Definition
A person employed to do any act for another (the principal), or to represent the other in dealings with third persons — with the power to bind the principal by acts done in the course of the agency.
An agent under Section 182 ICA is one employed to act for another. The agency relationship involves three parties: principal, agent, and third parties. The agent's key attribute is the power to bind the principal — acts done by the agent within their authority bind the principal as if the principal had done them directly. Agency can be created by: (a) express appointment; (b) implied appointment (conduct or necessity); (c) ratification (Section 196 — principal adopts agent's unauthorised acts); (d) estoppel (principal's representation that another is their agent — apparent authority). Agents owe duties of: loyalty, confidentiality, care, disclosure, and to account for money received.
Statutory Definition
Section 182, Indian Contract Act, 1872: 'An agent is a person employed to do any act for another, or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the principal.' Section 183: 'Any person who is of the age of majority according to the law to which he is subject, and who is of sound mind, may employ an agent.' Section 184: 'As between the principal and third persons any person may become an agent, but no person who is not of the age of majority and of sound mind can become an agent, so as to be responsible to his principal.'
Etymology & Origin
From Latin 'agens' (present participle of 'agere' — to do, to act). An 'agent' is literally one who 'acts' — one who does things on behalf of another. The Latin equivalent 'mandatarius' comes from 'mandatum' (a mandate, commission) — the agent acts under the principal's mandate.
Full Legal Analysis
Agent: Acting for Another, Binding the World
Agency is the legal device that allows one person to act through another — to sign contracts, receive payments, make representations, and generally conduct legal transactions as if they were the principal themselves. Without agency, every business transaction would require personal presence; commercial life would grind to a halt. Agency law determines when the principal is bound by the agent’s acts and when third parties can rely on the agent’s authority.
Types of Authority
(a) Actual authority (Section 186): Express or implied authority actually granted by the principal. Express: specified in the appointment; Implied: inferred from the nature of the position, trade usage, or conduct. (b) Apparent authority (ostensible authority): Authority that the principal's conduct leads third parties reasonably to believe exists — even if no actual authority was granted. A principal who holds someone out as their agent is bound by that agent's acts towards third parties who relied on the appearance. (c) Authority by ratification (Section 196): An act done by someone without actual authority may be ratified by the principal — the ratification relates back to the date of the act and binds the principal as if authority existed from the beginning.
Principal’s Liability for Agent’s Torts
The principal is vicariously liable for the agent's torts committed in the course of the agency. Under Section 238 ICA, misrepresentations and frauds by the agent within the scope of their authority make the principal liable to third parties. But the principal is not liable for acts done outside the scope of the agency without ratification — the agent alone is liable for ultra vires acts.
Duties of the Agent
An agent owes the principal: (a) Section 211: duty to act within authority — not to exceed the mandate; (b) Section 212: duty to exercise skill and diligence; (c) Section 213: duty to render accounts; (d) Section 215: duty not to deal on own account without principal's knowledge; (e) Section 219: duty to pay over money received for principal.
“Agency is trust made legal. The principal trusts the agent with their power — power to bind, to commit, to represent. The law enforces this trust rigorously: the agent must act in the principal’s interest, within the principal’s authority, and account for every exercise of that power.”
This Term in Indian Statutes
Indian Contract Act, 1872, 1872
"An agent is a person employed to do any act for another, or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the principal."
Definition of agent and principal under the law of agency
