Special Contract

SPECIAL CONTRACT
ASSIGNMENT
SUBMITTED TO:
PROF. DEVIPRABHA
SUBMITTED BY:
R.SRIMUGAN
SECTION-4
20191BAL0080
1. Priya, an agent for the sale of goods having an authority to sell on credit, sells to
vani on credit, w/o making the proper and usual enquiries as to the solvency of
vani. Vani at the time of such sale was insolvent. Analyze the responsibility of an
agent.
 A1) Agent's duties include:
 (1) Act on behalf of and be subject to the control of the principal
 (2) Act within the scope of authority or power delegated by the principal
 (3) Discharge his or her duties with appropriate care and diligence
 (4) Avoid conflict between his or her personal interests and those of the principal
 (5) Promptly hand over to the principal all monies collected on principal's behalf.
 Priya was an agent of sale of goods, hence, it was her responsibility to ask Vani about
her insolvency, before selling her goods on credit. When goods are sold on credit the
buyer has the option of paying for the goods later on. Priya didn’t discharge her duties
with appropriate care and due diligence which will later lead to a loss to the principal
as Vani was insolvent at the time of the sale.
2. Examine the provisions regarding the determination of agency. Add a note on

agency conflict with interest.
A2) The owner X can sue his agent Y because of his failure to discharge his duty assigned to
him by his principal. Not only did Y not act in his scope of authority, he misappropriated the
money he received after selling the horse. Y did not perform the duties of an agent properly
and failed to discharge his duties assigned to him by Owner X.
3. Owner X hands over the horse to his agent Y and instructed him not to sell the
horse under any circumstances. However, his agent Y sells to A for Rs.50000 and
misappropriates the money. Decide
A3) There are various types of authority that can be delegated to an agent:
 EXPRESS AUTHORITY: - authority granted to an agent by the terms of a written or

oral agreement between the agent and the principal. However, the power of attorney is
constructed strictly by the terms of the contract and limited to the given purpose.
 IMPLIED AUTHORITY: - every agent who is given express authority also has the
implied authority to act in a ‘reasonable, incidental and necessary’ manner in order to
effectively carry out his duties.
 OSTENSIBLE AUTHORITY: - ostensible authority is an appearance of authority
based upon the conduct of a principal to a third party which is intended to be relied
upon and is acted upon by that third party. It is the conduct of the principal which
makes himself liable to the third party although the agent does not have the authority.
 RATIFICATION: - Ratification is the process of authorizing certain activities after
they have taken place. It only speaks to the past and does not confer authority to do
the same act in the future.
 AGENCY BY NECESSITY: - It means when a person is faced with an emergency in
which the property of another party is in danger of being lost or damaged, he acts for
that party without his authority in order to preserve the property.
4. "The act of agents within the scope of his authority binds the principles “Explain
the various kinds of authorities l, delegated to agent.
A4) In determining whether an agency in the legal sense exists, the court looks at the
authority of the supposed ‘agent’ and other aspects of the relationship between the parties. An
agency’s authority may arise in a five ways, by expressing appointment by the principal,
implied appointment made by the principal, ratification by the principal, by necessity
(operation of law in certain circumstances) and by doctrine of estoppels or holding out.
Agency problem is a conflict of interest inherent in any relationship where one party is
expected to act in the best interest of another. Agency problem arises when incentives or
motivations present themselves to an agent to not act in the full best interest of a principal.
Through regulations or by incentivizing an agent to act in accordance with the principal's best
interests, agency problems can be reduced.

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2. Examine the provisions regarding the determination of agency. Add a note on

 EXPRESS AUTHORITY: - authority granted to an agent by the terms of a written or

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