contracts Of Agency (Unit-6), Commercial Laws with Reference to Banking Operations (Module D), Legal & Regulatory Aspects of Banking -Paper 3.

Contracts Of Agency

  • An agent, is a person employed to do any act for another person or to represent another person in dealings with some third person.
  • The person for whom such act is done (or who is represented) is called the principal.

Meaning Of Agency

The person should be authorised to do an act for a person in such a manner, as to bind that person, i.e. to make him answerable for such acts done on his behalf. The agent creates contractual relations between two separate persons when he enters into a contract on behalf of one of the parties.

Normal Rules Of Contract

The contract between the principal and his agent is a contract in itself and that is also governed by the normal rules of contract.

Persons To Be Majors And Of Sound Mind

Any person who is a major according to the law of which he is subject, and who is of sound mind, may employ an agent. Any person can become an agent, if he is a major and of sound mind.

Consideration

No consideration is necessary to create an agency.

Authority Of An Agent

The authority of an agent may be expressed or implied. An authority is said to be expressed, when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case.

Agent’s Authority in an Emergency

In an emergency, an agent has authority to do all acts to protect his principal form loss as would be done by a person his own case.

When Agent cannot Delegate

An agent cannot employ another to perform acts which he has undertaken to proform personally. A sub-agent may be employed of the custom of trade or the nature of agency so requires.  A ‘sub agent’ is a person employed by and acting under the control of the original agent. The agent is responsible to the principal for the acts of the sub-agent. The sub-agent is responsible for his acts to the agent, but not to the principal.

Right of person as to acts done for him without his Authority-Effect of Ratification

If acts are done by an agent on behalf of the principal without his knowledge or authority, the principal may elect to ratify or to disown such acts. If he ratifies them, the same effects will follow as if they had been performed with his authority. Ratification may be express or implied in the Conduct of the person on whose behalf the acts are done.

When Agent’s Remuneration becomes Due

An agent can detain received by him on account of goods sold, even of all the goods consigned to him for sale are not sold.

Fraud by Agent

A principal is liable for the agent’s fraud acting within the scope of his authority whether the fraud is committed for the benefit of the principal or for the benefit of the agent.

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