Posted February 1, 2014 by advocateguru in Learning Centre

creation of agency

The relationship of principal and agency may arise-

By express agreement;

By implied agreement;

By ratification;

By operation of law.


  • BY EXPRESS AGREEMENT:-  the authority of an agent may be expressed or implied. Normally, the authority given by a principal to his agent is an express authority which enables the agent to bind the principal by acts done within the scope of his authority. The agent may in such a case be appointed either by words of mouth or by an agreement in writing. The usual form of a written contract of agency is the power of attorney on a stamped paper.
  • AGENCY BY IMPLIED AGREEMENT:- Implied agency arises from the conduct, situation or relationship of parties. it may be inferred from the circumstances of the case and things spoken or written or the ordinary course of dealing, may be accounted as circumstances of the case. Implied agency basically arises when the principal conducts himself towards the person alleged to be the agent or the third parties in such a manner, as if the principal had conceded to the appointment of that person as agent. It includes-

I.            Agency by estoppel,

II.            Agency by holding out,

III.            Agency by necessity


  • AGENCY BY RATIFICATION:- A person may act on behalf of another without his knowledge or consent. For e.g.; A may act as P’s agent though he has no prior authority from P. in such case; P may subsequently either accept the act of A or reject it. If he accepts the act, done without hs consent; he is said to have ratified that act and it places the parties in exactly the same position in which they would have been if A had P’s authority at the time he made the contract.

Ratification may be expressed or may be implied in the conduct of the person on whose behalf the acts are done.


  • AGENCY BY OPERATION OF LAW:-  Sometimes an agency arises by operation of law. When a company is formed, its promoters are its agent by operation of law.