In an agency agreement, the principal appoints an agent to carry out a particular duty or conduct business on his behalf. The principle is liable for the actions of his agent toward third parties because he is bound by such actions. Let’s now examine the obligations and rights of agents.

Rights of Agents

1. Right to Remuneration

As per section 219, the associate agent incorporates a right to receive the in agreement remuneration or absence of agreement, an affordable remuneration for rendering the services to the principal that aren’t voluntary or gratuitous. He becomes eligible to receive the remuneration as shortly as he completes the work that he undertook.

2. Lien on Goods

Some agents who have the possession of products, securities, or properties of their principal even have a lien on this merchandise, securities, or properties relating to their remuneration and conjointly for any expenses or liabilities that they once associate unpaid merchant, he incorporates a right to prevent the products in transit.

3. Right to be Indemnified

An agent represents his principal to third parties. As per sections 222 and 223, the associate agent incorporates a right to be indemnified by his principal for all charges, expenses, and liabilities that he incurs throughout the agency.

4. Right to Compensation

In line with section 225 of the aforementioned Act, the associate agent is entitled to say compensation for the injuries suffered as a consequence or wish of the ability of the principal. The principal should create compensation to his agent in respect of injury caused to such agent by the principal’s neglect or wish of ability.

Duties of Agents

A principal incorporates a right to sue his agent for damages just in case of breach of duty by the agent. The duties of agents are:

1. Duty to follow the directions of the Principal [S.211]- Regarding this duty of Agent S. 211 provides: An agent is bound to conduct the business of his principal according to the directions given by the principal, or, in the absence of any such directions, according to the custom which prevails in doing business of the same kind at the place where the agent conducts such business. When the agent acts otherwise, if any loss be sustained, he must make it good to his principal, and if any profit accrues, he must account for it.

For Example in Pannalal Jankidas v. Mohanlal, AIR [1951] Agent purchased some goods for his principal and stored the goods in a godwon. Agent was also under the instructions to insure the goods. But he failed to insure the goods. The goods were destroyed by fire. It was held that Agent was liable to compensate.

2. To carry out his work with reasonable care and skills [S.212] – Regarding this duty of agent S.212 provides –An agent is bound to conduct the business of the agency with as much skill as is generally possessed by persons engaged in similar business unless the principal has notice of his want of skill. The agents always bound to act with reasonable diligence, and to use such skill as he possesses; and to make compensation to his principal in respect of the direct consequences of his own neglect, want of skill or misconduct, but not in respect of loss or damage which are indirectly or remotely caused by such neglect, want of skill, or misconduct.
   In State Bank of Indore v. National Textiles Corporation [2004] certain cheques were presented to Bank by customer Bank sent to the drawee for collection. The cheques were lost in transit. It was held that Bank was liable to the customer for the lost cheques.
3. To render proper accounts to his principal [S.213]- Regarding this duty of Agent S. 213 provides that an agent is bound to render proper accounts to his principal on demand. In State of Tamilnadu v. S.A Chettiar (1988) the agent filed suit against
   principal for rendition of accounts the Madras High Court observed that u/s 213 of contract Act it is provided that the agent is bound to render proper accounts to his principal on demand but there is no provision in the contract Act which empower the agent to file a suit for accounts against the principal.
4. To communicate with principal [S. 214]-Regarding this duty of agent S.214 provides that an agent is bound to render proper accounts to his principal on demand It is the duty of an agent, in cases of difficulty to use all reasonable diligence in communicating with his principal, and in seeking to obtain his instructions.
   Thus agent is bound his principal’s directions when he faces difficulty although agent may at in good faith without communicating the principal in cases of emergency.
   For Example: Principal consigned hundred boxes of grapes to his agent at Allahabad and directed to send grapes immediately to Mrs. Sohan at Mumbai. When agent received the grapes in Mumbai he found that grapes could not bear
   the journey to Mumbai without spoiling. He sold grapes in Allahabad it was held that agent was not liable because he acted in good faith.
5. Not to deal on his own accounts [S. 215 & S. 216]– Regarding this duty of agent S. 215 provides that an agent is bound to render proper accounts to his principal on demand If an agent deals on his own account in the business of the agency,
   without first obtaining the consent of his principal and acquainting him with all material circumstances which have come to his own knowledge on the subject, the principal may repudiate the transaction, if the case shows, either that any material fact has been dishonestly concealed from his by the agent, or that the dealings of the agent have been disadvantageous to him.
   Example: A directs B to sell A’s estate for himself in the name of C, A, on discovering that B has bought the estate for himself, may repudiate the sale, if he can show that B has dishonestly concealed any material fact, or that the sale has been
   disadvantageous to him.
6. Duty to pay sum received for principal [S. 218]– Regarding this duty of agent S. 218 provides that an agent is bound to render proper accounts to his principal on demand.
7. To protect the interest of principal [S.209]- Regarding this duty of agent S. 209 provides that when an agency is terminated by the principal dying or becoming of unsound mind, the agent is bound to take, on behalf of the representatives of his late principal, all reasonable steps for the protection and preservation of the interests entrusted to him.
8. Not to delegate authority – In respect of this duty of agent an agent S. 190 provides that an agent cannot lawfully employ another to perform acts which he has expressly or impliedly undertaken to perform personally, unless by the ordinary custom of trade a sub-agent may, or, from the nature of the agency, a sub-agent must, be employed.