(a) What are the essentials of an agency? How is an agency created and terminated under the Indian Contract Act, 1872? (20…

(a) Essentials, creation and termination of agency

An agent is employed to do any act for another or represent him in dealings with third persons, and the person represented is the principal (s.182, Indian Contract Act, 1872). The essence is the power to bind the principal to third parties.

Essentials:

• an express or implied agreement, except where law imposes agency by necessity, ratification or estoppel,
• a principal of full age and sound mind (s.183), while any person, even a minor, may be an agent (s.184),
• no consideration needed (s.185),
• a representative capacity, which separates an agent from a servant (Lakshminarayan Ram Gopal 1954) or an independent contractor, and
• fiduciary duties to follow instructions, use skill, account and avoid secret dealings (ss.211-216), with no delegation unless permitted (s.190).

Creation:

1. Express by words, such as a power of attorney, or implied from conduct or circumstances (s.187), such as the authority of a wife to buy necessaries, which is rebuttable (Debenham v Mellon 1880).
2. Necessity (s.189): acts to protect the principal in an emergency when he cannot be reached (Great Northern Railway v Swaffield 1874).
3. Ratification (ss.196-200): the agent must have purported to act for the principal (Keighley Maxsted v Durant 1901), the principal must have existed and been competent, ratification must be with full knowledge (s.198), cover the whole act (s.199) and not injure third parties (s.200).
4. Estoppel (s.237): a principal who leads others to believe an agent had authority is bound.

Termination:

• By the parties: revocation by the principal or renunciation by the agent (s.201), before authority is exercised so as to bind (s.203) and not for acts already done (s.204), with reasonable notice and compensation for an early end to a fixed-term agency (ss.205-206).
• By law (s.201): completion of business, death or unsoundness of mind of either party, insolvency of the principal, expiry of time, or destruction or illegality of the subject.
• Agency coupled with interest (s.202) cannot be ended to the prejudice of that interest, so if A authorises B to sell land and repay himself from the proceeds, A cannot revoke it and his death does not end it.
• Termination takes effect for the agent and third parties when known to them (s.208) and ends the authority of sub-agents (s.210).

(b) Time as the essence and remedies for delay

Section 55: where time is of the essence and a party fails to perform on time, the contract becomes voidable at the option of the promisee. Intention is drawn from the terms, nature and circumstances. Time is usually essential in mercantile contracts but presumed not to be in sales of immovable property (Chand Rani v Kamal Rani 1993), though courts guard against abuse of this in rising markets (Saradamani Kandappan 2011). Extension and liquidated damages clauses show time is not essential (Hind Construction 1979, Welspun v ONGC 2021).

Remedies:

1. Time essential: rescission (ss.55, 66), restitution of benefits (s.64) and damages for natural or contemplated loss (s.73, Hadley v Baxendale 1854) and for rightful rescission (s.75).
2. Time not essential: the contract is not voidable, but compensation for delay is due (s.55 para 2), and the promisee may make time essential by notice fixing a reasonable period.
3. Accepting late performance bars compensation unless notice of the claim is given at acceptance (s.55 para 3).
4. Liquidated damages (s.74): reasonable compensation up to the agreed sum, without proof of loss where loss is hard to prove (ONGC v Saw Pipes 2003, Kailash Nath v DDA 2015).
5. Specific performance: no longer discretionary since the 2018 amendment (s.10), but the plaintiff must show continuous readiness and willingness (s.16(c)), and substituted performance is available (s.20).
6. Waiver or extension by the promisee (s.63) varies the terms.

(c) Section 3(d) of the Patents Act, 1970 and Novartis (2013)

Section 3(d) excludes the mere discovery of a new form of a known substance that does not enhance its known efficacy, a new property or use of a known substance, and the mere use of a known process. Its Explanation treats salts, esters, polymorphs, isomers and other derivatives as the same substance unless they differ significantly in efficacy. It was added by the Patents (Amendment) Act, 2005, which introduced pharmaceutical product patents under TRIPS, to stop evergreening.

***Novartis AG v Union of India* (2013):** the claim for the beta crystalline form of imatinib mesylate (Glivec) had been rejected, upheld by the IPAB (2009), and the challenge to s.3(d) had failed in the Madras High Court (2007). The Supreme Court held that:

• imatinib was already disclosed in the Zimmermann patent,
• for medicines "efficacy" means therapeutic efficacy, so a 30% rise in bioavailability alone was not enough, nor were better flow, stability or lower hygroscopicity, and
• s.3(d) does not bar incremental innovation that shows real therapeutic gain.

Section 3(d) is an extra filter beyond novelty and inventive step, with the burden on the applicant to prove efficacy. It reflects the Doha Declaration (2001) and works with compulsory licensing (s.84, Natco v Bayer 2012) and oppositions (s.25). Critics, including US Special 301 reports, question its fit with TRIPS Art 27(1) and call the efficacy test vague. In practice it balances reward for real innovation with access to affordable generics.