The relationship between a principal and an agent is fiduciary, demanding the highest standards of good faith, accounting, and diligence.
1. Duties of an Agent
- Follow Instructions (Section 211): An agent is bound to conduct the business of the agency according to the directions given by the principal, or, in their absence, according to custom.
- Skill and Diligence (Section 212): An agent must conduct business with reasonable skill and diligence, and make compensation to the principal for direct consequences of neglect or want of skill.
- Render Accounts (Section 213): An agent is bound to render proper accounts to his principal on demand.
- No Secret Profits (Section 215 & 216): An agent must not deal on his own account. If an agent makes secret profits without the principal's consent, the principal can claim all such profits from the agent.
2. Rights of an Agent
- Remuneration & Retainer (Section 217 & 219): Right to receive agreed remuneration and retain out of sums received all expenses rightfully incurred.
- Right of Lien (Section 221): In the absence of any contract to the contrary, an agent is entitled to retain goods, papers, and other property of the principal until the amount due to him for commission or expenses is paid.
3. Personal Liability of the Agent: Section 230
Generally, an agent cannot personally enforce contracts made by him on behalf of his principal, nor is he personally liable on them.
Exceptions where the Agent is personally liable:
- Where the contract is made for the sale or purchase of goods for a merchant resident abroad.
- Where the agent does not disclose the name of his principal (undisclosed principal).
- Where the principal, though disclosed, cannot be sued (e.g. minor principal, foreign sovereign, or non-existent company).