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    Saturday, 11 March 2017

    Liabilities of Principal to the Agent

    Agent to the indemnified against consequences of lawful acts
    The employer of an agent is bound to indemnity him against the consequences of all lawful acts done by such agent in exercise of the authority conferred upon him. Section 222

    Liability of principal to agent

    An agent is entitled to reimbursement and indemnity by his principal when he acts within the scope of his directions. The agent's right to indemnity arises and becomes enforceable immediately on his incurring the liability and it is in no manner dependent upon his discharging the same as well.

    Lawful act
    To enable an agent to claim compensation under section 222, it is an essential condition that the agent's act shall be lawful. It is not sufficient that his acts are innocent and performed in good faith. If unlawfulness or illegality is even indirectly connected with a perfectly innocent and legal contract, the contract is rendered unlawful or illegal and the Court would refuse to enforce such a contract.

    Fraud on principal
    Agents who engage to defraud their principal forfeit their right to indemnity in respect of fraudulent transactions. Where securities deposited by principal with agents are fraudulently disposed of by, agents, the disposal amounts to conversion; and the principal on each occasion on which securities were sold has a right to damages for conversion measured by their value at the date of conversion.

    Agent to be indemnified against consequences of acts done in good faith
    Where one person employs another to do an act and the agent does the act in good faith the employer is liable to indemnify the agent against the consequences of that act, though it causes an injury to the right of third persons. Section 223

    Non-liability of employer of agent to do a criminal act
    Where one person employs another to do an act which is criminal, the employee is not liable to the agent, either upon an express or an implied promise, to indemnify him against the consequences of that act. Section 224

    Compensation to agent for injury caused by principal's neglect

    The principal must make compensation to his agent in respect of injury caused to, such agent by the principal's, neglect or want of skill. Section 225
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    Item Reviewed: Liabilities of Principal to the Agent Rating: 5 Reviewed By: Usman Ali
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