SEMESTER FALL 2011
Business & Labor Law (MGT611)
Assignment No. 02
Due Date: December 23, 2011 Marks: 15
Abstract:
In general terms, Agency refers to the relationship which exists between two persons, the Principal
and the Agent in which the Agent has to perform different duties/ functions as per instructions of the
principal and also enters into contract with the third party / parties on behalf of the principal. The
relationship of agency plays an important role in business and commercial dealings. This relationship
is legal created by virtue of agreement between Principal and Agent.
Agency may be created in the following ways:
1. By consent
2. By operation of law
3. By estoppel
4. By ratification
Please identify how agency can be created through these ways in the given cases?
Case 01:
Mr. Mohsen deals in trading of Branded and none branded computer hardware and shipped a large
quantity of computer hardware by three trucks from Lahore to Karachi. On the way to Karachi, one
truck seriously met an accident. The truck driver could not establish contract with Mr. Mohsen.
However he found that a large quality of computer hardware damaged. He visited to the nearest
market and get repaired some hardware and sold it at market rate.
Case 02:
Mr. Aslam is working as an agent of Mr. Salman from last 10 years and carrying different business
transactions with many business personals. Due to the conduct of Mr. Salman (principal), Mr. Munir
(third party) believes that Mr. Aslam is an agent of Mr. Salman and under this impression Mr. Munir
enters into an agreement with Mr. Aslam. Later on Mr. Salman terminated the agency relationship
with Mr. Aslam, however this was not in the knowledge of Mr. Munir and he continued his
commercial dealings with Mr. Munir.
Case 03:
Mr. Sajid, an agent of Mr. Shrafat lends Rs 500,000 to Mr. Mohsen. Mr. Mohsen is paying monthly
profit to Mr. Sajid. Who has rendered accounts in this respect to the principal, Mr. Shrafat. By
accepting the profits, Mr. Shrafat conduct implies an approval of the amount of loan provided by his
agent, although without his authority.
The Requirement:
1. You are required to identify the most appropriate way in each case through which agency can
be created.
2. Support your answer by providing logical reasons.
