Legal Aspect in Buying

Legal Aspects in Buying

The materials manager commits a good deal of corporate finance when he places purchase orders It is imperative that he understands the legal aspects that are relevant to his profession. The Indian Sale of Goods Act of 1930 and the Indian Contract Act of 1872 cover some of the important
legal aspects.

While a materials manager may not be well conversant with all branches of law, at least his profession demands that he possess a working knowledge of some of the important laws, which are essential, namely

(i) Law of Agency,
(ii) Law of Contract,
(iii) Law pertaining to sale of goods, and
(iv) Arbitration.

Law of Agency

We live in the area of trans-nations in which business intercourse is growing heavier and heavier. As such,the multiplicity of business transactions enjoins upon a businessman to depend upon the services of others In legal
parlance, normally such persons who provide services are called Agents. The law pertaining to the relationship between the Agent and the Principal is defined in the Law of Agency

Definition of ‘Agency’

According to sec. 182 of the Indian Contract Act, an agent’ is that person who is employed to do any act for another, or to represent another in dealings with the third
represented, is called the principal’. The legal relationship person. The person for whom such act is done, or who is so established between these two is known as an agency agreement.

Who is an Agent?

An agent is a person employed to do any act for another. He represents another in dealing with third persons. The person, to whom he represents is called ‘Principal’. Thus, an agent is a connecting link between principal
and a third party. But it is important to note that while an agent is acting for his principal, he is clothed with the capacity to his principal. As soon as the contract is established,the agent drops out and the principal and third parties are
bound to each other.

General Rules Regarding Agency

There are two important principles of law on which the law of agency is based-

1. Whatever a person can do himself, he can also do through an agent- This means a person competent to contract may act through an agent. However, it is not applicable in case where the personal skill or qualification is required.

For example, a person can not marry through an agent. Again, acts of personal nature are not performed through agents e.g. singing a song or painting a picture.

2. The acts of the agent are the acts of the principalmeans if a contract is entered through an agent, the principal will be liable for that contract in the same way as if the
contract has been entered into by himself.

Who can Employ an Agent?

A person, who is of the age of majority and who is of sound mind may employ an agent. In other words if a person is capable to enter into contract, he can employ an agent
unsound mind can not therefore, a minor or a person of appoint an agent.

Who can be Appointed as an Agent?

Any person whether he is competent to enter into contract or not may be appointed as an agent. Thus even a minor or a person of unsound mind can be appointed as an
agent However, where a minor is appointed as an agent he will not be personally liable. There is no need for an agent to have contractual capacity as he makes contract on behalf of the principal. But it will be in the interest of the principal to appoint an agent who is competent to enter into contract so that he could hold the agent responsible to make good the loss if the agent acts negligently.

Whether Consideration is
Necessary to Appoint an Agent
No, consideration is not necessary to create an agency. If a person has agreed to be bound by the acts of other, it is sufficient consideration to support a transaction
of agency.

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