Definition:
According to Sec. 182 of the Indian Contract Act, the definition of an agent and principal is as under:
"An agent" is a person employed to do any act for another or to represent another in dealings with third person. The person for whom such act is done or who is so represented is called the "Principal"
Methods of Creating Agency:
(1) Agency by Express Agreement :
The authority of an agent may be express or implied. Normally, the authority given by a principal to his agent is an express authority which enables the agent to bind the principal by acts done within the scope of his authority. In such a case, the agent may be appointed by word of mouth or by an agreement in writing. The usual form of a written contract of agency is the power of attorney on a stamped paper.
(2) Agency by Implied Agreement :
Implied agency arises from the conduct, situation or relationship of parties. It may be inferred from the circumstances of the case and things spoken. (a) Agency by Estoppel: The doctrine of estoppel may be stated with the help of this example: eg.. A tells B within the hearing of C that he (A) is C's agent & C does not object to this statement of A. Afterwards, B sends some goods to A on credit. A is liable to pay for the price to B.
(b) Agency by Holding Out : Agency by holding out is a branch of agency by estoppel. In this case, a prior positive or affirmative act on the part of the principal is required to establish agency subsequently. e.g. A allows his servant habitually to purchase the goods for him on credit from B and pays for them. On one occassion, he pays his servant cash to purchase the goods but the servant misappropriates the money and purchases the goods on credit from B. B can recover the price from A as he had held out his servant as his agent on prior occasions.
(c) Agency by Necessity: In certain urgent circumstances, the law confers an authority on a person to act as an agent for the benefit of another, there being no opportunity of communicating with that other. Such agency is called agency of necessity. It arises when an agent is exceeding his authority in an emergency
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