Duties and Obligations of an Agent :
Following are the duties of an agent:
(i) Duty in conducting principal’s business: The agent should conduct the business of the principal as per directions of the principal or in the absence of any directions as per the custom prevalent in the business
(ii) The agent is liable to the principal for any loss if he deviates from the above duty/ obligation where he did not act according to instruction of the principal. It was held by the Supreme Court in a case that the agent had to compensate the principal where the agent did not act according to the instructions of the principal. In the given case the agent was under instruction to insure the goods of the principal but he did not. There was an explosion in the Bombay dock and as a result all the goods of the principal, along with others, was destroyed. The Government passed an ordinance that where ever there was a fire insurance policy, full amount would be paid to the owners and where there was no insurance cover, half the amount would repaid. The principal was paid half the losses and he sued the agent for the balance loss and the agent was ordered by court to pay the balance amount to compensate him for loss.
(iii) Requirements as to skill and diligence: Agent must act always as a person with diligence and skill normally exercised in the trade. He would otherwise be responsible to compensate the principal for any loss suffered by the principal for want of his skill. Where ‘A’ acts as an agent for ‘B’ and sells rice to ‘C’ in the usual course of business without verifying about C’s solvency and if ‘C’ goes insolvent, then ‘A’ is responsible for losses arising to ‘B’.
(iv) Agents duty to account: The agent has to maintain and render proper accounts to principal whenever demanded. He is bound to pay the principal all sums received. He is bound to maintain accounts even if the contract is illegal or void.
(v) Duty to communicate: The agent must in order to obtain instruction, communicate and contact the principal as a man of ordinary diligence.