Q.
According to Contracts Act, 1950 list down the various duties of principal towards his agent.
A.
This part of the law is from Section 175 to 178 of Contracts Act, 1950. Extracts are posted below.
Principal’s duty to Agent
Agent to be indemnified against consequences of lawful acts
175. The employer of an agent is bound to indemnify him against the consequences of all lawful acts done by the agent in exercise of the authority conferred upon him.
ILLUSTRATIONS
(a) B, at Kelang, under instructions from A, of Taiping, contracts with C to deliver certain goods to him. A does not send the goods to B, and C sues B for breach of contract. B informs A of the suit, and A authorizes him to defend the suit. B defends the suit, and is compelled to pay damages and costs, and incurs expenses. A is liable to B for such damages, costs and expenses.
(b) B, a broker at Taiping, by the orders of A, a merchant there, contracts with C for the purchase of 10 casks of oil for A. Afterwards A refuses to receive the oil, and C sues B. B informs A, who repudiates the contract altogether. B defends, but unsuccessfully, and has to pay damages and costs, and incurs expenses. A is liable to B for such damages, costs and expenses.
Agent to be indemnified against consequences of acts done in good faith
176. Where one person employs another to do an act, and the agent does the act in good faith, the employer is liable to indemnify the agent against the consequences of that act, though it cause an injury to the rights of third persons.
ILLUSTRATIONS
(a) A, a decree-holder and entitled to execution of B’s goods, requires the officer of the court to seize certain goods, representing them to be the goods of B. The officer seizes the goods, and is sued by C, the true owner of the goods. A is liable to indemnify the officer for the sum which he is compelled to pay to C, in consequence of obeying A’s directions.
(b) B, at there quest of A, sells goods in the possession of A, but which A had no right to dispose of. B does not know this, and hands over the proceeds of the sale to A. Afterwards C, the true owner of the goods, sues B and recovers the value of the goods and costs. A is liable to indemnify B for what he has been compelled to pay to C and for B’s own expenses.
Non-liability of employer of agent to do a criminal act
177. Where one person employs another to do an act which is criminal, the employer is not liable to the agent, either upon an express or an implied promise, to indemnify him against the consequences of that act.
ILLUSTRATIONS
(a) A employs B to beat C, and agrees to indemnify him against all consequences of the act. B there upon beats C, and has to pay damages to C for so doing. A is not liable to indemnify B for those damages.
(b) B, the proprietor of a newspaper, publishes, at A’s request, a libel upon C in the paper, and A agrees to indemnify B against the consequences of the publication, and all costs and damages of any action in respect thereof. B is sued by C and has to pay damages, and also incurs expenses. A is not liable to B upon the indemnity.
Compensation to agent for injury caused by principal’s neglect
178. The principal must make compensation to his agent in respect of injury caused to the agent by the principal’s neglect or want of skill.
ILLUSTRATION
A employs B as a bricklayer in building a house, and puts up the scaffolding himself (by A himself). The scaffolding is unskillfully put up (by A), and B is in consequence hurt. A must make compensation to B.
Ref:
S175 - 178 Contracts Act, 1950.