As per the legal concept of agency, when one person (the agent) acts on behalf of another person (the principal), a legal relationship known as agency is established. In such a relationship, the principal authorizes the agent to act on their behalf and the agent agrees to do so while following the principal`s instructions. In this article, we will explain the rights and duties of principal and agent in a contract of agency.
The Rights of Principal in a Contract of Agency
1. Right to Control: The foremost right that a principal enjoys is the right to control the actions of the agent. In other words, the principal has the power to direct the agent`s actions and ensure that they are in line with the principal`s objectives.
2. Right to Compensation: The principal has a duty to pay the agent for their services. The compensation is usually agreed upon in the contract of agency.
3. Right to Information: It is the duty of the agent to keep the principal informed about all the relevant matters related to the agency. The principal has the right to demand such information at any time.
4. Right to Terminate: The principal has the right to terminate the contract of agency at any time, provided that they give reasonable notice to the agent.
5. Right to Sue: The principal has the right to sue the agent for any loss suffered due to the agent`s negligence or breach of duty.
The Duties of Principal in a Contract of Agency
1. Duty to Compensate: As mentioned earlier, the principal has a duty to compensate the agent for their services. The compensation is usually agreed upon in the contract of agency.
2. Duty of Good Faith: The principal has a duty to act in good faith towards the agent and not to take any action that may harm the agent`s interests.
3. Duty of Care: The principal has a duty to take reasonable care in selecting the agent and to ensure that the agent possesses the necessary skills and expertise to perform the tasks assigned to them.
4. Duty to Indemnify: The principal has a duty to indemnify the agent for any loss suffered by them due to the performance of their duties on behalf of the principal.
The Rights of Agent in a Contract of Agency
1. Right to Compensation: The agent has the right to receive compensation for their services. The compensation is usually agreed upon in the contract of agency.
2. Right to Reimbursement: The agent has the right to be reimbursed for any expenses incurred while performing their duties on behalf of the principal.
3. Right to Lien: The agent has the right to retain possession of any property belonging to the principal until the principal pays for the services rendered by the agent.
4. Right to Indemnity: The agent has the right to be indemnified by the principal for any loss suffered by them due to the performance of their duties on behalf of the principal.
The Duties of Agent in a Contract of Agency
1. Duty of Loyalty: The agent has a duty to act in the best interests of the principal and to avoid any conflicts of interest.
2. Duty of Skill and Care: The agent has a duty to exercise reasonable skill and care while performing their duties on behalf of the principal.
3. Duty to Account: The agent has a duty to keep accurate records of all transactions carried out on behalf of the principal and to provide the principal with regular reports.
4. Duty to Follow Instructions: The agent has a duty to follow the principal`s instructions and to act within the scope of their authority.
In conclusion, a contract of agency establishes a legal relationship between the principal and the agent. Both parties have certain rights and duties that are critical to the overall success of the relationship. By understanding these rights and duties, both the principal and the agent can work together effectively towards achieving their desired objectives.