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Contract of Agency & Mock Trial / Moot Court Activity | B.Com Notes

Study material and explanations for Unit 1

Contract of Agency & Mock Trial / Moot Court Activity

1. Statutory Concept & Legal Maxims of Agency

Section 182 of the Indian Contract Act 1872 defines:

“An ‘agent’ is a person employed to do any act for another, or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the ‘principal’.”

  1. Qui facit per alium facit per se: “He who does an act through another is deemed in law to do it himself.”
  2. No Consideration is Necessary (Section 185): Agency is a consensual relationship; love, trust, or commercial employment suffices.
  3. Capacity to Employ (Section 183): Any person of the age of majority and sound mind can employ an agent. A minor cannot be a principal.

2. Modes of Creating an Agency

Five Recognized Modes of Creating an Agency
1. Express Agreement (Sec 186)
Conferred by spoken or written words (e.g., executing a formal **Power of Attorney**).
2. Agency by Estoppel (Sec 237)
When principal's conduct leads third party to reasonably believe an individual is authorized to act as his agent.
3. Agency by Necessity (Sec 189)
Emergency situation where agent must act to save principal from catastrophic commercial loss (e.g., ship master selling perishable cargo).
4. Agency by Ratification (Sec 196)
Where acts are done by an unauthorized person without knowledge, and principal subsequently elects to confirm and adopt the acts.

3. Sub-Agent vs. Substituted Agent

  • Maxim: Delegatus non potest delegare — A delegate cannot further delegate his authority (Section 190).
  • Sub-Agent (Sec 191): Employed by and under the control of the original agent. The principal is bound by acts of properly appointed sub-agents, but the sub-agent is responsible directly to the agent, not the principal.
  • Substituted Agent (Sec 194): An agent names a person to act for the principal in business of agency with principal’s express/implied knowledge. A direct contractual nexus is established between principal and substituted agent.

4. Personal Liability of Agent (Section 230)

As a rule, an agent cannot personally enforce contracts nor is he personally bound by them. However, an agent is personally liable in the following statutory exceptions:

  1. Foreign principal (Contract with a merchant residing abroad).
  2. Undisclosed principal (Agent does not disclose name of principal).
  3. Principal cannot be sued (Minor or incompetent principal).
  4. Custom of trade establishes personal liability.
  5. Agency coupled with an interest (Section 202).

5. Practical Activity: Mock Trial & Moot Court Competition Guide

Moot court simulation bridges theoretical commercial law with realistic legal advocacy.

Structure of a Business Law Mock Trial:

  1. The Moot Proposition: A factual scenario involving breach of contract, guarantee default, or unauthorized agency acts.
  2. Court Roles:
    • Judges (Bench): Maintain decorum, question counsel on statutory sections and precedents.
    • Plaintiff / Appellant Counsel: Draft Memorials, frame issues, establish breach of contract.
    • Defendant / Respondent Counsel: Plead defenses (frustration, lack of privity, revocation).
    • Witnesses: Provide sworn testimonies adhering to given facts.
  3. Oral Advocacy Etiquette: Addressing bench as “May it please your Lordship / Ladyship”, systematic prayer for relief.