Legal Aspects of Agency Law: Duties and Responsibilities of an Agent

This article discusses the legal aspects of agency law and explores the duties and responsibilities of an agent. It covers topics such as the duty to follow instructions, duty of care and skill, duty to avoid conflict of interest, duty to account, and duty not to delegate authority. Understanding these duties is crucial for both agents and principals in order to maintain a successful agency relationship.

QUESTION-2

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................4
Discussion on the topic “An agent is subjected to a range of responsibilities defined as legal
events related to the agency relationship by general law. In which the agency is contracting,
several duties can come into force in the agreement as an implied term, or be changed by its
express terms. Those duties are therefore immediately placed on the agent”.............................4
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Legal Aspects of the business is one of the crucial topic which plays the important role and
explains that how any of the legal work is to be managed in a systematic manner. It is necessary
to be understood by every business organisation that they must be able to follow the legal
language as legal penalties can be imposed for any of the default performed by the parties.
Talking about agency law, it can be easily explained as one of the most essential topic where
there two different parties try to enter into the contract. The agency may be considered a
fiduciary relationship that is formed among two individuals, i.e., principal and agent. Here, agent
has the capacity to make decisions on account of the principal in order to fulfil an organization's
objectives. By moving in contract, these styles of relationships are formed specifically, and can
be either seen in implied or expressed form. The one aspect that needs to be remembered with
agency law is that each agent only has to conduct certain works where authorization has been
granted to them. Any of the decision should not be taken by the agent which cause problem to
the principal
The relationship among agent and principal will be established by legal proceedings in
which principal can provide specific details about rights and duties that agent is expected to
undertake. There have been various forms in which agency can be established and the best
example is through the process of appointment. There's a choice by estoppel to create an
organization whereby implicit selection is valid. the another way is to take the help of expressed
contract. There, both agent and principal must agree on the jurisdiction and measures to be taken
for the benefit of a specific entity (Fahamsyah and Suri, 2019). There is Tripartite relationship,
which is beneficial for the purpose of maintaining the relation between principal and agent as
authorized person from judiciary form the contract to protect the interest of either parties. Also,
if in any of the situation, the party faces any of the problem at the time of purchase of product
then they get the option to claim against the party so that damages can be recovered easily.
Speaking of the dynamics of agent-principal agreement, it clearly interpreted as the
circumstance whereby the employee is given the power to make most of the decisions that are
vital to the entity. This is one of choices that allows to remove total pressure to be that from the
principal. Moreover, it has some significant characteristics that enables agent to make certain
decisions that immediately increase the chances of meeting the enterprise target. Different topics

will be addressed in assignment, which will be specifically connected to subject relevant to the
relationship between agent and principal. Also, different duties which automatically imposes
upon the agent when they enter into the contract.
MAIN BODY
Discussion on the topic “An agent is subjected to a range of responsibilities defined as legal
events related to the agency relationship by general law. In which the agency is contracting,
several duties can come into force in the agreement as an implied term, or be changed by its
express terms. Those duties are therefore immediately placed on the agent”.
The current situation indicates that whenever any of the business organization is
incorporated there is the requirement of different employees who can contribute towards
accomplishing the goals. Here, law of agency always plays the effective role through which
target can be achieved easily because different roles and responsibility are authorized to different
people in it. It becomes mandatory that any of the roles and responsibility which has been given
to agent must be performed in a required manner (Coman-Kund, 2018). Here, different skills are
required to be applied so that effective results can be obtained. There are other obligations as
well which is needed to be fulfilled whenever any of the agent and principal enters into the
contract as certain duties automatically imposed upon them.
It is necessary for any of the agent that whenever they perform any of the task. Firstly,
they must be able understand the law because it will direct them that how any of the work is to
be done in lawful manner. It is because small mistake can create huge problem for principal as
concept of ultimate liability is applicable in it. There are number of other responsibility of agent
such as work on the grounds of instructions which has been provided by principal because it will
reduce the percentage of pressure from both the involved parties. There are some of the other
duties as well which automatically imposed upon agent at the time of making contract which has
been discussed below in detail.
 Duty to follow the lawful and reasonable instruction of principal: It is among one of
those duty which is general assigned to the agent automatically at the time of formation
of contract. There is no such requirement that it should be mentioned because the main
purpose of assigning them is to make working process easy. In any of the circumstances,
they must ensure that their decision will not affect principal and attaining goals will be

and easy task for them. Whenever any of the agent is able to work according to principal
instruction then there will not be any of the issues which they will have to face in any of
the circumstances (Bahli and Rivard, 2017). There are number of case where agent didn’t
work as per the requirement and due to which principal has to suffer from losses. In this
types of situation, it is necessary for principal to be aware because they get the
opportunity to make a claim against agent through which they can easily recover the
damages which has been incurred just because of agent. One of the popular case is
between Gledhill v/s Bentley Design in which it was clearly indicated by jury that in any
of the situation it becomes the obligation that all of the work must be performed as per
the requirement. Here, in the case agent was made liable for the decision which was taken
by him because it directly or indirectly created issue due to which principal has to suffer
from lots of problem.
 The Duty of Care and Skill: This is second duty which also imposes automatically upon
the agent. It is necessary for any of the agent or director of a company that they must be
able to exercise their power by considering proper skill and care. If any of the
circumstances occur in which agent is unable to fall under the basic standard of skill and
care, then in that respective situation it is necessary that for them to compensate the
principal for all of the damages. As per the guidelines of common law, at initial stage
company will be held liable but at the end of the day they can easily make agent liable
under gross negligence. Whenever any of the agent is higher, it is assumed that they will
use of the skills and talent through which they can tackle the situation which can
overcome the problem. In short, it becomes mandatory for agent that their every decision
will be in the interest of a company by implementing care, diligence and skills. One of
the case which can help to understand this particular duty in detail is between is Keppel
v/s Wheeler (Vitolla, Raimo and Rubino, 2019). Here, in this case, the duty was given to
agent to provide all of the information to principal. While giving information, it is
necessary that it must not be transferred to any of the person as information carries
confidentiality by agent fails to do so and principal has to suffer from losses. In this
particular situation, it was decided that agent must compensate principal for loss and
damages which he incurred.

 The Duty to avoid Conflict and interest: This is also among one of the duty which has
been provided to agent where they are need to understand that they will not create any of
the situation of conflict and interest. It is because directly or indirectly it will harm the
goodwill of principal due to which performing any of the task will not be an easy task. It
becomes the responsibility of agent that if any of the conflict occurs then in that
respective situation they are needed to tackle the situation so that problem can be solved
in best possible manner. The second must important thing in it is that there are number of
situation where those transaction takes place which do not allow to attain goals. Here, it
is essential that agent must disclose the transaction to principal so that positive result can
be obtained. One of the landmark case has taken place for this respective situation which
was held between, Railway Co. v/s Blaikie Bros. In this case, there was the problem
related to property where it was the duty of director to give all of the essential
information to principal or company (Dharmapala, Garoupa and McAdams, 2016). But,
he didn’t do that because it personal interest was there and it was one of the reason for
raise in conflict among agent and principal. Here agent was held liable for not performing
the duty as per requirement.
 The Duty to account: The roles and responsibility for agent is not limited as they are the
one who has to perform number of work so that each and every situation can be brought
under control for the purpose of attaining the goals. Out of number of duty, it is also
essential for agent to understand about the duty to account. In this particular duty, it is
essential that agent must be able to keep proper record of every single transaction which
has been taken place so that records can be overviews at any time period. Not only this,
as there are other duties as well which is included in it. For example: agent has received
the house to stay but in this particular situation he is not able to take any of the action
regarding selling or putting the property into lease (Dimitriu, 2017). Also, at the time of
termination of contract, property must be returned to principal. There are other duties as
well as it become mandatory that if in any of the situation principal seeks the account,
then agent must provide with immediate effect. The relevant case which had taken place
in this particular situation is among Ram All v.Asian Commrel. Here, the
case states that agent was given the duty to perform the task where
he must be able to maintain the records of account but it was found

that he was not able to do that. Even the property which was given to
agent was further transferred as a lease which was completed against
the agency law. Here Jury decided that agent must be held liable for
the breach of duty which was given to him. Compensate should be
done to principal.
 The Duty not to delegate authority: There are number of situation where agent further
transfer his or her duty which is completely against the agency law. It is necessary for
agent to understand that whenever any of the duty is assigned to them, they must be able
to perform them as per the requirement of law. If in any of the situation they fail to do so
then legal action can be taken against them. It is mainly done for the purpose of
maintaining the confidentiality between agent and principal so that ideas and concept
cannot be copied by other person (Agency Definition, 2019). Also, there are certain
circumstances where agent has to hire sub-agent who perform under agent. In this
particular situation, if any of the default is performed then legal action can be taken by
principal agent. Also, all of the expenses which occurs during the process of hiring the
agent till the date of termination of sub-agent, will be managed by agent himself as
principal will not be liable in this particular situation. One of the famous case which had
taken place is John McCain and Co. v Powai. In this particular case, it was found that
agent hired the sub-agent to manage day to day work but there were number of decision
which were being taken by sub-agent. This were those decisions which put company
under pressure as losses started to incur. Here, permission was not given by the principal
in this case (Agent's duties to principal under common law, 2019). So, looking at the
scenario, principal filed the case where agent was held liable for all of the decision which
were taken by sub-agent.
These are some of the essential duties which automatically incurs upon the agent whenever
they enter into the contract with principal. It is also necessary to understand that agent must be
able to perform every single duty in appropriate manner so that goals can be accomplished.

CONCLUSION
This can be easily derived from file where different topics has been discussed that agencies
is one of the requisite laws under which specific regulations are expected to be complied with. I t
is to be understood that law is very beneficial to the company because it enables principal to
make certain decisions whereby they can minimize the proportion of the responsibility from
them because authorized agent gets opportunity to make many decisions by which objectives
could obtained. Numerous benefits of the law of agencies, but it has been noticed that it needs
adjustments as there are various situations under which legislation causes problems for principal.
As, it was noticed if either of the agent makes any decisions, the final obligation is to be
modified. As there are many cases where agent is displaying the negligence and causing
problems for principal, so if improvements are made among this clause then the regulation of the
agency will be very successful. It has also been said that operating in ethical manner is very
essential for an agent where the valuable skills could be applied. It is because direct effect can be
seen upon the outcomes where ultimate liability occurs upon principal.

REFERENCES
Books & Journals
Fahamsyah, E. and Suri, F. A., 2019. Post-Notification Settings in Incorporation of Business
Agency (Merger) as the Efforts to Prevent Unfair Business Competition. Lentera
Hukum. 6(2).
Coman-Kund, F., 2018. European Union agencies as global actors: a legal study of the
European Aviation Safety Agency, Frontex and Europol. Routledge.
Bahli, B. and Rivard, S., 2017. The information technology outsourcing risk: A transaction cost
and agency theory-based perspective. In Outsourcing and Offshoring Business
Services (pp. 53-77). Palgrave Macmillan, Cham.
Vitolla, F., Raimo, N. and Rubino, M., 2019. Board characteristics and integrated reporting
quality: an agency theory perspective. Corporate Social Responsibility and
Environmental Management.
Dharmapala, D., Garoupa, N. and McAdams, R. H., 2016. Punitive police? Agency costs, law
enforcement, and criminal procedure. The Journal of Legal Studies. 45(1). pp.105-141.
Dimitriu, C., 2017. Agency law and odious debts. Ethics & Global Politics. 10(1). pp.77-97.
Online
Agent's duties to principal under common law. 2019. [Online]. Available Through:
<https://www.eaa.org.hk/en-us/Information-Centre/Publications/Agency-Law/-5-
Agents-duties-to-principal-under-common-law>
Agency Definition. 2019. [Online]. Available Through:
<http://www.duhaime.org/LegalDictionary/A/Agency.aspx>