Define ‘Agent’ and ‘Principal’. Can a Minor Be an Agent? Discuss.
Introduction
The concept of agency is widely used in business, legal, and financial matters. It is a relationship where one person (agent) is authorized to act on behalf of another (principal). This relationship is governed by the Indian Contract Act, 1872, from Section 182 onwards. Understanding who can be an agent or principal, and whether a minor can be an agent, is crucial for anyone dealing with agency-based transactions.
Who is an Agent?
As per Section 182 of the Indian Contract Act, 1872:
“An agent is a person employed to do any act for another or to represent another in dealings with third persons.”
In simple words, an agent is someone who acts on behalf of another person in business or legal matters.
Who is a Principal?
The principal is the person who authorizes the agent to act on their behalf.
Example: If A appoints B to sell his house, A is the principal and B is the agent.
Key Features of an Agency Relationship
- It is based on mutual agreement or consent.
- The agent works on behalf of the principal.
- The agent creates legal obligations between the principal and third parties.
Types of Agents
- General Agent – Performs all acts related to a business or trade
- Special Agent – Appointed for a specific task
- Commission Agent – Works for commission on sales or purchases
- Broker, Auctioneer, Factor – Different categories based on function
Can a Minor Be an Agent?
This is a common legal question. The Indian Contract Act provides a clear position on this:
- A minor can be appointed as an agent but he cannot be held personally liable to the principal.
Explanation:
- As per Indian Contract Law, a minor is not competent to enter into a contract (Section 11).
- However, acting as an agent does not require contractual capacity.
- Thus, a minor can act as an agent and bind the principal in transactions made with third parties.
- But, since a minor has no contractual liability, the principal cannot sue the minor if the agent causes a loss.
Case Law: Dilip Kumar vs. Sita Ram
In this case, the court held that a minor can act as an agent, and their acts are binding on the principal. However, the minor cannot be made liable for any breach or loss arising from the agency.
Duties of an Agent
- Act in the best interest of the principal
- Follow lawful instructions
- Maintain proper accounts
- Not to delegate authority unless allowed
Rights of an Agent
- Right to receive agreed commission
- Right to reimbursement for expenses
- Right to retain goods till dues are paid (right of lien)
Conclusion
In an agency relationship, the principal authorizes the agent to act on their behalf, and the agent can make deals or contracts with third parties that legally bind the principal. A minor, although not competent to contract, can act as an agent. However, he is not personally responsible to the principal. Therefore, care must be taken while appointing a minor as an agent, especially in important or financial matters.