Agent is a person who acts on behalf of principal. They are the person or thing that takes an active role or produces a specified effect on contract. Agent is a person who has the authorization to act for another through employment, by contract or apparent authority. The importance is that the agent can bind the principal by contract or create liability if he causes injury while in the scope of the agency.
According to sec. 58(1) of Nepal Contract Act, In case it is necessary to appoint, a sub-agent according to the nature of any trade, business or transaction, or in case a sub-agent can be appointed according to provision contained or practice followed in the contract relating to agency, the agent may, except when otherwise provided for in the contract, appoint a sub-agent with the consent of the principal person. A person whose duties as an agent are delegated to him or her by another agent is called as sub-agent or a person who works for or under the supervision of an agent.
A substituted agent is a person appointed by the agent according to the express or implied authority of the principal, to act on behalf of the principal in the business of the agency. A substituted agent is only named by the agent but is under the control of the principal. It acts independently for his principal. There is a contractual relationship between the substituted agent and the principal. An agent is not liable for the acts of the substituted agent.
The co-agent acquires equal rights as the original agent at the same time are called co-agent.
Right to receive remuneration:The agent has full right to receive the remuneration and commission of his work. The agent is entitled to receive the agreed remuneration from the principal. Once agent complete the work which is assigned by the principal he/she has right to claim for remuneration.
Right to retain money: The agent who is working on the behalf of the principal has right to claim for the expenditure incurred in the course of agency business.
Right to lien: The agent has right to keep principals goods or other properties until an obligation made by the principal is not discharged.
Right to indemnification against the consequences of lawful acts: An agent enjoys a right to claim indemnification for any loss suffered by him in spite of all lawful acts done in exercise of his authority. But an agent who is guilty of misconduct in the business of the agency is not entitled to any remuneration in respect of that part the business which he has misconduct. For example, Krishna employs Hari to beat Shyam and agrees to indemnify him against all consequences of the act. Hari beats Shyam. Since the act is illegal, as an agent Hari cannot get any indemnification from Krishna.
Right to indemnification against the consequences of the acts done in good faith: An agent has the right to be indemnified against the consequences of an act done in good faiths though it turns out to be injurious to the rights of the third person. For example, Krishna, at the request of Hari, sells goods in the possession of Hari. Actually, Hari has no right to dispose of it. Krishna(Hari's agent) does not know this and hands over the proceed of sale. Later, Shyam the true owner of the goods after that Shyamsue to Krishna and recover the goods and cost, since the act is done in good faith Hari is liable to indemnify Krishna.
Right to indemnification for injury due to principal’s neglect: The agent has the right to be compensated for injuries sustained by him due to principal neglect or want of skill.
Right to claim compensation in case of removal without any reason: If the principal removes the agent without a reason then the agent has the right to indemnification. If an agent is approved for a specific period or work the principal must not remove him prior to that period or work.
Right to stoppage of goods in transit: If the principal has become insolvent to pay for the goods by that has brought by an agent or incurring a personal liability for the price then an agent has right to stop goods in transit to the principal.
They are the person who employs an agent in dealing with the third person. He/she authorizes an agent to act to create one or more legal relationships with a third party. Since it is a special contract between agent and principal it must be satisfied with all essential element of the valid contract. Therefore principal must be competent in the eye of law.
Termination of agency by the act of Parties. The following are the situations where the agency is terminated by the act of parties.
To carry out business activities, there were not the separate provision in Nepal before 1992 BS.
In 1992 B.S. Rana Prime Minister issued an ordinance (Istihar) in its regards.
In B.S. 2014, The Agency Act had been enacted and enforced. To make very clear provision regarding agency, prevailing contract Act, 2056 has included the provisions regarding agency in chapter 8 of the Act.
Major Provisions of agency Act, 2014
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Rights and duties of an agent
Rights and duties of principal