2. A principal is bound to indemnify his agent for loss

or damage incurred by the latter in transacting the agency

business.

Adamson v. Jarvis (1827), 4 Bing. 66 ; here it was laid

down that every one who employs another to do an act

which the employer appears to have a right to authorize

him to do, undertakes to indemnify him for every act which

would be lawful, if the emploj^er had the authority which

he pretends to have.

If a principal directs his agent to undertake anj^ work

GO TEE LAW OF AGENCY.

for him, in doing which liabilities are incurred by a

particular custom of any trade, business, or locality, the

agent has a right (arising out of a contract implied in law)

to be indemnified against them by the principal.

Whitehead v. Izod (1867), L. R. 2 C. P. 228; here

Willes, J., said ; " It is familiar law that a principal who

employs an agent to purchase goods for him in a particular

market is taken to be cognisant of, and is bound by, the

rules in force therein; and the agent is entitled to be

Indemnified for all he does in accordance with those rules."

Camx>bell v. Larkiuorthy (1893), 9 T. L. R. 528 ; here a

person going to Australia agreed to deliver an ice machine

to persons to whom his principal had sold it for shares in

a company, and also agreed to take the certificate of the

said shares in his own name, and so to become a share-

holder ; he moreover agreed to retain the certificate to hand

over to his principal. The agent did what he had agreed

to do ; and subsequently a call having been made upon the

shares, he, as the registered holder of them, was bound to

pay up. The Court held that his principal was bound

to indemnify him.

There are, however, the following limitations to an

agent's right of indemnity : —

(a) If a particular custom of any trade, business, or

locality, through which any liability is incurred by an

agent, is not so general and notorious that all persons

dealing in that trade, business, or locality could easily

ascertain it, then knowledge of and assent to it on the part

of the principal, will not be implied in law ; but will in

Kuch a case have to be proved, to entitle the agent to an

Indemnity from his })rincipal.

GrisseU v. L'ristoiue (1868), L. R. 3 C. P. 112 ; here

]3ovill, C.J., said ; " Where such a custom or usage is

Intended to be relied u])on, it ought to be clearly and

distinctly proved to exist, and to be so general and

BIGHTS OF AN AGENT AGAINST HIS PRINCIPAL. 61

notorious that persons dealing in the market could easily

ascertain it, and must be presumed to have been aware

of it."

{h) If a particular custom of any trade, business, or

locality through which any liability is incurred by an

agent is an unreasonable one, such as a custom of the Stock

Exchange to hold a contract binding which is not bindino-

In law, knowledge of and assent to such a custom on the

part of the principal will not be implied in law, but will

have to be proved, to entitle the agent to an indemnity.

Neilson v. James (1882), 9 Q. B. D. q^Q. C. A.; in this

case the Court held that a person could not be bound by

a custom oВЈ the Stock Exchange to ignore the provisions

of Leeraan's Act (30 & 31 Vict. c. 29), when he was ignorant

of such a custom ; seeing that such a custom was an un-

reasonable one. In giving judgment, Brett, L.J., said ; "I

think, however, that the plaintiff is only bound by such

a custom as is both reasonable and legal, for to that extent

only, can a person who is ignorant of a custom be assumed

to acquiesce in and be bound by it. Now, the contract for

sale which the defendant made did not comply with the

terms of the Act (30 & 31 Vict. c. 29), and was therefore