42

Agency Avenues

42.1 Introduction
Diversity and complexity of modern life has increased the need for specialists
in every walk of life. Man today has neither the time nor the ability to meet
his requirements himself. He takes the assistance of those who specialise in
their respective fields and manage the affairs better. These specialists are
known as agents and their services are known as agency business.

Agency business has acquired a great significance these days. It has become
a significant, lucrative and profitable business. Gone are the days when agency
business was looked-down upon. Now the agency business has acquired high
status. Agents today command respect and better earnings. The earnings of
an agent depend upon his capability and efforts. He can secure very good
earnings without much investment. You can also adopt agency business as
your profession and secure better earnings and status in society. Naturally
you would like to know more about the various agency avenues available
these days. In this lesson, we shall study in details about them.

42.2 Objectives
After studying this lesson, you will be able to:
• Identify the various agency avenues, viz.,
• Insurance agency
• Savings agency
• Advertising agency
• Travel & Tours agency
• Courier Service
 Agency Avenues :: 349

• Packing Agency
• Commission agency-factors and broker.
• Property agents
• Describe the meaning, features and functions of different agencies as
mentioned above, that is, Insurance agency, savings agency, Advertising
agency, Travel & Tours agency, Courier service, and packing agency,
Property agency and Commission agency.

In our economy, there are several areas in which agency business can be set
up, for example, insurance, savings and investment, travel and tours,
advertising, purchase and sale of property and so on. In this lesson we shall
study about the peculiar characteristics of each of them.

42.3 Insurance Agency

An indispensable link between Insurance Companies and prospective Insured
is the insurance agent.

Nothing is free from accidental losses. An individual may be involved in an

accident. Property may be damaged by fire and ships may sink. As a protection
against such risks, the system of insurance has been devised. Insurance as we
shall learn later, is a contract by which an insurance company for a certain
premium, undertakes to compensate the insured for any damages caused to
him by a particular insured event. Insurance cannot prevent risks, but it
provides for mitigating the sufferings arising therefrom.

In order to secure insurance business, insurance companies appoint agents.

These agents are specialists in the field of insurance. They are beneficial not
only to the insurance companies but also to the insuring public. Besides
securing good business to the insurance companies, they render very useful
services to the society. Let us now discuss the importance of insurance agency
both from the point of view of insurance companies and the policy holders.

Functions of Insurance Agency

A. For insurance Companies

Insurance agency is indispensable to the insurance companies will be clear

from the following:

(i) To propagate business: Agents personally meet different people and

explain to them the salient features of different schemes of insurance
and the benefits accruing therefrom. They also distribute literature and
in this way propagate the business of Insurance Companies.
Business Studies :: 350

(ii) To procure business: Almost all the business of insurance companies

is procured through agents these days. A negligible percentage of
business is procured directly by insurance companies.

(iii) To protect the interests of the companies: Insurance companies rely

on the agency force to select good business. In deciding upon the
risk, the companies have to satisfy themselves as to the purpose of
insurance and the character, habits and financial standing of the
proposers through their agents. The agents give complete information
on these points as is possible in reply to the queries contained in the
Agent’s Confidential Report. This helps the insurance company in
deciding whether it should accept the proposal or not and on normal
terms or special terms. Thus the agents not only procure business for
the insurance companies but also help the insurance companies in
selecting good business.

B. For policy holders/public

An insurance agent is a link between the insurance company and the policy
holders. He renders many useful services to the policy holders. These services
may be summarised as follows:

i) Educates people about the benefits of Insurance: An insurance agent

explains properly the benefits of different types of insurance schemes
to the public and convinces them of the need for insurance. He also
helps them in selecting the best schemes suitable to their needs. He
not only helps the public in general, but also the businessmen in
particular. Businessmen have to face many risks in business such as
production risks (break down of machinery, inefficient labour, use of
faulty material and tools), poor weather, market risks (loss due to bad
debts, improper advertising etc.), risk of destruction of property by
flood, fire, dust storm etc. An insurance agent helps them in covering
adequately for these risks by suggesting different plans available. He
educates the businessmen about the plans and saves them from the
losses arising therefrom.

ii) Encourages thrift by providing better channels of investment: An

insurance agent ensures that the policy holder saves regularly and
pays the premium in due time. He reminds the policy holders now and
then about the date of next premium.

iii) Renders after-sale-service to the public: An insurance agent renders

the public prompt and regular after-insurance services, such as collection
of premium, appointment of nominee or assignee, alternations in the
policy contract, arranging loan on the policy, securing surrender value,
revival of lapsed policies, additional insurance, settlement of claims,
etc.
 Agency Avenues :: 351

How to become an Insurance Agent

Any person can become an insurance agent provided

i) he/she has passed matriculation or equivalent examination. For working

in a rural area, he/she must have passed middle class.

ii) he/she has completed the age of 18 years.

If a person satisfies the above conditions, he/she may apply to any branch
office of LIC or GIC in the prescribed application form containing the
following particulars:

i) a) Name in full (Block Letters)

b) Father’s /Husband’s name
ii) Nationality
iii) Educational Qualification
iv) Complete address for correspondence
v) Date of birth, state of health and any body-defects
vi) Place of domicile
vii) Previous experience
viii) If any of the relatives is working in the LIC or GIC
ix) If the spouse is in service
x) Present occupation along with the name and address of the employer
xi) Languages know, read and write
xii) Territory in which he/she intends to work as agent
xiii) Names and addresses of two responsible persons as referees.

Besides the above information, the applicant is to supply certain other

information and has to complete certain legal formalities such as signing the
declaration as given in the application form.

If the Branch Manager is satisfied after interviewing the candidate that he/
she can be appointed as an agent, the Development Officer gives his report.
The agent is to obtain licence to act as an insurance agent from the Controller
of Insurance, Shimla, on payment of licence fee of Rs.15/-. The licence is
issued for a period of 3 years, after which it can be renewed. On receipt of
the licence, the person is required to undergo the prescribed training for
agents. During training, to meet the out of pocket expenses, the Life Insurance
Business Studies :: 352

Corporation of India pays a monthly stipend of Rs.300 in the first year,

Rs.250 in the second year and Rs.200 in the third year of training subject to
satisfactory business performance. During this training period itself, a hard
working and sincere trainee can earn a monthly income of upto Rs.600 or
more as insurance commission. Besides this, the company can assist the trainee
to have a scooter or a motor cycle if he performs well. When the agent
submits the first case of insurance, a code number is allotted to him/her.

Every agent of LIC is requested to secure a minimum guaranteed business of

Rs.1 lakh each for 12 different lives in urban area, and Rs.75,000 each for
12 different lives in rural area per agency year for 15 years after which there
is no minimum specified for insurance cases. For agents appointed by any
subsidiary company of the General Insurance Corporation of India, there is
no minimum guaranteed business prescribed. Otherwise, procedure for securing
agency is the same as in the case of LIC of India. (Specimen of application
for agency of LIC of India is given in Appendix to this lesson).

42.4 Savings Agency

Savings are indispensable for the economic growth of a country. Various
savings schemes are provided both by public and private sectors, such as Life
Insurance Corporation of India, Unit Trust of India, National Savings
Organisation, Commercial Banks, Mahanagar Telephone Nigam, Railways,
National Thermal Power Corporation and other companies in the private and
joint sectors. The savings schemes provided by them are profitable to the
investors and useful to the society as a whole. What is needed is someone
who could motivate, encourage and educate the people to save and invest.
Here comes the role of savings agents. Savings agents work for these
institutions and get handsome remuneration for their services.

The profession of savings agents has already established itself on a solid

ground. Without investing much, one can get as much as one’s efforts in this
direction. It is a highly remunerative public service. Savings agents command
high status in the society. Usually these agents are men of good honour and
integrity.

Let us now discuss the services provided by these agents.

Services
A. To the investing public

The following services are provided by the savings agencies to the investing
public:
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i) Educate the public about investments: These agencies motivate the

investing public to save more. They educate the people about the
different schemes available for investment with different institutions,
their comparative merits and demerits and encourage public to invest
their savings in secure and profitable channels of investment. They
obtain stable and better returns for their investment.

ii) Channelise the investment: These agencies collect the savings from
the investing public, direct them in different savings schemes provided
by different organisations according to the choice of the people.

iii) Provide personalised service: These Agents approach the individuals

at a place and time convenient to them. They collect the savings as
per the convenience of the investors. They assist them in getting loans,
in case of need, against their investments, remind them of the maturity
date of the investments and help them in the realisation of these
investments.

B. To the collecting organisations

The agents help the business firms as well as the government in raising funds
for their growth activities. They collect savings from each and everyone,
from far and near, and from the rich and the poor alike which may not be
otherwise possible.

How to become a savings agent.

One who is competent to contract and enjoys the trust and confidence of the
people can take up the business of savings agent. The savings Schemes
introduced by the Union Ministry of Finance are operated through the post
offices. Agency can be secured by anyone who satisfies the following
conditions: (i) He/She should be at least 23 years old; there is no maximum
age limited; (ii) He/She should have passed at least the Matriculation (Class
X) Examination; (iii) None of his/her relatives should be a government servant.
Application forms are available at the Office of Deputy Director, National
Savings located in different regions. The application has to be accompanied
by proof of age and copy of ration card for identity. On submission of the
application, it is recommended for issue of a licence by the Regional Director,
National Savings.

For securing agency of different Finance Companies and application forms

obtainable from different investment organisations, application has to be made
to the office of the organisation for Savings Agency on agreed terms and
conditions.
Business Studies :: 354

Intext Questions 41.1

1. Answer the following questions in not more than fifty words each:

i) Importance of insurance agency for the insurance company.

__________________________________________________

__________________________________________________

ii) Insurance Agents are indispensable to the public.

__________________________________________________

__________________________________________________

iii) Insurance agency a profession of high status and good earning.

__________________________________________________

__________________________________________________

iv) Qualifications for becoming an insurance agent.

__________________________________________________

__________________________________________________

2. Explain the following in not more than fifty words:

i) Savings agency is a lucrative profession.

__________________________________________________

__________________________________________________

ii) The importance of savings agency for the investing public.

__________________________________________________

__________________________________________________

iii) Requisite for becoming a Savings Agent.

__________________________________________________

__________________________________________________
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42.5 Advertising Agency

An advertising agency is a business set up to render specialised services in
advertising and marketing of products. It helps advertisers in drafting the
advertisement and placing them in appropriate media for publicity. Some
large business firms have their own advertising departments. But many
producers may not afford such in-built facilities. Consequently they depend
upon specialised advertising agencies for designing and publicising or exhibiting
their advertisements in an effective manner.

Functions

The main functions of advertising agencies include:

(i) preparing and designing advertisement copies,
(ii) planning and selection of advertising media, and
(iii) securing space or time in all media categories, i.e. print, televisions,
radio, bill board, etc.

Additional services may include printing a product, designing the package,

undertaking distribution, market research, presentation of advertising strategy
to advertisers and performance of the public relations task. In fact, the work
of public relations has gained greater significance now-a-days. Many big
advertising agencies, like Ogilvy Benson and Mather have set up a separate
public relations department for the purpose.

Some of the top most advertising agencies functioning in our country are
Hindustan Thompon Associates, Clarion Advertising Services, Lintas India,
ogilvy Benson and Mather, Reddifusion, Vasudev Publicity, Akshara, etc.

Importance of Advertising Agencies

Advertising agencies have become an essential part of modern world of

commerce. Larger scale production and distribution are not possible without
the help of advertising agencies.

Not only this, of late our government is using the facilities and talents available
with the private advertising agencies to give publicity and back up its various
programs and achievements, specially in the field of economic and social
developments. Advertising agencies have acquired great significance because
of the following services they render:

i) Promote sale of goods and services: Advertising agencies promote

the sale of goods and services by selecting target consumers and
informing and persuading the prospective buyers to buy them for use.
The tremendous growth in soft drink concentrates, washing powder,
Business Studies :: 356

paan masalas, processed and fast food items can be attributed greatly
to their high ranking advertisements.

ii) Help introduction of new products in the market: Adverting agencies

introduce the business enterprises and their products in the public
through most appealing and effective advertisements. They also help
in determining prices and discounts and designing products and their
packages.

iii) Enhance the goodwill of business enterprise: Advertising agencies

not only introduce business enterprises and their products to the public,
but also build up their reputation. They enable an enterprise to
communicate its achievements and efforts towards customer welfare.
They may also undertake market research and develop alternative
strategies for the distribution of the product. In this way, it helps
business firms in ultimately launching their products at the right time
and right place.

iv) Render advisory services: Advertising agencies render many useful

services in such matters as packaging of goods, naming new products,
differentiating one’s products from that of others, undertaking more
and more research to identify new products and their new uses. For
this purpose they recruit experts in media, copy writing and art and
study the product, market and competitors thoroughly.

Advertising agencies may be characterized as either full service firms which

are capable of performing all the above services for their clients of specialised
agencies performing only a few functions.

A Successful Advertising Agent

A successful advertising agent is one who has basic knowledge of scientific

advertising and succeeds in conveying the right message across through the
right media at the right time to the right people. He should have imagination
enough so as to visualise appropriate and catchy headlines, slogans, illustrations
and photographs for the advertisement. He must use the most impressive
photographs at his command to achieve the advertiser’s objectives. He should
be able to prepare the copy of the advertisement at low cost without loosing
its effectiveness. He must have artistic talent and knowledge about the
psychology of people.
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Intext Question 42.2

Explain the following in not more than fifty words.

a) The important functions of advertising agencies.

__________________________________________________

__________________________________________________

__________________________________________________

__________________________________________________

__________________________________________________

__________________________________________________

b) Importance of advertising agencies for advertisers.

__________________________________________________

__________________________________________________

__________________________________________________

__________________________________________________

__________________________________________________

42.6 Travel and Tours Agency

Travelling for business and pleasure has increased a great deal over the
years. Travellers ordinarily do not have time and knowledge to plan their
travels economically and conveniently. They seek the help of travel and tours
agencies.

Travel agencies undertake a number of functions-preparing itinery, getting

reservation for travelling and hotel accommodation, arranging group tours,
arranging credit facilities, helping to secure visas and passports etc. These
agencies not only work for the touring public but also organisations such as
railways, airways, shipping companies and road transport companies. They
provide business for these organizations and get good remuneration for their
work. Sometimes they work for hotels as well. The top-most Tours and
Travel Agencies in India are SITA World Travels, Indian Tourism Development
Corporation, State Tourism Development Corporation in every State of India,
Thomas Cook India Ltd., etc.
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Functions of Travel and Tours Agency

These agencies are indispensable to the touring public both inbound and
outbound because of the following services rendered by them:

i) Preparing itinery: These agencies have specialised knowledge of all

the places of interest in a country. They help the travelling public in
preparing a good itinery i.e., programme of the travel or tours so that
the tourists can visit the maximum number of places of interest with
optimum utilisations of the time and money available.

ii) Helping public to secure passport and complete other formalities:

These agencies help in securing the passport, Reserve Bank Clearance
or VISA formalities completed on behalf of the travelling clientele in
case of foreign travel.

iii) Getting Reservation for travelling accommodation: These agencies

help the travelers and tourists in getting the travelling accommodation
reserved for the travel in railways, airways, ships and buses.

iv) Getting Reservation of hotel accommodation: These agencies have

specialised knowledge of hotels and their suitability to different types
of tourists. They help in getting suitable accommodation reserved for
the tourists during their stay at different places. Besides, they also
provide local transport on hire for going to places of one’s own interest.

v) Helping tourists with credit facilities: These agencies help the tourists
by granting credit or securing credit facilities for them, in case they
fall short of money while travelling.

vi) Arranging group tours: These agencies arrange economic and

convenient tours in groups and provide package deals or special holiday
packages which include the travel-fare and accommodation charges,
sight seeing and other transportation charges to and from the place of
departure. Some agencies also arrange tourist exchange programme
between two countries.

vii) Other functions: Travelling with these agents means individual care
and personalised attention. For this purpose most travel agencies
arrange for holidaying, water sports and wild life tracking, adventure
travels, fishing, river rafting, pilgrimage etc., whatever the place is
famous for. For business executives, they arrange conferences, meetings
and discourses. For foreign travellers, they also provide courier service
and help in Air and Sea Cargo clearance.
 Agency Avenues :: 359

How to secure the Agency

In order to become a successful travel and tours agent, a person should have
the following qualifications:

i) Knowledge of modes of transport: A travel and tours agent must

have full knowledge of all available modes for domestic as well foreign
travel, their availability and the fare charged by each. This helps them
in offering expert advice regarding the suitability of a mode of travel
to individual needs of the tourists.

ii) Knowledge of places of interest: A travel and tours agent must have
knowledge of all places of interest, historical or industrial, both within
and outside the country. This enables him to give a complete picture
of different places of interest to the tourists.

iii) Information about hotel accommodation: The agent must have

detailed information about hotel accommodations generally available
in the country, their probable charges and the facilities and comfort
provided by them.

iv) Acquaintance with formalities to be completed: A travel and tours

agent must be acquainted with all formalities to be completed before
and after the travel or tours. He must have the knowledge of the
procedure for getting Passport, Visa and Reserve Bank clearance and
other formalities to be completed.

v) Personal qualities: A travel and tours agent must be fair and honest
in his dealings with the travelling public. This increases his reputation
and standing. He must be dedicated and hardworking. He should always
remember that a tourist can only be won over with a smile. Courteous
service alone can bring success to the business of a travel agent.

Anyone who is competent to contract and has the requisite knowledge and
capability can operate a travel and tours agency. However, if the operations
are on a regional or national level, it is desirable that the agency should
apply for and seek recognition of the Department of Tourism of the
Government of India or the State Government concerned. There are prescribed
norms of operation that must be satisfied before recognition can be obtained.

42.7 Courier Service

Sending and receiving letters, documents, packets, parcels, etc. are essential
for most business firms. Couriers undertake the task of receiving these articles
from sender and delivering the same to the addressees both within the country
Business Studies :: 360

and abroad. They act as agents of the senders and their services thus may be
called agency services. As you know, post offices also receive letters, packets
and parcels for dispatch to the addressees. But despatch of mails through the
post office often involves delay in reaching the parties in far off places. It is
in this respect that couriers render a valuable service, ensuring timely and
prompt delivery of articles. Not only business firms, but the public can also
use the courier service for sending urgent mail. However, couriers charge
more than the postal rates. In a way, couriers may be said to supplement the
postal services.

Functions

Couriers serve the principals (users) in different ways:

i) Collect letters, packets, parcels, etc. from the users of their service at
no extra charge.

ii) Receiving articles at different collection centres for despatch.

iii) Arrange prompt despatch of articles through messengers and other

means of transport (roadways, railway, air transport, etc.)

iv) Undertake carriage of articles to different places within the country as

also countries across the borders.

v) Deliver articles to the addressee, against acknowledgement receipt.

vi) Send proof of delivery (acknowledgement receipt of the receiver) to

the sender.

Who can be a successful Courier

To be a successful courier, a person should have full knowledge of the means

of sending mail and other articles and the charges payable for the purpose.
He must have the ability to select messengers (employees)both for collection
of mail from business firms and delivering the same to the addressees in the
same city, as well as messengers for receiving outstation mails at the roadway
terminal, railway station or airways office for delivery to the addressees at
the destination. He must also be conscious of and discharge his responsibilities
with diligence towards the senders to ensure safe and timely deliver of articles
to the parties concerned.
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Intext Question 42.3

Explain the following in not more than fifty words.

i) Services rendered by the travel and tours agencies

__________________________________________________

__________________________________________________

__________________________________________________

__________________________________________________

__________________________________________________

__________________________________________________

ii) The qualifications of a travel and tours agent.

__________________________________________________

__________________________________________________

__________________________________________________

__________________________________________________

__________________________________________________

__________________________________________________

42.8 Packing Agency

Unless goods, particularly manufactured goods are packed properly, they
cannot be transported or conveniently handled. Packing serves the purpose of
protecting goods from deterioration or damage, facilitates their handling and
promotes their marketing. Any person or firm undertaking the task of packing
goods on behalf of the producer or owner is known as a packing agent.
Packing agencies design the appropriate package to be made and make use
of wrapers or containers for the purpose of packing the products. The package
may consist of goods wrapped in cloth, hesain or plastic sheets or goods
packed in a container, carton, box, bag or crate. Packages may be of different
sizes depending on the purpose in view. For example, sugar may be packed
in bags for transportation but for retail sale it may be packed in small
cellophane packages.
Business Studies :: 362

Functions of Packing Agency

The following are some of the main functions of a packing agency:

1. Preservation of product: Good packing increases the durability of

products as it helps in preserving the products in their original state,
shape or colour. This increases the life of products.

2. Easier handling of goods: Packing makes handling of goods easier

and more convenient as the number of units or quantity of the product
can be packed in containers according to the weight and bulk capable
of being handled easily.

3. Self advertising: Attractive packages serve as a means of self-

advertising as their display on shelves or in showcases draws the
attention of customers.

4. Information on the package: Useful information regarding the

contents-quantities, maximum price, etc. are printed on the package
and customers can make informed buying decision after reading the
matter on the package.

5. Protection from damage: Packing helps protection of goods from

damages during transportation. In the case of certain products,
transporters are cautioned about the necessity of handling the packages
with due care, like, for example. “Glass with Care”.

6. Protection of quality: Sealed containers used for packing reduce the

chances of adulteration of a product and thus helps in maintaining its
quality.

7. Increased sale: Packaging helps in popularising the brand name of

products and thereby increasing their sale.

Intext Questions 42.3

1. Which of the following statements are right and which are wrong?
Indicate by writing R and W respectively in the blank spaces:

___________ (i) Only business firms can avail of the courier services.

___________ (ii) Couriers have different collection centres in the same

city for receiving mails to be sent.

___________ (iii) Couriers may use only rail or road transportation for
sending outstation mail.
 Agency Avenues :: 363

___________ (iv) Products in sealed containers reduce the chances of

adulteration.

___________ (v) For particular products, packages are always of the same
size and weight.

___________ (vi) Packaging is essential for selling, not for storing.

2. In what way is courier service superior to postal mail services ?

__________________________________________________

__________________________________________________

__________________________________________________

__________________________________________________

3. How can packaging help increase the sale of a product ?

__________________________________________________

__________________________________________________

__________________________________________________

__________________________________________________

42.9 Commission Agency

In the modern world of business, goods are bought and sold not at the place
of production, but at places far away in the country or out of the country.
It is, therefore, not possible for every businessman to buy and sell goods
himself. They need the services of someone who could buy or sell goods on
their behalf. These persons are known as Commission Agents because they
get commission for their services. Their business is known as commission
agency business. Commission agents are commissioned to act on behalf of
their principals for different purposes and on different terms.

They generally buy and sell goods in their own name without disclosing the
identity of their principals. When appointed to buy goods, they are known as
Purchase Agents. When appointed to sell goods, they are known as Sales
Agents. Sometimes they are made responsible for bad debts in case of credit
transactions in consideration of an extra remuneration called the Del Credere
Commission. In all such cases, they are known as Commission Agents.
Business Studies :: 364

Functions of Commission Agencies

Commission agencies render a series of useful services such as the following:-

(i) Buying and selling of goods: The commission agents buy and sell
goods on behalf of their principals at the most favourable rates and
terms.

(ii) Marketing services: They perform certain marketing functions, such

as storage of goods, sales promotion, transportation, etc.

(iii) Advisory Services: The commission agents advise their principals

regarding the market conditions; when and where to buy or sell; when
and how to store goods, etc.

(iv) Providing financial assistance: Sometimes, in case of need, the

commission agents also advance money to their principals

Commission agents — factors and brokers

Commission agents may be grouped into
(a) Factors, and (b) Brokers
a) Factors:
A factor is a commission agent employed to sell goods consigned or
delivered to him by the principal. He is entrusted with the possession
of goods and usually sells the goods in his own name without disclosing
the identity of his principal. He may sell the goods on usual terms as
to credit, may receive payment of the price and give valid receipts. He
may pledge the goods in his possession. He has general lien on the
goods in his possession for all charges and expenses and also an
insurable interest in them. He gets commission as his remuneration.
b) Brokers:
A broker is an agent who makes bargain for others and receives
money for his service, which is called brokerage. He is employed to
buy and sell goods. He is not entrusted with the possession of goods
for sale and does not have authority to contract in his own name. He
encourages training by finding buyers for those who wish to sell and
sellers for those who wish to buy. When he makes a contract, he
enters the terms in his book called the Memorandum Book and signs
it. He then sends out Bought Note and Sold Note to the buyer and
seller respectively.

A broker is not given possession of the goods. Unlike a factor, he does not
deal in his own name.
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Difference Between a Factor and a Broker

After studying about factors and brokers, let us now examine the difference
between the two. They differ from each other in respect of the following:-

Points of Factor Broker

difference

1. Dealings He deals in his own name He deals in the name

and may not disclose the of his principal.
name of his principal.

2. Possession He is in possession of He is not entrusted with

of goods goods to be sold. the possession of goods
to be sold.

3. Liability He is personally liable He is not personally

on his contracts (for his liable unless he contracts
acts) unless he expressly as principal.
contracts as an agent.

4. Regularity He usually carries on the He is employed for a

business of his principal particular transaction
regularly. only.

5. Authority He has authority to receive He has no such authority

payments and issue receipts to receive payment and
of discharge in his own name. give a valid receipt.

6. Lien He has a right of general He cannot ordinarily

lien on the goods in his exercise the right of
possession. lien even if he gets
possession of goods
sold through him.

7. Discretion He is a general mercantile He is a special mercantile

agent. agent who has no
discretion as to the terms
of sale negotiated by
him, which is decided
by the principal.
Business Studies :: 366

Intext Questions 42.4

Below are given some statements. Some of these relate to Factors, while
others relate to brokers. Write ‘F’ against those statements that relate to
Factors and ‘B’ against those relating to Brokers, in the space provided
against each:

( ) i) He deals in his own name.

( ) ii) He is employed for a particular transaction only.
( ) iii) He is personally liable for his acts unless otherwise expressly
stated.
( ) iv) He has authority to receive payments in his own name.
( ) v) He deals in the name of his principal.
( ) vi) He is in possession of goods to be sold.
( ) vii) He has authority to issue valid receipt of discharge.
( ) viii) He is a general mercantile agent.
( ) ix) He is not personally liable for his acts unless he contracts as
principal.
( ) x) He has a right of general lien on the goods in his possession.

Property Agents

Agents who act on behalf of buyers and sellers of properties are known as
property agents. Such agents also act on behalf of those who wish to get
properties on rent or on lease and the owners of properties. Strictly speaking,
properties may include moveable as well as immoveable properties. However,
property agents generally do not undertake deals involving moveable properties
like automobiles, machinery or furniture. They are engaged in the process of
buying, selling or renting of immoveable properties by the parties concerned.
Such properties may include a plot of land, a flat or building for residential
or commercial purpose, a factory, shop, farmland, etc.

Property agents act as middlemen helping buyers and sellers of properties

and charge a commission or fee for the services. Likewise they charge
commission or fee from parties who seek their assistance in renting a property.

A property agent contacts or is approached by owners of properties. He

keeps on record details of properties which are on sale or available on rent
 Agency Avenues :: 367

in the area of his operation. He also notes the price at which the owners
expect to sell, or the rental, advance deposit and other terms, which the
owners have in view. One who intends to buy or rent a property intimates
his requirements to the agent, and is informed about the availability of
properties which may suit his purpose. He is also informed about the price
or rent, etc. Having known these the party may like to inspect one or more
properties before making his choice, which is arranged by the agent. At this
stage, the agent may want a certain amount to be paid to him as retainer,
which is adjustible against his commission. Once the intending buyer has
selected the property, an advance is payable by him to the seller. The deal,
is completed upon legal transfer of the ownership in favour of the buyer and
payment of the balance of price, or when the agreement between the owner
and the tenant has been signed and executed. The commission due to the
agent is payable at this stage.

The services of property agents are found to be most useful in growing

metropolitan cities and towns. Depending upon their contacts and information
regarding properties available for sale or renting, some agents have restricted
areas of operation, while others have wider areas. The latter generally
advertise in newspapers about the nature of properties which are available
for sale or on rent. The earnings depend upon the value of the property
bought and sold, or the amount of rental for hire.

Functions
Property agents generally perform the following functions:

1. They procure information relating to properties available for sale or

on rent in the area of operation.
2. They keep record of details of such properties including name(s) of
owner(s), name(s) of occupier, location, size or area, facilities available
nearby, whether freehold or leasehold, price or rent expected by the
owner(s).
3. They check the title deeds in respect of the properties on sale.
4. They record the rent expected, advance payment, or security deposit
desired, and other terms and conditions which owner(s) of properties
have in view for renting.
5. They communicate to the public through posters, handbills or newspaper
advertisements the nature of properties which are available for purhcase
or renting.
6. They provide necessary information to the intending buyers or tenants
about the properties suited to their requirements.
Business Studies :: 368

7. They arrange inspection of the properties by the parties interested.

8. They ensure a fair deal between property owners on the one hand and
the buyers or tenants of properties on the other.
9. They help buyers and tenants to complete the deal with owners by
legal transfer of ownership or signing of rent agreement and payments
required to be made.
10. They assist the buyer or tenant to secure possession or occupy the
property.

Intext Question 42.5

State whether the following statements are true or false. Write ‘T’ against
true statements and ‘F’ against false statements.

( ) (i) A property agent acts for himself.

( ) (ii) The services of a property agent are generally required in

metropolitan cities and towns.

( ) (iii) The property agents procure information relating to properties

available for sale or rent in the area of operation.

( ) (iv) The property agents do not assist the buyers to secure

possession of the property they secured.

( ) (v) The property agents arrange for the inspection of the properties
by the parties interested.
 Agency Avenues :: 369

42.11 What You Have Learnt

In this lesson you have learnt about several avenues for choosing and
establishing an agency business of your own.

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Insurance

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Inv
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Sa

AGENCY AVENUES
Transport
Co
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Adv a
erti vel
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Agency Avenues

If you are an extrovert, imaginative, hard working, want to do some thing

new, feel delighted in going places, meeting and mixing with people, talking
to them, convincing and persuading them, then you are a suitable person for
establishing an agency of your own. However, a person suitable for one type
of agency may not be suitable for another type. So read this lesson carefully,
meet people, discuss with them and make up your mind.
Business Studies :: 370

42.12 Terminal Exercise

1. Insurance agency is a profession of high status and high and valuable
skill. Explain the statement.
2. Explain the qualifications required to become a successful insurance
agent.
3. Enumerate the services provided by savings agencies to the investing
public and investment organisation.
4. What are the essential requirements for a successful savings agent?
5. What is the importance of advertising agencies for an advertiser?
6. What are the qualifications of a successful advertising agent?
7. Enumerate the functions of courier service.
8. What services do packing agents render to manufacturers and traders?
Explain briefly.
9. What are the services rendered by the travel and tours agencies?
Explain.
10. There are certain qualifications which are required to become a
successful travel & tours agent. Enumerate them.
11. Who is a commission agent? Explain the functions of a commission
agent.
12. Mention any five points of difference between a factor and a broker.

13. State the nature of agency work of property agents. What functions
do they perform?

42.13 Answers to intext questions

Answers to intext questions 42.1 , 42.2 and Q. Nos. 2 and 3 of intext
question 42.3 have been clearly given in the lesson itself. So refer to the
appropriate sections.

42.3 1 (i) W (ii) R (iii) W (iv) R (v) W (vi) W

42.4 F: (i), (iii), (iv), (vi), (vii), (viii), (x)
B: (ii), (v), (ix)

42.5 (i) F (ii) T (iii) T (iv) F (v) T

 SENIOR SECONDARY COURSE

BUSINESS STUDIES

Students Assignment - 6
Maximum Marks : 50 Time : 1½ hours

INSTRUCTIONS

• Answer all the questions on a separate sheet of paper.

• Give the following information on your answer sheet:
• Name
• Enrolment number
• Subject
• Assignment number
• Address
• Get your assignment checked by the subject teacher at your study centre
so that you get positive feedback about your performance.

Do not send your assignment to National Open School

1. What is meant by the terms ‘agent’ and ‘principal’? Who can be

an agent?
2. Explain the main characteristics of agency services.

3. Distinguish between an agent and a servant on the basis of :

(a) Legal relationship;

(b) Risk;
(c) Purpose;
(d) Consideration; and
(e) Field of activity.
Business Studies :: 372

4. Explain briefly any five circumstances under which an agent can be

personally held responsible by other parties.

5. Sanjay appoints Sameer as his agent and directs him to purchase a

particular house. Sameer likes that house and purchases it for his own
self and tells Sanjay that the house could not be purchased. What are
the rights and duties of Sanjay and Sameer under the above
circumstances?

6. State the functions of Insurance agency.

7. Explain, in brief, the services provided by the Savings Agents to the

investing public and the collecting organisation.

8. Differentiate between a Factor and a Broker in respect of:

(a) Dealings;
(b) Possession of goods;
(c) Liability;
(d) Authority to receive payment; and
(e) Lien on goods.

9. Explain briefly the qualifications required to become a successful Travel

& Tour agent.

10. What is the importance of advertising agency for an advertiser? Explain.