Indian Contract Act,1872
Act No : 9
Section : Skill and diligence required from agent
212. Skill and diligence required from agent.-An agent is boundto conduct the business of the agency with as much skill as isgenerally possessed by persons engaged in similar business, unless theprincipal has notice of his want of skill. The agent is always boundto act with reasonable diligence, and to use such skill as hepossesses; and to make compensation to his 'principal in respect ofthe direct consequences of his own neglect, want of skill ormisconduct, but not in respect of loss or damage which are indirectlyor remotely caused by such neglect, want of skill or misconduct. Illustrations (a)A, a merchant in Calcutta, has an agent, B, in London, to whoma sum of money is paid on A's account, with orders to remit. Bretains the money for a considerable time. A, in consequence of notreceiving the money, becomes insolvent. B is liable for the money andinterest from the day on which it ought to have been paid, accordingto the usual rate, and for any further direct loss-as e.g., byvariation of rate of exchange-but not further. (b)A, an agent for the sale of goods, having authority to sell oncredit, sells to B on credit, without making the proper and usualenquiries as to the solvency of B. B, at the time of such sale, isinsolvent. A must make compensation to his principal in respect ofany loss thereby sustained. (c)A, an insurance-broker employed by B to effect an insurance ona ship omits to see that the usual clauses are inserted in thepolicy. The ship is after wards lost. In consequence of the omissionof the clauses nothing can be recovered from the underwriters. A isbound to make good the loss to B. (d)A, a merchant in England, directs B, his agent at Bombay, whoaccepts the agency, to send him 100 bales of cotton by a certainship. 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 priceof cotton rises. B is bound to make good to A the profit which hemight have made by the 100 bales of cotton at the time the shiparrived, but not any profit he might have made by the subsequent rise.
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