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Ghayoor Zafar BBA-4E 01-111182-151

Summary of lecture 7
In this lecture we learned about the contract of the agency, the definition and meaning of the
agency- the contract between a principal and agent in which the agent work on behalf of the
principal by the authority conferred by him. Then it states the essientials of the contract of
agency in which there must be an agreement to form the agency, the principal must be a maijor
and competent to make a contract, agent must also be competent to make a contract, it is not
nessecary for this contract to have a consideration and lastly agent must have intention of using
the authority in the interest of the principal. The lecture tells about, how can an agency be
formed- it is formed by expressed( spoken or written) contracts, by implied( due to condition,
situation or relationship)contracts, ratification means approval of the authority by principal after
it’s usage by the agent, and lastly by operation of law- stated by law.

After this it describes the rights and the duties of both the agent and the principal. It is
compulsory for the agent to perform these duties which includes following the direction of the
principal, where there is no direction follow customs of trade, act with reasonable skill and
diligence Reasonable skill means skill that can be possessed by the ordinary man, maintain
proper accounts of the business of which you have been authorized, in case of difficulty use
reasonable effort to contact the principal to obtain instructions, protect the interest of the
principal and his representatives in case of death or insanity, must disclose all the facts and
figures related to the business, return the benefit gained by the business and must not delegate
the authority to any other person without the permission of the principal. the right to which the
agent is liable are also discussed- he have the right to to retain all his claim out of the sums
received on behalf of principal regarding remuneration and expenses incurred by him in
conducting the business of agency, to receive agreed commission, to retain goods until he has
been paid, to be indemnified against the consequences of act in good faith and all lawful acts
done by him in exercise of the authority conferred upon him, to be compensated for the loss due
to the neglect of the principal, in some case he have the rights to stoppage of the goods in transit.
It also discus the rights of principals which are - Right to Recover Damages and Refuse to
Indemnify (if the loss involves the negligence or misuse of the authority by the agent) and Right
to Obtain Benefit. His duties involves the fulfillment of the rights of the agent (Pay
Remunerations and Indemnify for Lawful Acts, Acts done in Good Faith, injury/loss)

TERMINATION OF AGENCY

This contract can terminate by different means, which includes- by the mutual agreement
between both parties, Revocation by the Principal or agent, completion business or the tenure for
which the authority was given, in case of death, insanity or insolvency of the the principal or
agent( agents insolvency may not terminate the agency in some cases), destruction of subject of
the agreement and change of law will also dissolve the contract.

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