1. What is an Agency?
Agency is a fiduciary relationship “which results from the manifestation of consent by one person to another that the other shall act in his behalf and subject to his control, and consent by the other so to act”. A party who employs another person to act in his behalf and subject is called a Principal. A party who agrees to act on behalf of another is called an Agent. Agency is governed by a large body of common law known as agency law. Eg: A real estate broker who is employed to sell a house.
2. What are the duties of a Principal to its Agent?
A Principal owes following duties to its agent:
* Duty to compensate: A principal owes a duty to compensate an agent for services provided either upon completion of agency or at some other mutually agreeable time. * Duty to reimburse: A principal owes a duty to reimburse the agent for all such expenses if they were authorized by the principal, within the scope of agency and necessary to discharge the agent’s duties in carrying out the agency. * Duty to indemnify: A principal owes a duty to indemnify the agent for any losses the agent suffers because of principal’s conduct. * Duty to cooperate: A principal owes a duty to cooperate with and assist the agent in performance of agent’s duties and the accomplishment of the agency.
3. What are the duties of an Agent to its Principal?
An agent’s owes following duties to its principal:
* Duty to perform: An agent must perform the lawful duties expressed in agency contract with reasonable care, skill and diligence. * Duty to notify: An agent owes a duty to notify the principal of any information he or she learns that is important to the agency. * Duty to account: An agent must maintain an accurate accounting of all transactions undertaken on the principal’s behalf. A principal may demand such accounting from agent at any point of time.
4. While an Agent delivers...