Duties of principal -fiduciary relationship | Business Law | Management Notes

The rights of an agent are the duties of a principal. Contract Act, 2056 in Sections 59 and 62 have also laid down a little bit provision in this respect. Generally, the principal has the following duties: –

    1. To provide remuneration: – The principal should provide remuneration (commission) to the agent at the rate as mentioned in the contract. If not mentioned in the contract, the principal should provide reasonable commission to his agent.
    2. To reimburse money: – The principal is liable for repaying or reimbursing money which spent by the agent to preserve the goods or performance of a contract.  
    3. To provide indemnity: – The principal has to provide indemnity (compensation) to his agent in the business agency in following cases: – a) Against the consequences of lawful acts performed by the agent within his authority. b) Against the consequences of acts performed by the agent in good faith. c) In respect of injury caused to the agent by the principal’s neglect.

            4.  To give reasonable compensation: – In the case, where the principal removes his agent without any reason and prior                   notice, he must provide compensation to the agent for his loss.

           5. To be responsible: – The principal must be responsible for any loss or damage caused by the lack of skill or efficiency                 of the agent if he had knowledge previously that the agent has no such thing in respect of any subject.

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