Section 212 - Skill and diligence required from agent, Section 213 -
Agent's accounts : Indian Contract Act
What is Skill and diligence required from agent? What is
responsibility of agent regarding Agent's accounts? Section 212 and 213 of Indian Contract Act
Section 212 of Indian Contract Act 1872 : "Skill and diligence
required from agent"
212. 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 agent is 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.
(a) A, a merchant in Calcutta, has an agent, B, in London, to
whom a sum of money is paid on A's account, with orders to
remit. B retains the money for a considerable time. A, in
consequence of not receiving the money, becomes insolvent. B is
liable for the money and interest from the day on which it ought
to have been paid, according to the usual rate, and for any
further direct loss - as, e.g., by variation of rate of exchange
- but not further.
(b) A, an agent for the sale of goods, having authority to
sell on credit, sells to B on credit, without making the proper
and usual enquiries as to the solvency of B. B, at the time of
such sale, is insolvent. A must make compensation to his
principal in respect of any loss thereby sustained.
(c) A, an insurance-broker employed by B to effect an
insurance on a ship, omits to see that the usual clauses are
inserted in the policy. The ship is afterwards lost. In
consequence of the omission of the clauses nothing can be
recovered from the underwriters. A is bound to make good the
loss to B.
(d) A, a merchant in England, directs B, his agent at Bombay,
who accepts the agency, to send him 100 bales of cotton by a
certain ship. B, having it in his power to send the cotton,
omits to do so. The ship arrives safely in England. Soon after
her arrival the price of cotton rises. B is bound to make good
to A the profit which he might have made by the 100 bales of
cotton at the time the ship arrived, but not any profit he might
have made by the subsequent rise.
Section 213 of Indian Contract Act 1872 : "Agent's accounts"
213. An agent is bound to render proper accounts to his
principal on demand.