Agency (1) Flashcards
3 Main parties involved in agency?
Agent
Principle
Third party
Who is the negotiation between?
Agent and third party.
Who is the contract between?
Principal and third party.
What is the explanation of the term agent?
Kennedy v Dr Trafford (1897) - Is defined as a legal term. His purpose is to bring the principle and third party into contractual relations.
Can a principle with full capacity properly appoint a minor who doesn’t have capacity as an agent?
Yes, main point is that the principle needs to have full capacity to perform the transaction that the agent performs on his behalf.
What 2 branches is agency split into?
Agency with consent (actual authority)
Agency without consent (apparent/ ostensible authority)
What types of Agency with consent (actual authority) are there?
- Express actual authority
- Implied actual authority
What types of Agency without consent (apparent/ ostensible authority) are there?
- Usual authority
- Agency of Necessity
What is actual authority?
Where principle gives agent actual authority to enter into agreement with 3rd party on his behalf (can be express/implied)
What is express actual authority?
Defined by Diplock LJ in Freeman v Buckhurst (1964) as:
- legal r/s b/w principle and agent where they alone are parties and the scope is ascertained by regular contracts. (written or orally said)
What is implied actual authority?
- comes by implication instead of express words
- still actual authority as agreement b/w p and a to give a authority
- but scope is difficult to determine
What is a case example supporting the idea of implied authority?
Heley-Hutchinson v Brayhead LTD (1968):
Chairman acted as managing director making company liable in favour of third parties debts by signing off on behalf of company.
Held: company was liable as chariman had implied actual authority as he was a director so scope of office was the same.
What is the exception to implied actual authority?
Waugh v HB Clifford 1982:
Highlighted that implied actual authority is not present in the case where the p expressly instructs a to not act in a particular way as it would be contravening his instructions.
What case defines apparent authority and how?
Freeman v Buckhurst (1964):
- Apparent authority = authority without consent or agreement of principle for agent to act on his behalf
- arises as result of representation principle made to third party regarding agent as acting on his behalf despite him lacking authority to do so.
What happens once the third party has the impression of authority from representation of principle and acts in reliance on it?
- Estoppel arises
- Principle is estopped from denying the agent has his authority
- Principle is bound by agents act
Is apparent authority, authority in the strict meaning of the word?
No, its an illusion of authority.
-Where it arises, the principle is estopped as explained in ING Re LTD v R&V Versicherung AG (2006)
How do ordinary business dealings run in consideration of apparent authority?
They rarely ever run with T relying on actual authority of A, they run with T receiving and relying on information regarding authority directly from P and A who are the only ones who truly know the actual answer. T only knows what they are told.
How can the representation for apparent authority arise?
Through conduct.
What are the three requirements for apparent authority to exist Per Rama Corp. Ltd v Proved Tin Ltd (1952)
?
1) Representation by P of A having authority via conduct, words, or implied via previous dealings - Armagas Ltd v Mundogas SA (1986).
2) T must have relied on representation.
3) T must have altered their position ie) been induced into contract or entered it- Freeman v Buckhurst (1964).
What happens regarding apparent authority in the case where T knows A has none?
No apparent authority exists.
-seen via First Energy Ltd v Hungarian Bank Ltd (1993) where the A (senior manager) made it clear to T he had no authority to make such a decision despite any miscommunications regarding the loan.
What is usual authority normally seen as?
An extension of implied actual authority and apparent authority.
What does the Heley-Hutchinson v Brayhead (1968) case say about usual authority?
Where A belongs to particular trade of profession he will have usual authority to fulfil his express authority as an agent.
What is an example of a case where usual authority was clearly found to be present?
Panorama Development Ltd v Fidelis (1971):
Company found liable and bound by contracts as they were within the usual authority of someone of the company secretary’s role.
Is usual authority an independent category?
Yes, as the A has usual authority to act on behalf of and bind P even when P expressly forbids it, which is different to implied actual authority which it’s argued of being an extension of - seen via Watteau v Fenwick (1893).
What is the likelihood of the agency of necessity arising these days?
Less likely as modern communication has made it so A can contact P for instructions in most cases even if it is an emergency to a certain extent.
What is the agency of necessity?
A acts on behalf of P for his benefit in the case of an emergency.
What are the requirements for the agency of necessity to arise?
- A must be in control of P’s property.
- Intervention of A must be necessary.
- Must be impossible / near impossible for A to contact P for instructions.
- Actions of A must be bona fide + in interests of P
- Actions of A must be reasonable and careful in all circumstances
- P must be competent when A intervened
What is a good example of a case concerning agency of necessity?
Springer v Great WR co (1921):
Court refused to impose Agency of Necessity as it was seen that communication could have occurred so A held liable for losses.
What are agency of necessity cases usually limited to and not extended beyond?
Maritime (sea) cases - Surrey Breakdown Ltd v Knight (1999)
Explain ratification
If A decides to carry out act in name of P for which he wasn’t authorised P can ratify it, meaning he adopts A’s unauthorised acts making them become authorised ab initio.
After ratification, what is the agent regarded as having?
Retrospective actual authority.
What is ratification equivalent to?
Ratification = equivalent to antecedent authority- koenigsblatt v Sweet (1923)
What is the all or nothing rule regarding ratification?
Smith v Henniker (2003) :
Ratification is all or nothing, P either ratifies all of the transaction or none, cannot do one part.
What factors are vital regarding ratification?
Keighley v Durant (1901)- undisclosed P cannot ratify transaction, only P who’s behalf A acted on.
Kelner v Baxter (1866-67)- P (ie company) needs to exist at time contract is made.
Boston Deep sea v Farnham (1957)- P needs to have been competent at time of agent performing act on behalf of him.
Grover & Grover v Matthews (1910)- P needs to be competent to perform act at time of ratification. P needs to possess that capacity.
SEB v Manches (2005) reversed on other grounds- P is not permitted to wait and see w/n transaction is beneficial to him before deciding on approval.
SEB v Manches (2005) reversed on other grounds- P must ratify w/i a reasonable time of A’s act. Lapse of time = relevant to w/n ratification should be inferred. Longer the wait whilst T and others acting under false impression the more compelling the inference of ratification.
A void contract cannot be ratified.
