Thursday, 26 November 2015

AGENT AND PRINCIPAL(POWER OF ATTORNEY)

Which is the Act that governs the relationship between Agent and the Principal?
A separate Act, the Power of Attorney Act 1882, deals with the Power of Attorney. It is a small Act with 5 sections. But Indian Contract Act 1872 which deals with agency is applicable to the Power of Attorney, as the Power of Attorney Holder is an agent of the principal.
Who is an agent, Principal ?
An agent is a person, employed to do certain acts for another person or to represent such another person, while dealing with third persons. The person on whose behalf the agent acts or whom the agent represents is called the principal. The donor of Power of Attorney is the principal and Power of Attorney Holder is the agent.
What are the requirements of a Principal and agent ?
The principal should have attained majority and should be of sound mind. Likewise, the person to be appointed as agent should also be a major with sound mind. Though the Section 184 of Indian Contract Act stipulates that as between principal and agent any person may become an agent, but age and sound mind are important because a minor and a man of unsound mind cannot be responsible for his Principal. Further, as between the Principal and third person the act of an agent is deemed to be act of the Principal. As such the Power of Attorney Holder and principal should be majors  and of sound mind.
Whether an agent can appoint another agent? Whether a Power of Attorney Holder can appoint an another Power of Attorney Holder?
The generally accepted principle is that an agent cannot appoint another agent to do acts, which he has to perform. So a power of attorney holder cannot appoint another power of attorney holder. This is well expressed in maxim “delegate non potest delegare” which means a person who is delegated with certain powers cannot delegate such powers to a third person. But Section 190 of Indian Contract Act has provided certain exceptions, whereby a sub-agent may be appointed in certain circumstances, a power of attorney holder may appoint another power of attorney holder in similar circumstances.
(1) The nature, custom of the trade is such that it requires the appointment of sub-agents.
(2)The terms of agency and the terms of power of attorney provide for appointment of sub-agents.
Who is a Sub-Agent ?
A Sub-agent is a person employed  to act under the control of original agent. The relationship between original agent and sub-agent is that of principal and agent.
What is the relationship between the Original Principal and the Sub-Agent ?
A Sub-agent, if properly appointed in terms of the agency  to meet the requirements of the business, binds the principal for his acts with the third person. The agent is responsible to the principal for the acts of the sub-agent. The sub-agent is responsible for his acts to the agent and not to the principal except in case of fraud or willful wrong.
What is the responsibility of the agent who employs a sub-agent without authority ?
When an agent appoints a sub-agent without proper authority, the agent is responsible for the acts of the sub-agent to both the principal and to third person. The principal is not responsible for the acts of the sub-agent, nor the sub-agent is answerable to the principal.
Whether the principal or donor can cancel the agency, power of attorney ?
The Principal or donor may cancel the agency or power of attorney with due notice. Further proper notice should be given to the public. Such agency also gets cancelled, when the work for which agency was granted is completed, or by the death of the principal/donor, agent or any of them becoming of unsound mind or insolvent.
However if the agent himself has any interest in the property which is the subject matter of agency, it cannot be cancelled, unless the agent agrees. Further, the principal cannot cancel the agency, after the agent has partially exercised his authority. In case of power of attorney given to sell the property, if the power of attorney holder has entered into a sale agreement in accordance with the terms of power of attorney, the donor cannot cancel the power of attorney until the sale is completed; the sale agreement is binding on the principal.

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