Law of agency

Agency is a legal relationship between an agent who is a person having the authority or capacity to create legal relations between a principal and third parties. A person can be appointed as a real estate agent or employed as an advocate and solicitor for a particular case, among others. The principal and agent relationship can be established by the consent of both the principal and the agent, either expressly or by implication from their words and conduct. When a person engages or employs another person to do any act for himself or to represent him in dealing with third persons, it is referred to as ‘contract of agency’. The essential characteristic of an agency is that the agent is invested with a legal power to alter his principal’s legal relations with third parties. However, an agent does not become a party to the contract, nor does he incur any liability under that contract. Instead, the principal shall be responsible for all the acts of his agent if they are within the scope of his authority. The law of agency governs the relationship between agents and principals as well as their rights and obligations in relation to third parties. In relation to termination, the principal and agent’s relationship can be terminated by the acts or agreement of the parties to the agency or by operation of law. Having said the above, this chapter discusses the rights and duties of the agent and principal with reference to Part X (sections 135 to 191) of the Contracts Act 1950 (Act 136).