Principal and agent

Power of attorney is written authorization, whereby "principal" authorizes "agent" to do acts specified therein on behalf of the "principal"

Such acts when executed are binding on the "principal" as if done by him

Primary purpose of instrument of such nature is to assign authority of "principal" to another person as his agent.

No doubt it would be possible in theory for a principal in appointing an agent to agree that the agent may bind the principal even if and when the agent is acting dishonestly with the aim of defrauding the principal

But it seems inconceivable that any sane person would ever agree, or could reasonably be presumed to have agreed, to confer such authority on an agent

As is generally the case in commerce, parties to an agency relationship naturally deal with each other on an unspoken common assumption that each will act honestly in relation to the other

Authority conferred on an agent does not encompass acting dishonestly to further the agent's own interests in opposition to the interests of the principal.

Principle of "principal and agent" arising out of contractual delegation could not apply to the delegated authority of the delegator and the delegate, which derived its source from an enactment, being statutory delegation.

Agent could not absolve himself of his responsibility to be held accountable to his principal and could not be allowed to dispute the authority of his principal.

Agreements existed between parties according to which plaintiffs were to facilitate sale of goods on behalf of defendant in the market

Effect

Term 'agent' under S. 182 of Contract Act, 1872 was a person employed to do any act for another or to represent another in dealings with third person and person for whom such act was done or who was so represented was called 'principal'

Agreements provided that plaintiffs would facilitate sale of sugar on behalf of defendant company in market on due dates (dates on which delivery orders could be presented) at market rates or price

Such facilitation was to be regarded as authority for plaintiffs to represent defendant company in its dealings with third persons for sale of sugar

Such clauses of agreement had brought relationship between the parties within the scope of S.182 of Contract Act, 1872 and there was an "agency" between the parties.

Agreements existed between parties according to which plaintiffs were to facilitate sale of goods on behalf of defendant in the market

Effect

Term 'agent' under S. 182 of Contract Act, 1872 was a person employed to do any act for another or to represent another in dealings with third person and person for whom such act was done or who was so represented was called 'principal'

Agreements provided that plaintiffs would facilitate sale of sugar on behalf of defendant company in market on due dates (dates on which delivery orders could be presented) at market rates or price

Such facilitation was to be regarded as authority for plaintiffs to represent defendant company in its dealings with third persons for sale of sugar

Such clauses of agreement had brought relationship between the parties within the scope of S.182 of Contract Act, 1872 and there was an "agency" between the parties.

Where a recipient of money (i.e. agent) knew that impending insolvency would prevent it from performing the corresponding obligation, whether this could give rise to a liability to account on its part as a "constructive trustee"

Where money was paid with the intention of transferring it to the payee, the least that must be shown to establish a constructive trust was that the intention was vitiated, for example, because the money was paid as a result of a fundamental mistake or pursuant to a contract which has been rescinded, or, that irrespective of the intentions of the payer, in the eyes of equity the money had come into the wrong hands, as where it represented the fruits of a fraud, theft or breach of trust of fiduciary duty against a third party

Where money was being paid in circumstances in which there was a prospect of a total failure of consideration, such fact was not sufficient to mean that there was no intention on the part of the payer to transfer the entire legal and beneficial interest in the monies

Unless the agent was expressly made trustee for the money then it would form part of the agent's insolvent estate and the principal must prove in the winding up for the outstanding balance

Any suggestion of a flexible approach allowing the imposition of constructive trust simply because it would be contrary to any ordinary notion of fairness to allow the general pool of creditors to keep the monies, rather than the principal had to be rejected Neste Oy v Lloyd's Bank [1983] 2 Lloyd's Rep 658 not approved. In re Japan Leasing (Europe) plc [1999] BPIR 911 held to be wrongly decided.

In order for the authority of an agent to be irrevocable, there must be an agreement that it should be irrevocable, and the authority must have been given to secure some interest of the agent (whether a proprietary interest, or a liability owed to the agent personally)

Where said two conditions were satisfied, the agent's authority was truly irrevocable in law as long as the personal interest of the agent subsisted.

Such duty however did not necessarily give rise to a trust of the money in the agent's hands; that depended on the intentions of the parties derived from the contract, or in some cases from their conduct

As a broad generalisation, the relations between principal and agent must be such that the agent was not at liberty to treat as part of his general assets money for which he was accountable to his principal; this would usually, but not invariably, involve segregating it from his own money.

Where an agent received a benefit in breach of his fiduciary duty, he was obliged to account to the principal for such a benefit, and to pay, in effect, a sum equal to profit by way of equitable compensation

Principal's right to seek an account undoubtedly gave him a right in equitable compensation in respect of the bribe or secret commission, which equaled the quantum of that bribe or commission (subject to any permissible deduction in favour of the agent - e.g. for expenses incurred)

Where an agent acquired a benefit which came to his notice as a result of his fiduciary position, or pursuant to an opportunity which resulted from his fiduciary position, the general equitable rule was that he was to be treated as having acquired the benefit on behalf of his principal, so it was beneficially owned by the principal

In such cases, the principal had a proprietary remedy in addition to his personal remedy against the agent, and the principal could elect between the two remedies.

Whether in respect of secret profit/bribe/commission received by agent, the principal only had a claim for equitable compensation or also had a proprietary interest in the same

Deal for purchase of property

Agent acting on behalf of principal in respect of purchase of property from vendor - Agent obtaining undisclosed/secret commission from vendor without knowledge of principal

Agent held such secret commission or bribe on trust for his principal, and the principal had a proprietary claim to it

Bribes and secret commissions received by an agent should be treated as the property of his principal, rather than merely giving rise to a claim for equitable compensation

Secret commissions inevitably tended to undermine trust in the commercial world

Proceeds of a bribe or secret commission consisted of property which should not be in the agent's estate at all

In many cases, the bribe or commission would very often have reduced the benefit from the relevant transaction which the principal would have obtained, and therefore it could fairly be said to be the principal's property

Principal whose agent had obtained a bribe or secret commission should be able to trace the proceeds of the bribe or commission into other assets and to follow them into the hands of knowing recipients.

Principles regarding fiduciary duties of agent stated.

Petitioners moved an application for setting aside judgment and decree whereby the arbitration award announced by the arbitrator was made rule of the court on the ground that general attorney was not given any power to appoint an arbitrator and file consenting written statement before the court

Application was dismissed concurrently on the ground that the petitioners failed to establish any fraud on the part of the respondents

Validity

Power-of-attorney should be construed according to recitals of the documents on the basis whereof he was exercising his right and any act of the attorney done beyond the power vested with him could not be let go unnoticed and principal was not bound for said act

One of the principals died but the attorney knowing said fact that after his death he was no more his attorney, proceeded to collude with the respondents and filed consenting written statement on behalf of a dead person while showing himself as his attorney which was an example of fraud not only with the parties but also with the court

Respondents being beneficiaries were to prove that arbitrator was duly appointed with the consent of parties and the said fact could only be proved by producing the said arbitrator in the witness box but the respondent did not bother to produce the arbitrator as witness which inference went against the respondents

Non-registration of the award spoke about foul played by the respondents

Prime duty of the attorney was to safeguard interest of the principal and any act done by the attorney repugnant to the rights of the principal could not be given shelter rather the same stood open to attack by the principal

On the termination of agency due to death of one of the principals, it was duty of the attorney to take all reasonable steps for the protection and preservation of interests entrusted to him by the principal on behalf of the representatives of the principal but the act of the attorney was fraudulent

Both the courts below failed to appreciate that attorney had no authority to make statement on behalf of one of the principals.

Suit for declaration seeking declaration to the effect that the instrument of revocation of power of attorney in favour of the plaintiff be declared ineffective and invalid

Maintainability

Agency

Principal and agent

Revocation of power of attorney

Contention of the plaintiff was that Power of Attorney in his favour was against consideration therefore it could not have been revoked

Validity

Admitted position was that no consideration whatsoever against execution of power of attorney was passed and even if the case of the plaintiff was admitted, even then he only acted as an agent

No doubt that in cases where the agent had an interest in the property, which was the subject matter of the agency, then such agency could not be revoked to the detriment of the agent's interest unless it was provided in the contract itself, however that was not in the present case as the plaintiff had no interest in the subject matter of the agency

Plaintiff as an agent had no interest whatsoever in the subject matter of agency, and therefore, no cause of action in the present suit

Power-of-attorney without consideration could be revoked any time but such revocation would not be valid for transactions already entered into by the agent prior to such revocation, and the cause of action to get such transaction specifically enforced would only be available to the third party in whose favour such power was exercised or interest was conferred

Plaintiff had no cause of action and therefore, plaint was rejected, in circumstances.

In the present case, agency agreement between principal and agent was intact when the agreement to sell property was executed

Plea of undue influence could not be accepted on mere allegation specifically when claimant failed to prove that the respondent was in dominating position in the case rather the respondent was in compromising position as they had paid the amount but the possession remained with the appellants and as such the plea of undue influence was just a plea and had not been proved

Appellants' case was that there was an oral agreement, as such, in the circumstances of the case, it was the duty of the appellants to prove the existence of any oral agreement

Respondents had claimed that agreement was written but it was not signed by the appellants while the respondents had successfully proved the agreement of sale between the parties and payment of amount, as such the judgment of trial Court decreeing the suit did not warrant any interference

Appeal against order of the trial Court was dismissed, in circumstances.

Plaintiffs contended that the surety having died during the pendency of the suit, his legal heirs were not bound to honour his surety

Validity

`Agent' was the person employed to do any work for another or represent another in dealing with a third party

No particular formality was required to constitute the agreement of agency

Principal's authority to agent to represent or act for him or to act in bringing him into contractual relationship with the third party, constituted essence of agency

Such' authority or agency was not required to be necessarily in writing but the same could be inferred from circumstances

Principal was responsible for the acts done by the agent within the agency arrangement

Agent of defendant sold the property to plaintiffs while undertaking to make good for any loss incurred by plaintiffs due to any defect in the title of the property by transferring his own property in favour of plaintiffs

Attorney, while acting on behalf of his principal undertook to compensate the plaintiff personally and as such he became the guarantor or surety of his principal

Under S.128 of the Contract Act, 1892, liability of the surety was co-extensive with that of the principal debtor unless otherwise provided by the contract

Attorney could not escape liability, as S.131 of the Contract Act, 1872 applied only to future transactions

Both seller/principal and his attorney were jointly and severally liable to transfer their other land in favour of the plaintiffs in case of defective title of the seller/defendant

Order III, R.1, C.P.C. was not mandatory but the same was directory in nature

Object of O.III, R.1, C.P.C. was to ensure that the facts stated in the pleadings were duly owned by the parties presenting the same

Non-signing of the plaint by the principal was not fatal and the defect could be rectified at any stage of proceedings

After removal of defect, or rectification, the suit shall be deemed to have been instituted on the day of presentation of the plaint and its registration in the office

Legal heirs of deceased attorney/agent would inherit his estate subject to the first charge of plaintiff as the deceased attorney stood/surety/guarantor of the seller regarding the suit land

Legal heirs of deceased surety could not be absolved from the liability of their deceased father

Impugned judgment was set aside and the judgment of the Trial Court was restored.

Deceased predecessor-in-interest of the parties which were siblings inter se had Dakheel Kari rights in the land and was required to obtain permission from the Provincial Government for alienating the disputed property

Attorney of the said deceased predecessor-in-interest obtained permission from the Collector for pronouncement of gift of occupancy rights in favour of the defendant who was real son of the deceased predecessor-in-interest

Land in question was property of the Provincial Government and the deceased predecessor-in-interest was holding only the Dakheel Kari rights in the property transferred by his attorney

Sale-deeds were subsequent to the issuance of permission under S.19 of the Colonization of the Government Lands (Punjab) Act, 1912

Son of the deceased predecessor-in-interest was already a donee of the disputed property which was transferred by the attorney through sale-deeds in order to exclude other legal heirs of the deceased/ principal

Attorney was bound to take special permission from the deceased/ principal before transferring the property in his own name or in the name of close fiduciary relations

Attorney was bound to satisfy the court qua absence of his principal at the time of transaction of sale as such transaction would not hold good unless knowledge and consent of the principal had been established

Attorney of the deceased and the defendant colluded to transfer the disputed property through gift transaction followed by sale-deeds in order to exclude other legal heirs of the deceased who was an ailing old man

Sale-deeds executed by the attorney were hit by Ss.188 and 214 of the Contract Act, 1872

Permission given by the Collector to the attorney pertained to gift transaction and not the sale

Suit was not time-barred as limitation was not applicable to inheritance

Earlier suit filed by the deceased predecessor was no bar to subsequent suit filed by the plaintiff to seek her share in the deceased's/father's property

Sale in question having been proved fraudulent, was not binding on the rights of the plaintiffs

Revision petition was dismissed in circumstances.

Suit of plaintiff (agent) was stayed on the ground that there existed an exclusive foreign jurisdiction clause in the agreement

Covenants in the agreement and the contract had addressed the controversy as the same were not contrary to the public policy nor contravened the provisions laid down in S.28 Contract Act, 1872 nor the same violated procedural law

In view of relevant clause of the agreement, contractual relations being subject to foreign law and both the parties having agreed to fulfil all obligations of the contract in foreign court having exclusive jurisdiction, there was no ambiguity in the mind of contracting party

Contention was that relief claimed in the suit could not be granted by the court of foreign jurisdiction which may deprive plaintiff from legitimate judicious advantage

Held, question of inconvenience to be faced by anyone of the parties was negated on account of reciprocal agreement between two parties, decree passed- by High Court in Pakistan could not be executed in the foreign country as foreign judgment; there being no reciprocal agreement between the two governments to execution of such decrees

Appeal was dismissed.

Suit of plaintiff (agent) was stayed on the ground that there existed an exclusive foreign jurisdiction clause in the agreement

Covenants in the agreement and the contract had addressed the controversy as the same were not contrary to the public policy nor contravened the provisions laid down in S.28 Contract Act, 1872 nor the same violated procedural law

In view of relevant clause of the agreement, contractual relations being subject to foreign law and both the parties having agreed to fulfil all obligations of the contract in, foreign court having exclusive jurisdiction, there was no ambiguity in the mind of contracting party

Contention was that relief claimed in the suit could not be granted by the court of foreign jurisdiction which may deprive plaintiff' from legitimate judicious advantage

Held, question of inconvenience to be faced by anyone of the parties was negated on account of reciprocal agreement between two parties, decree passed by High Court in Pakistan could not be executed in the foreign country as foreign judgment; there being no reciprocal agreement between the two governments to execution of such decrees

Appeal was dismissed.

Petitioner was aggrieved of registration of sale-deed by Sub-Registrar executed by power of attorney holder of petitioner, in his own favour, on the basis of Notification No.IGS/BOR/99-878, dated 5-8-1999, issued by Member Board of Revenue, Sindh

Validity

Notification issued by Board of Revenue was not in accordance with law and dictum laid down by the highest Court in the hierarchy of judicial system

High Court in exercise of constitutional jurisdiction, set aside the Notification and directed the authorities to delete the entries from their registration of sale-deed, after issuing notices to the concerned parties

Petition was allowed accordingly.

Buyer, therefore, was not acting as an agent, rather was a favourite buyer of the seller who was assigned a particular area to further sell the products manufactured by the seller

Buyer, in circumstances, was not acting for or on behalf of the seller to bind the seller as the principal qua the persons to whom such product was sold.

Governing principle for relationship of principal and agent.

Plaintiff shipping a consignment of handicrafts to a foreign buyer and handing over covering documents to their local Bankers for being forwarded to foreign Bankers with specific instructions with documents be delivered to consignee against payment

Foreign Bankers, in absence of proper instructions from defendant-Bank, releasing documents without realising value of consignment

Negligence of agent (defendant) in matter not denied

Loss caused to principal- (plaintiff) not due to remote consequences of agent's action but due to his own negligence

Principal entitled to sue his agent and recover amount for loss caused to him

Suit of plaintiff decreed.

Held, quantum of damages would be same which a person would be entitled to recover from principal if agent would have acted under a proper authority.

[Damages].

Ss. 203, 205, 206 & 73 -Principal and agent-Damages-Contract of agency -Termination of agency before expiry of agreed term Damages could be recovered only where such termination without "sufficient reason"-Loss of his reputation by agent-Could be considered "sufficient reason" for putting end to agency on part of principal- Whither there way "sufficient cause"-To be determined by circumstances of each case-Loss of reputation not mentioned in letter of revocation by principal as reason for termination of agency although there had been in fact some loss of reputation of agent on account of police action against him-Loss of reputation, in circumstance, although -may not be relied upon as furnishing "sufficient cause" for withdrawal of agency it nevertheless could be taken into consideration In assessing measure of damages-Breach of contract -Principles guiding Court in determination of measure of damages Compensation is payable for actual loss or damage caused

Principal and agent Principal and agent-Acts done or made not for general or special benefit of principal but for agent's private ends-Principal not bound by such acts or representations - General Manager of defendant Corporation on friendly terms with plaintiffs, writing letter to plaintiff's varying terms and conditions of loan agreement

Not for benefit of defendant Corporation-Letter not binding on defendants.

S. 211-Principal and agent-. Contract-Plaintiff-company, wider agreement with Government, receiving atta, paying up its price at authorities' bidding but informing them of its deteriorated quality-Part of atta not marketted due to its being badly damaged and eaten by worms-Civil Supplies Department treating disposal of atta as their own concern and selling it against permits-Plaintiffs vainly requesting authorities for disbursement of amount paid by them as against unsold atta and their commission, transport charges etc. and also requesting for its disposal-Atta being rendered unfit for human or cattle consumption, creating unhealthy and obnoxious atmosphere, plaintiff's destroying it on protests of neighbours-Suit against GovernmentGovernment's stand that since atta was purchased by plaintiffs as wholesale dealers, no restriction was placed on its disposal,

sub-agent by a Clearing and Forwarding Agency, detaining goods on ground that goods belonged to a particular firm of Kabul who 'owed' him large sums of money-Sub-agent, held, had no right to detain goods except under an order of a Court-Special Leave to Appeal refused by Supreme Court.

Principal and agent Suit between Corporation and third person dealing with it-Contract or act on behalf of Corporation by its officer ultra vires only when such act or contract be beyond powers expressly or impliedly conferred on Corporation-Contract or act ultra vires not for want of power in Corporation itself but for lack of power in its Officer to perform such duty or because of non-compliance with certain formalities required by law to be observed-May be valid as to third person-Person dealing with Corporation-Bound only to read Act and registered documents concerning such Corporation-Not bound to make inquiry into regularity of internal proceedings ; "the indoor management".

Principal and agent Agent suggesting to principal practice of fraud to prejudice of third party-Agent liable in damages to such party.

Principal and agent Principal and agent-Pay scales revised by agent under mistake of facts subsequently held voidable by principal-Conditions of service, held, not altered in circumstances of case.

Principal and agent -Both cannot be impleaded in suit at same time, if agent not liable personally.

Principal and agent -Bank acting as clearing agent to importers-Bank liable only as an agent to importers or their representative (buyer)-Bank making over delivery orders to buyer incurs no liability thereby for delay in delivery-Contract Act (IX of 1872), Ss. 211, 212.

Principal and agent -Bank-Acting as agent to collect fixed amount of proceeds of Railway Receipts re goods despatched by Bank's client to third person-Bank failing to remit proceeds because of default of its employee-Client's suit for amount by way of damages-Question of market price of goods irrelevant-Bank's agency not on same footing as ordinary selling agency.

Commission of a wrongful act by agent-Liability-Direction (writ) to whom issuable-Constitution of India, Art. 226 (Constitution of Pakistan Art. 170).

Principal and agent -Crown and public officer-Right to act for the Crown must be established by statute or otherwise Being in service of the Crown does not by itself confer any right to act for the Crown.

Grant of commission, held, not within competence of Court, A commission based on profits would be rendered nugatory by the absence of profits. In their Lordships' opinion the relief which the appellant claims, namely an account and payment of commission based on rubber purchased or shipped, is beyond the competence of any Court to grant. The Court cannot determine the basis and rate of the commission. To do so would involve not only making a new agreement for the parties but varying the existent; agreement by transferring to the Court the exercise of a discretion vested in the respondents. If the appellant is not entitled to any commission it is conceded that he cannot claim an account.