When someone acts in the name of or on behalf of another, he or she is professionally known as an agent representing the main authority. In most cases, they have some degree of authority to perform specific tasks. Most of the organized human activity of Indian Contract Act 1872 – classes of agents and almost all commercial prospectuses run through an agency. No corporation is possible without the concept of agents. If we say, for example, Extensive Motors is manufacturing vehicles in Russia, we can’t shake hands with Extensive Motors. Therefore, Extensive Motors works and exists under agents.
Similarly, business organizations and partnerships rely on agents for conducting their businesses. It is not an overstatement to say that agency is the base of any enterprise organization. This is the reason, understanding the concept of classification of agents is crucial.
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What is an Agent in Business?
To make it simpler, let us consider the roles in a business partnership. When it comes to partnership, each partner plays the role of a general agent. Similarly, if we consider a corporation law, all the officers and employees are agents of the corporation. There are different types of agents, but we will cover this part later. The agent’s existence is based on a new set of contracts that depends on the situation or business type. In terms of an agent negotiation, a tort is no less harmful, and a contract is no less binding.
What are the Types of Agents?
There are different kinds of agents. However, to know this clearly, one needs to understand the functions of agents in business. An agent is intermediary acting on behalf of a principal. He or she will be an authorized person to make connecting agreements between the principal and the customers. Therefore, the types of agents are as follows.
Selling Agents
Selling agents are types of agents who are responsible for having contractual authority for selling a service or product of the principal. They are usually appointed when the principal is not that keen to approach customers directly due to a lack of qualification or resource. Selling agents are kinds of agents who together form a powerful source for making sales as they know the market standards better than the principal. They are responsible for influencing pricing and terms & conditions of sales.
Mercantile Agents
There are different types of agents, and mercantile is one of them. Mercantile agents play an important role when it comes to the transfer of goods from the producer to the consumer. They are kinds of agents who stand responsible for taking the goods directly from the producers and delivering them to the consumer end. Sometimes, a producer fails to reach the consumer, and thus, the requirement of such agents arises. This process of transferring goods requires efficient and skilled hands to be formal.
Mercantiles are kinds of agents who are appointed on behalf of a business and represent the same when dealing with the services and products to other people. Here, the business is a principal, and the mercantile is an agent. Some of the important characteristics of the mercantile agents are as follows.
They have the authority of buying and selling goods on behalf of the principal or consign them for sale.
They are not indulged in personal business, but certainly represent the business for all the dealings.
Auctioneer
Auctioneer is the kind of agent who is mainly appointed by sellers to sell the goods (not services in most cases) in the form of an auction. The auctions are held for a reward in the form of a commission. Therefore, an auctioneer is an agent on behalf of the seller. However, there is a twist when the items are sold; the auctioneer becomes the agent of the purchaser when the item is sold. When discerning the facts of classification of agents, make sure to pay special attention to the part of auctioneers as most students become prone to mistakes while answering.
An auctioneer has the right to keep possession of the items for the charges. He or she has the right to claim for the commission from both sides. Auctioneers also have the right to sue the price to own the name on the instructions of the principal. However, in this case, the principal becomes liable to the third parties when auctioneers act staying within the scope of the apparent authority.
FAQs on Indian Contract Act: Classes of Agents
Q1. Who is an Agent?
Answer: From the perspective of legal terminology, an agent is an authorized person who can perform acts on behalf of another person or entity. An agent is employed for representing a principal in front of clients and performing several negotiations and dealings with third parties. Agents are authorized to play the role of decision-makers for the principal. They are authorized to represent clients even for negotiations. They are also responsible for making agreements between consumers and the principal for which they are working.
Q2. What is a General Agent?
Answer: A general agent has the authority of carrying out a wide range of transactions on behalf of or in the name of a principal. General agents play a major role in the classification of agents. A general agent can be the manager of a business. In most cases, they are limited to roles in terms of business operations. However, they have open hands when it comes to dealings and establishing legal relationships with third parties.
Q3. What are the different Types of Agents?
Answer: When it comes to differentiation in agents, the list goes unending. Considering the primary concept of differentiation, agents differ in three basic forms. These are universal agents, general agents, and special agents. A universal agent is responsible for performing acts on behalf of the principal, staying within the general relationship.
General agents can make contracts and perform normal duties for ordinary business principles. They are usually employed for managing the shops under a brand or also used as a travelling agent.
Special agents have limited powers and are appointed for specific purposes which are especially not in the course of the general approach.
