Short notes on the Classes of Agents

ADVERTISEMENTS:

Agents have been classified in various ways. There may be (a) general classification, e.g., Mercantile or non-mercantile agent, (b) classification on the basis of extent of authority, e.g., special or general agent, (c) classification on the basis of liability, e.g., del-credere agent, (d) classification on the basis of control, e.g., sub-agent. However, we are classifying them on a general basis.

Agent may be classified as follows:

1. Special Agent:

ADVERTISEMENTS:

As its name implies, a special agent is appointed to perform a special act or for a specific purpose or to represent his principal for a specific transaction, like selling a car or selling a house. His agency is limited to that particular act and is terminated after the transaction is over. Thus the third party is under an obligation to correctly ascertain the extent of his authority, otherwise the principal will not be bound by any other act of the agent.

2. General Agent:

A general agent is appointed to do all or general acts relating to a particular trade or business. In such a case, an agent has authority to do all such acts which are within the scope of his authority. Again, his authority, unlike the authority of a special agent, continues until it is terminated and the third parties have notice of such termination.

3. Universal Agent:

ADVERTISEMENTS:

Where an agent has unlimited authority, he is called a universal agent. His authority is not limited except where the act” is of a personal nature. For example, even a universal agent has no authority to marry on behalf of his principal or to sing a song in place of the principal.

4. Mercantile or Commercial Agents:

Mercantile agents are those agents which are employed to carry out mercantile or commercial transactions. The following are the types of mercantile agents:

(i) Broker:

ADVERTISEMENTS:

A broker is a person who brings two parties together to enter into a contract. He is a connecting link and acts as an intermediary. He is an agent of the seller as well as of the buyer. He is not given the possession of goods or the documents of title. He sells and buys goods on behalf of his principal. He acts in the name of his principal and has no authority either to deal in his own name or to delegate his authority. He has no right of lien as property is not in his possession.

(ii) Factor:

A factor is a person who has the possession of goods or the documents of title. He has a right to enter into transactions in his own name. Since he has possession of the goods, he has a right of general lien on the goods belonging m his principal for a general balance of account.

His authority is rather wide and varied in character. He can sell goods on credit. He can receive payment and can give a valid receipt for the payment received by him. In case he is in possession of goods or documents of title with the consent of his principal, he may in the ordinary course of business, sell, pledge or otherwise dispose of the goods. The principal is bound by the acts of the agent, provided the third party acted in good faith and bona fide and has no knowledge of the defect of authority of the agent.

ADVERTISEMENTS:

(iii) Auctioneer:

An auctioneer is an agent appointed to sell goods by public auction to the highest bidder. He is under an obligation to take reasonable steps to minimize the loss of his principal, otherwise he will be liable for negligence. He, therefore, cannot sell the goods on credit. He has to sell goods only on cash. He may, however, accept payment by a cheque but not by a bill of exchange or a promissory note.

An auctioneer, in the absence of any reserve price, must sell to the highest bidder. However, in case any reserve price has been fixed, then a buyer is bound by that reserve price even if the exact amount of the reserve price was not known to the buyer at the time of sale. But the principal will be bound to the third party by the acts of the auctioneer done within the scope of his apparent authority even if he acts contrary to the instructions given privately by the principal.

Example:

ADVERTISEMENTS:

An auctioneer was instructed to sell a pony by auction subject to a reserve price of Rs. 25. The agent inadvertently sold the pony, below the reserve price, for Rs. 16 only. Held, the principal was bound by the sale [Rainbow v. Hawkins.]

Of course, the principal can recover his loss from the auctioneer in the above case. Further, an auctioneer has no implied authority to make a private sale, even at a higher price than the reserve price, if the auction sale does not materialize or proves abortive, i.e., fails.

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