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In S.187 of ICA In this case chairman L.I.C v. Rajiv Kumar Bhaskar, as per the salary saving scheme of L.I.C, the boss was supposed to subtract the premium from the employee’s salary and credit it with L.I.C. Upon the demise of the employee, it was found by his successors that the employer has evaded in doing so, causing the policy to delay. A clause in the receipt letter was discussed, in which the boss had said that he would act as the manager of the employee and not as that of L.I.C. It was held that the employer was acting as the manager of the company, thereby creating the company (L.I.C) accountable as a Principal due to the mistake of the Agent (the employer)
Contracts creating a connection of the agency is very common in business law. It can be express or implied. An agency is shaped when a person delegates his power to another person, that is, employs them to do some precise job or a number of them in specified areas of the job. Formation of a Principal-Agent relationship consults rights and obligations upon both parties. There are numerous instances of such a relationship: Insurance agency, advertising agency, travel agency, factors, brokers, etc.
So in S.237 of ICA When supposedly P allows third parties to trust that A is acting as his official agent, he will be prohibited from refuting the agency if such third-parties trusting on it make a contract with an even when A had no power at all. Similarly, where an individual is held out by another as his agent, the third-party can hold that person accountable for the acts of the alleged agent, or the agent by holding out. Associates are each other’s agents for building contracts in the normal course of the partnership business.
The basic difference between Section 187 and Section 237 of ICA is the definition
Section 187 says, ” Definitions of express and implied authority.—An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case; and things are spoken or written, or the ordinary course of dealing, may be accounted circumstances of the case”.
and Section 237 says, “Liability of principal inducing belief that agent’s unauthorized acts were authorized.— When an agent has, without authority, done acts or incurred obligations to third persons on behalf of his principal, the principal is bound by such acts or obligations, if he has by his words or conduct induced such third persons to believe that such acts and obligations were within the scope of the agent‟s authority
Section 187 talks about two-party only: one Principal and other Agent
and Section 237 talks about three-party: one Principal and second Agent and third is the third party
The difference between both the sections is of purpose1. Section 188 of the Indian Contract Act, 1872 states extent of agent’s authority. Section 237 of the Indian Contract Act, 1872 states third party right and liability of principal.
2. Section 188 describes how agency can be created by necessity. Section 237 describes how agency can be created by estoppel
3. Section 188 mentions that if an agent is bound to perform some act, he can lawfully take up necessary measures required in completion of the task.
Whereas section 237 mentions that if an agent performs acts exceeding his authority, the principal is bound by such acts moreover, the sections also mentions that the principal induces the other party to
believe that the agent is performing under his authority limit and thus the principal would be liable.4. Example:
Section 188: A is employed by B, residing in Canada, to recover at Kolkata a debt due to B. A may adopt any legal process necessary for the purpose of recovering the debt, and may give a valid discharge for the same
Section 237: A consigns goods to B for sale, and gives him instructions not to sell under a fixed price say, rs 1000. C, being ignorant of B’s instructions, enters into a contract with B to buy the goods for 800, lower than the reserved price. A is bound by the contract.According to Section 188 of Indian Contract Act an agent who has the authority to perform or do one act has an implied or obvious authority to do any necessarily lawful thing which is directly or indirectly associated with the performance of the actual act.
For example if an agent wants to establish a school so he has an authority to do any lawful act which is important or usually done or required in the course of establishment of that school.
Whereas, according to section 237 of ICA states that the principle will be liable for the unauthorised acts of his agent. If a principle has said something to agent like to do things in a certain manner during the course of his business and the agent has without authority incurred obligations to third party on behalf of his principle, then in such cases the principle is bound by such acts, if the agent has induced the third party by his acts or words to believe that he is within the scope of his authority. For example if a principle instructs his agent to sell a product only at a price of 200 or above and the agent sells the product to C at a price of 150, here the principle is bound by the act of the agent. The distinction between two articles is that in section 237 the principle is clearly stating the agent what to do and if he did anything to keep that specific instruction in mind then the principle will not be liable. Section 237 is a bit specific than section 188.Section 237 of ICA, 1872:
Liability of principal inducing belief that agent’s unauthorized acts were authorized – When an agent without authority done acts or incurred obligations to third persons on behalf of his principal, the principal is bound by such acts or obligations, if he has by his words or conduct induced such third persons to believe that such acts and obligations were within the scope of the agent’s authority.Illustrations:
(a) A consigns goods to B for sale and gives him instructions not to sell under a fixed price. C, being ignorant of B’s instructions, enters into a contract with B to buy the goods at a price lower than the reserved price. A is bound by the contract.(b) A entrusts B with negotiable instruments endorsed in blank. B sells them to C in violation of private orders from A. The sale is good.
Section 188 of ICA, 1872:
Extent of agent’s authority – An agent having an authority to do an act has authority to do every lawful thing that is necessary in order to do such act. —An agent having an authority to do an act has authority to do every lawful thing which is necessary in order to do such act.” An agent having an authority to carry on a business, has authority to do every lawful thing necessary for the purpose, or usually done in the course, of conducting such business.Illustrations:
(a) A is employed by B, residing in London, to recover at Bombay a debt due to B. A may adopt any legal process necessary for the purpose of recovering the debt, and may give a valid discharge for the same.(b) A constitutes B his agent to carry on his business of a ship-builder. B may purchase timber and other materials, and hire workmen, for the purpose of carrying on the business.
Can the principal be made responsible for the contract entered by an agent under section 226 of the Indian Contract Act, 1872? What is the difference between section 226 and section 188 of the Indian Contract Act, 1872?
Section 226 of the Indian Contract Act, 1872 states that “Contracts entered into through an agent, and obligation arising from acts done by an agent, may be enforced in the same manner, and will have the same legal consequences, as if the contract had been entered into and the act done by the principal in person.”
The interpretation of above-mentioned section enumerates that if any contract has been entered through an agent, then the principal is obliged to follow all the legal consequences arising sue to the contract. It will be presumed that the contract has been made with the principal himself.
However, the contract entered by the agent should be within his authority. If the contract entered into is within his authority and the act was done professedly on behalf of the principal, then the motive of the agent is immaterial and the principal would be liable for the same.
The basic difference between section 226 and 188 is that section 188 deals with the authority of an agent that up to what extent the agent can do any act, but section 226 states that if any agent commits or entered into any contract, the principal will also be liable for the action of his agent, which has been done under such authority.Section 188 and section 237 of Indian Contract Act, 1872, are related to unauthorised act done by the agent.
Section 188 states that a agent will have all those power which are compulsory to complete the task provided to him by his authority. All the work, settled down by the agent during completion of his task would be lawful. The principal will be liable for the act of his agent, ab initio.
Section 237 of Indian Contract Act, 1872 states that the principal would be liable for the act done by his agent without any authority which incurred an obligation to third party on behalf of his principal. However, there should be inducement to the third party by principal to make him liable.
The basic difference between section 166 and 237 of ICA, 1872 is that in section 166 the agent committee his act to complete the task assigned to him by his principal and thus it is lawful to act all the necessary things, beyond his authority for the completion of work. But in section 237, the principal would be liable to the act of agent only if the principal himself had induced the third person that the work done by agent is within his authority. The inducement by the principal toward third party for the unauthorized act of his agent shows his consent to the work done by his agent beyond the authority.
Section 237 and Section 188 of ICA, 1872 are related to the unauthorized act done by the agent.
Section 237 states that when the agent has without authority done acts or incurred obligations to third persons on behalf of his principal, the principal is bound by such acts or obligations if he has by his words or conduct induced such third person to believe that such acts and obligations were within the scope of the agent’s authority.
Section 188 talks about the extent of the agent’s authority. It states that when the agent has been authorized by the principal to do any act, then the agent is also authorized to do all the legal acts which are necessary to do such an act. While doing these legal acts if the agent incurred obligations to third persons then the principal will be liable for it. Under both circumstances, the principal will be liable for the acts of his agent. But there is one exception to this i.e. if the agent does any unauthorized illegal acts (like misrepresentation or fraud), then in such a case principal would not be liable for it.
In my opinion, the major difference between both the sections is that under section 237, the agent does an act which is completely unauthorized by the principal but under section 188, the agents do the unauthorized legal acts which are necessary to do the authorized act.Section 237 in The Indian Contract Act, 1872 “Liability of principal inducing belief that agent’s unauthorized acts were authorized.”
237. When an agent has, without authority, done acts or incurred obligations to third persons on behalf of his principal, the principal is bound by such acts or obligations, if he has by his words or conduct induced such third persons to believe that such acts and obligations were within the scope of the agent’s authority.Interpretation of Sec 237 of the Indian Contract Act, 1872
When an agent without the authority has done acts or incurred obligations from the third parties on behalf or in the name of his principal, the principal is bound by every action of his agent. if he has by his words or conduct induced such third persons to believe that such acts and obligations were within the scope of the agent’s authority.Section 188 in The Indian Contract Act, 1872 “Extent of agent’s authority”
188. An agent having an authority to do an act has the authority to do every lawful thing which is necessary in order to do such an act.Interpretation of Sec 188 of the Indian Contract Act, 1872
An agent having an authority under the principal to do an act has the authority to do every lawful thing which is necessary to keep the contract going in order to do such an act.It can be clearly seen that there is a resemblance between Sec 237 and Sec 188 of the Indian Contract Act yet the principle underlying the mentioned sections is distinct. According to Sec 188, the agent has the authority to do all such lawful acts which are necessary to do the authorised act. On the other hand, Sec 237 of the Contract Act the principle is liable for the acts of the agent because he has publicly given the authority to the agent and made him competent to do acts for which he is not authorised.
It is evident from the acts of the principal that in these cases principal I stranger between an agent and third party, yet is held liable for the acts of his agent. Such liability of principal is also because he has conferred an ostensible authority upon the acts of agents.Section 95 is intended to prevent penalisation of negligible wrongs or of
offences of trivial character. Whether an act which amounts to an offence is
trivial would undoubtedly depend upon the nature of the injury, the position of
the parties, the knowledge or intention with which the offending act is done, and
other related circumstances. There can be no absolute standard or degree of
harm which may be regarded as so slight that a person of ordinary sense and
temper would not complain of the harm. It cannot be judged solely by the
measure of physical or other injury the act causes. A soldier assaulting his
colonel, a policeman assaulting his Superintendent, or a pupil beating his
teacher, commit offences, the heinousness of which cannot be determined
merely by the actual injury suffered by the officer or the teacher, for the assault
would be wholly subversive of discipline. As assault by one child on another, or
even by a grown-up person on another, which causes injury may still be
regarded as so slight, having regard to the way and station of life of the parties,
relation between them, situation in which the parties are placed, and other
circumstances in which harm is caused, that the victim ordinarily may not
complain of the harm. (Veeda Menezes vs. Yusuf Khan and Ors. AIR1966SC1773)It is already known that Section 95 is intended to prevent penalisation of negligible wrongs, or of offences of trivial nature. As per the Draft Penal Code, the section provides an exception from criminal liability in respect of those acts which though fall under the letter of law but are yet not accounted under its spirit rather are considered innocent. For example, it is theft to take a white paper from another man’s drawer, or taking someone’s pen without telling them, pressing against a man while getting into a crowded train. If such trivial acts were made punishable then all free movement and interaction in society would come to an end and men would not be able to live freely. If a person is subject to criminal trial for every petty act he does, he would be exposed to all the troubles and worries of criminal trial. Thus, the law will not take notice of trifles, that is, de minimis non curat lex. The parties are allowed to settle such petty matters between themselves and outside the court. In this section the act that causes harm, is intended to cause harm or is known likely to cause harm and such harm is so slight that no man of ordinary sense or temper will complain of such harm. The expression “harm” has not been defined in the code although it has been used in different sections of the code differently and very specific however in section 95 IPC “Harm” has a wider meaning including physical injury, financial loss, loss of reputation, mental worry and even apprehension to injury.
Thus the term “slight harm” does not have any special or specific meaning. The only condition of slight harm is that it needs to be a petty matter or a trivial matter. This same view was kept forward by the Supreme Court in Veeda Menezes v. Yusuf Khan Hani Ibrahim Khan, the court held that whether an act amounts to an offence is trivial or otherwise totally depend upon the nature of the injury, the position of the parties, the knowledge or intention with which the offending act is done and other related circumstance.In my opinion, when the ‘harm’ caused is so slight that a person of normal logic and temper would not complain of any action. nature of the injury, the situation of the parties, intention or knowledge with which the act was done and other related conditions are relevant concerns to determine as to whether a person of ordinary sense and temper would complain of the harm or not. Like for example a mother beating the child for misbehavior doesn’t cause any kind of severe harm or adults fighting for petty issues or even children fighting while playing or in any argument these harms cannot be regarded as something harm that needs to complain. Any trivial matters that take place in day to day life which causes slight harm.
There are a countless number of acts being done daily everywhere in the world which is ‘offenses’ technically, but the law cannot and should not take cognizance of these because doing so would possibly be impossible and would also harm the attention of the public permanently while at the same time troubling the courts unnecessarily.
Some such instances may be hustle and bustle in a crowded area like a busy local market area where power is applied almost always by one against another in the form of pushes, goings-on in a busy railway or bus station where even deliberate physical contacts take place between individuals, entering into the premises of another without authority with a view to drink water from a tap on the corner of the lawn there, or just randomly visiting or lurking around my also cause harm but that won’t be subjected to any requirement for filing complain. Also, the measure of harm depends on the situation and thus cannot be judged only by the measure of physical or other damage the act causes.
‘De minimis non curat lex’ the legal maxim in it’s literal sense means the law does not entertain the trail of trifle matters. The judge may refuse to perform a trail in the court of law if it is an extremely minor transgression of law. The maxim is backed by Section 95 of the I.P.C it states that it is intended to prevent penalisation of negligible wrongs. For example, a person cannot file a case of battery against another person if he/she was pressed or pushed while getting into a railway compartment.
In the case of Veeda Menezes v/s Yusuf Khan Hai Ibrahim Khan, the Supreme Court dismissed the appeal, because a slight scratch on the elbow by the respondent would constitute only a slight harm, since if a person of ordinary temper and sense would have been placed in the same circumstances as the appellant would not have reasonably complained of the damage and therefore would not have been entertained
However, the meaning and essence of this maxim should not be mixed with the fact that the court of law dismisses every trail on the basis of the amount of damage. If the damage is significant and harmful enough caused by the accused then the court of law might instruct minor damages to be paid and may even award punishment.The law does not take trifling matters into account. Nothing is to be wrong if a person of ordinary temper and rationale would not complain about. The Latin term for this concept is De minimus non curat lex. The judiciary applies this term to trivial matters that do not require judicial scrutiny. For instance: If A is driving along a dusty road and a little dust is thrown on a passerby B, A would not be liable for damage caused to B. The court would apply the principle of De minimus non curat lex.
This maxim is also recognised in Sec. 95 of the Indian Penal Code which states that nothing is an offence that causes slight harm and that a person of ordinary temper would not complain about.
This principle of common law is to highlight the fact that judiciary will not take notice of extremely minor violations of the law, taking place in peoples day to day lives. The law does not encourage litigants to bring legal action where there is negligible damage, as it would only waste the time and resources of the judiciary.
In the case of Coward v. Bradley, a bystander B touched C’s arm, a fireman, to attract his attention to another part of the building where the fire was raging. On a suit filed by C against B for battery, the court held that the bystander was not liable for the tort, and that it amounted to trivial act before the court.However there are a few cases where the maxim was not applied by the court. In the case of Helford V. Bailey, B casts and draws a net in water where H has an exclusive right of fishing. It was held that whether any fish was caught or not, B had committed a tort against H.
Thus, some injuries merit so little consideration that no suit can be filed in such cases. This defence, does not mean that the act is not justified, it merely means that there will be no punishment for such an act because of it’s frivolous and trivial nature.According to section 95 of Indian Penal Code, Nothing is an offence which is caused by a person not intending to harm or not intended to cause or lightly would cause hurt to the person of which a normal ordinary person and temper would complain of it. And this provision of Indian penal code actually discards the claims of people who complain of small inflicted harm to the court in which a normal person wouldn’t complain off. This section is based on the principle of “de minimis non-curat lex” which provides that the “law is not concerned with trifles.”And this section even reduces its burden in dealing with cases by introducing this section by dismissing the claims under slight harm and insignificant cases. This makes the court to work more on things which is severe and which need demand justice. However, the act comes under this section only when an ordinary men wouldn’t complain of it. And in considering whether the following case comes under this section or not then we have examine all the facts of the case and circumstances will be taken into account, the relationships between the parties will be also play a major role in deciding a case whether it comes under the ambit of this case. The nature of injury the scope of loss caused to the victim due to the act and then even the intention matters in deciding a case whether it falls under this section or not. So, all these factors will be measured and then conclude whether it falls under this section or not. For example, no man can pass through a crowd without dashing against somebody or without treading on somebody’s toes and hence, no man of reasonable sense would complain of such small annoyance caused to him.
