What Is Agency in Indian Contract Act

The Indian Contract Act of 1872 is an essential legal document that outlines the rules and regulations governing various types of contracts. One of the significant concepts introduced by this act is the concept of “agency.”

Agency refers to a relationship where one person (the principal) gives authority to another person (the agent) to act on their behalf. The agent represents the principal in legal or business matters and carries out tasks as instructed. The agent is accountable to the principal for their actions and must act in the principal`s best interests.

The Indian Contract Act defines agency as “the relationship that arises when one person (the principal) appoints another person (the agent) to act on their behalf.”

There are three types of agency recognized by the Indian Contract Act:

1. Express Agency: An express agency is created when the principal specifically appoints an agent and outlines the tasks to be carried out by the agent.

2. Implied Agency: An implied agency arises when an agent is appointed by the principal through their conduct or actions. For example, if a principal buys goods on credit and sends someone to collect the goods, the receiver becomes an implied agent.

3. Agency by Estoppel: Agency by estoppel arises when the principal leads the third party to believe that the agent has the authority to act on their behalf, even though no express or implied agency exists.

The Indian Contract Act sets out various rules and regulations that govern the relationship between the principal and the agent. These include the duties of the agent, the rights of the principal, and the liability of the agent.

In conclusion, the concept of agency plays a vital role in business and legal matters in India. Understanding the different types of agency and the rules that govern them is crucial for any person involved in contractual relationships.