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The Indian Contract Act, 1872: page 47

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    210. Termination of sub-agent’s authority.—The termination of the authority of an agent causes
the termination (subject to the rules herein contained regarding the termination of an agent’s authority) of
the authority of all sub-agents appointed by him.
                                                   Agent’s duty to principal
    211.Agent’s duty in conducting principal’s business.—An agent is bound to conduct the business
of his principal according to the directions given by the principal, or, in the absence of any such
directions, according to the custom which prevails in doing business of the same kind at the place where
the agent conducts such business. When the agent acts otherwise, if any loss be sustained, he must make it
good to his principal, and if any profit accrues, he must account for it.
                                                           Illustrations
     (a) A, an agent engaged in carrying on for B a business, in which it is the custom to invest from time to time, at interest, the
moneys which may be in hand, omits to make such investment. A must make good to B the interest usually obtained by such
investments.
     (b) B, a broker, in whose business it is not the custom to sell on credit, sells goods of A on credit to C, whose credit at the
time was very high. C, before payment, becomes insolvent. B must make good the loss to A.

     212. Skill and diligence required from agent.—An agent is bound to conduct the business of the
                                                                                      e
agency with as much skill as is generally possessed by persons engaged in similar business, unless the
                                                                               od
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
                                                                       aC
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.
                                                                  di
                                                           Illustrations
                                                            In
     (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 after wards 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.

     213.Agent’s accounts.—An agent is bound to render proper accounts to his principal on demand.
     214.Agent’s duty to communicate with principal.—It is the duty of an agent, in cases of difficulty,
to use all reasonable diligence in communicating with his principal, and in seeking to obtain his
instructions.
    215.Right of principal when agent deals, on his own account, in business of agency without
principal’s consent.—If an agent deals on his own account in the business of the agency, without first
obtaining the consent of his principal and acquainting him with all material circumstances which have
come to his own knowledge on the subject, the principal may repudiate the transaction, if the case shows,
either that any material fact has been dishonestly concealed from him by the agent, or that the dealings of
the agent have been disadvantageous to him.


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