Question 3 (a)

Agency by estoppel and agency by necessity

6 marks

Time to write
About 12 minutes
Topic
Agency
Notes
Crux notes

Question

Question 3 (a) · 6 marks

What do 'Agency by Estoppel' and 'Agency by Necessity mean? Explain the provisions of the Indian Contract Act on the Contract of Agency that are relevant to these.

Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.

Before you write

Read off the question and its marks

12 minfor 6 marks

Read from the question

  • What…?Explain…2 asks, each with its own marks below. Answer both.

Write it in this order

  1. Read; underline the asks; jot your points 1 min
  2. 1 Agency by estoppel: section 237, essentials, example 3 marks 5 min
  3. 2 Agency by necessity: section 189 and its conditions 3 marks 5 min
  4. Check: every ask answered, key terms underlined 1 min

Short on time? Trim steps 1 and 2 evenly rather than skip one: each is capped at its own marks.

Try it first. About 12 minutes for 6 marks. Write it out, then open the solution.

Solution

Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.

Agency by estoppel. Under section 237 of the Indian Contract Act, 1872, where the principal, by his conduct or statement, wilfully leads another person to believe that someone is his agent, he is afterwards prevented (estopped) from denying the agency. The essentials are:

  1. the principal has made a representation, express or implied;
  2. the representation is that the agent has authority to do an act, though really he has none;
  3. the principal has induced the third person by that representation; and
  4. the third person believed it and made the contract on that belief.

Example: A consigns goods to B for sale with instructions not to sell below a fixed price. C, unaware of the instruction, contracts with B to buy at a lower price. A is bound by the contract and cannot plead his instruction to B.

Agency by necessity. In an emergency, the law gives an agent authority beyond his ordinary authority so as to protect the principal. Under section 189, an agent may, in an emergency, do whatever a person of ordinary prudence would do in his own case in similar circumstances to protect his principal from loss. The conditions are:

  1. the agent has no opportunity to communicate with the principal within the time available;
  2. there is an actual and definite commercial necessity to act promptly;
  3. the agent acts bona fide and for the benefit of the principal;
  4. he adopts the most reasonable and practicable course in the circumstances; and
  5. he is in possession of the principal's goods that are the subject of the contract.

Where the 6 marks sit

#ComponentMarks
1Agency by estoppel: section 237, essentials, example3
2Agency by necessity: section 189 and its conditions3
Total6
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