What is Agency? :

The Indian Contract Act,1872 does not define the word ‘Agency’. However the word ‘Agent’ is defined as “a person employed to do any act for another or to represent another in dealings with third persons”. The third person for whom the act is done or is so represented is called “Principal”.(Section 182)

Thus ‘Agency’ is a comprehensive word used to describe the relationship between one person and another, where the first mentioned person brings the second mentioned person into legal relation with others.

The Rule of Agency is based on the maxim “Quit facit per alium, facit per se:” i.e., he who acts through an agent is himself acting Salient features of agency: Following are the four salient features of agency

(i) Basis: The basic essence of ‘agency’ is that the principal is bound by the acts of the agent and is answerable to third parties.

(ii) Consideration not necessary: Unlike other regular contracts, a contract of agency does not need consideration. In other words, the relationship between the ‘principal’ and ‘agent’ need not be supported by consideration.

(iii) Capacity to employ an agent: A person who is competent to contract alone can employ an agent. In other words, a person in order to act as principal must be a major and of sound mind.

(iv) Capacity to be an agent: A person in order to be an agent must have authority to contract. So, minor has no capacity to contract but may have authority to act as agent. An agent brings about a contractual relationship between the principal and third persons and therefore his contractual capacity is immaterial.