Meaning of Universal Agent
Under the Indian Contract Act, 1872, an agent is a person employed to do any act for another or to represent another in dealings with third parties (Section 182). A universal agent is an agent who has been given authority to act on behalf of the principal in all matters that can be lawfully delegated. Unlike a special agent (limited authority) or a general agent (authority in a specific business or type of transactions), a universal agent’s powers are the broadest, covering almost all acts of the principal.
Rights and Duties of a Universal Agent
A universal agent, by virtue of wide authority, can bind the principal in nearly all contracts and obligations entered into lawfully. However, the authority must be expressly granted, usually by a general power of attorney. The universal agent owes duties of good faith, loyalty, and due care to the principal under Sections 211–215. If the agent acts within the scope of authority, the principal is bound; but if the agent exceeds authority, the principal may not be held liable unless they ratify the act. This makes the role highly trusted and significant.
Importance in Business and Law
Universal agents are crucial in situations where the principal cannot manage their affairs personally—such as in cases of absence abroad, old age, or incapacity. Their wide powers allow smooth handling of both legal and financial matters. However, because of the extensive authority, only highly trusted persons are appointed as universal agents. For law students, this concept highlights the principle of delegation and the extent of liability a principal may face due to an agent’s actions.
Real-Life Example
Suppose Mr. Sharma, an NRI, gives his son a registered general power of attorney, authorizing him to manage all his business, financial, and property-related matters in India. The son, acting as a universal agent, can sign contracts, sell property, and represent Mr. Sharma in legal proceedings. All such acts bind Mr. Sharma as if he had done them personally. This shows how universal agents operate in practical life.
Mnemonic to Remember – “ALL”
To recall universal agent’s authority, remember ALL:
- A = All-encompassing authority
- L = Legal power through general power of attorney
- L = Liability of principal for agent’s lawful acts
Think of it as: “Universal Agent handles ALL.”
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