Agency (1)

Question 1

3 Main parties involved in agency?

Answer 1

Agent
Principle
Third party

Question 2

Who is the negotiation between?

Answer 2

Agent and third party.

Question 3

Who is the contract between?

Answer 3

Principal and third party.

Question 4

What is the explanation of the term agent?

Answer 4

Kennedy v Dr Trafford (1897) - Is defined as a legal term. His purpose is to bring the principle and third party into contractual relations.

Question 5

Can a principle with full capacity properly appoint a minor who doesn’t have capacity as an agent?

Answer 5

Yes, main point is that the principle needs to have full capacity to perform the transaction that the agent performs on his behalf.

Question 6

What 2 branches is agency split into?

Answer 6

Agency with consent (actual authority)

Agency without consent (apparent/ ostensible authority)

Question 7

What types of Agency with consent (actual authority) are there?

Answer 7

• Express actual authority

- Implied actual authority

Question 8

What types of Agency without consent (apparent/ ostensible authority) are there?

Answer 8

• Usual authority

- Agency of Necessity

Question 9

What is actual authority?

Answer 9

Where principle gives agent actual authority to enter into agreement with 3rd party on his behalf (can be express/implied)

Question 10

What is express actual authority?

Answer 10

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)

Question 11

What is implied actual authority?

Answer 11

• 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

Question 12

What is a case example supporting the idea of implied authority?

Answer 12

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.

Question 13

What is the exception to implied actual authority?

Answer 13

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.

Question 14

What case defines apparent authority and how?

Answer 14

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.

Question 15

What happens once the third party has the impression of authority from representation of principle and acts in reliance on it?

Answer 15

• Estoppel arises
• Principle is estopped from denying the agent has his authority
• Principle is bound by agents act

Question 16

Is apparent authority, authority in the strict meaning of the word?

Answer 16

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)

Question 17

How do ordinary business dealings run in consideration of apparent authority?

Answer 17

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.

Question 18

How can the representation for apparent authority arise?

Answer 18

Through conduct.

Question 19

What are the three requirements for apparent authority to exist Per Rama Corp. Ltd v Proved Tin Ltd (1952)
?

Answer 19

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).

Question 20

What happens regarding apparent authority in the case where T knows A has none?

Answer 20

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.

Question 21

What is usual authority normally seen as?

Answer 21

An extension of implied actual authority and apparent authority.

Question 22

What does the Heley-Hutchinson v Brayhead (1968) case say about usual authority?

Answer 22

Where A belongs to particular trade of profession he will have usual authority to fulfil his express authority as an agent.

Question 23

What is an example of a case where usual authority was clearly found to be present?

Answer 23

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.

Question 24

Is usual authority an independent category?

Answer 24

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).

Question 25

What is the likelihood of the agency of necessity arising these days?

Answer 25

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.

Question 26

What is the agency of necessity?

Answer 26

A acts on behalf of P for his benefit in the case of an emergency.

Question 27

What are the requirements for the agency of necessity to arise?

Answer 27

• 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

Question 28

What is a good example of a case concerning agency of necessity?

Answer 28

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.

Question 29

What are agency of necessity cases usually limited to and not extended beyond?

Answer 29

Maritime (sea) cases - Surrey Breakdown Ltd v Knight (1999)

Question 30

Explain ratification

Answer 30

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.

Question 31

After ratification, what is the agent regarded as having?

Answer 31

Retrospective actual authority.

Question 32

What is ratification equivalent to?

Answer 32

Ratification = equivalent to antecedent authority- koenigsblatt v Sweet (1923)

Question 33

What is the all or nothing rule regarding ratification?

Answer 33

Smith v Henniker (2003) :

Ratification is all or nothing, P either ratifies all of the transaction or none, cannot do one part.

Question 34

What factors are vital regarding ratification?

Answer 34

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.