Agency

Question 1

What is agency?

Answer 1

Where one party acts as an agent for another.

Question 2

What does this do to the parties in a contract?

Answer 2

The contract can be made by the agent on behalf of the principal with a third party. This would bind the principal and the third party. All three parties would then have privity of contract.

Question 3

What are the two main types of agency in law?

Answer 3

Partner in a partnership and a director of a company.

Question 4

What is agency by express agreement?

Answer 4

A principal appoints an agent in writing or orally, and they do so expressly. For commercial it is usually in writing. For power of attorney it is usually by deed.

Question 5

What is agency by implied agreement?

Answer 5

The conduct or relationship of the parties leads to a belief that there is an agency relationship in existence. Could also be the case that you take on a role that automatically gives you agency without the need for express appointment e.g you become a director.

Question 6

What is agency by estoppel?

Answer 6

The principal has done something that leads to the conclusion that this person has the authority to form contracts on their behalf as an agent. E.G person has been an agent, but any third parties are not informed that they no longer are. Where in the past the agent has had more authority than they should have but they cannot be stopped now.

Question 7

What creates agency by estoppel?

Answer 7

The actions of the principal. It must be express or impliedly given to start with to the point where a third party believes that they are an agent. They acted as an agent and the principal never said no, so now they are an agent.

Question 8

What is agency arising from necessity?

Answer 8

Agency by operation of law. Occurs when there is an emergency, the agent cannot communicate with the principal and the agent is acting in good faith in the best interest of their principal. Normally has to be an existing contractual relationship that would lead them to think that they have a right to these decisions.

Question 9

What is agency by ratification?

Answer 9

When the agent isn’t appointed in advance but they begin to act as an agent and the principal then chooses to ratify this.

Question 10

When can ratification occur?

Answer 10

When the principal existed at the time of contracting. When the principal had the legal capacity to have made that contract for themselves. The agent id’ed the principal. The principal knows all the terms of the contract.

Question 11

How does ratification occur?

Answer 11

When the principal agrees the whole contract, in reasonable time, with a clear communication of intention to ratify.

Question 12

What are the duties of the agent?

Answer 12

Act in good faith. Act in accordance with principals wishes. Execute contracts on behalf of the principal.

Question 13

What are the duties of the principal?

Answer 13

To give notice of the termination of a contract. To provide compensation for termination. To furnish the agent with all the relevant information so as to contract adequately on their behalf.

Question 14

What are the duties of an agent at law?

Answer 14

Accountability, Conflicts of Interest, Performance, Obedience, Skill, Personal Performance (do it themselves), Confidentiality

Question 15

What happens when an agent breaches their duty?

Answer 15

The agent is liable to the principal for any losses. The principal may dismiss the agent. The principal may recover any benefit obtained. The principal may be able to avoid the contract completely and walk away.

Question 16

What are the rights of the agent at law?

Answer 16

To indemnity for any expenses accrued during the work as agent. To Remuneration for the services provided. To Lien - to retain any goods that are pending payment for such until payment is made.

Question 17

What is actual express authority?

Answer 17

This is authority that is stated expressly by the principal to the agent. Will likely be found in the written contract. They have the outright power to bind the principal in contracts.

Question 18

What is actual implied authority?

Answer 18

The circumstances of any arrangements have led to the conclusion that there is agency. In particular there has been certain behaviours and past conduct that suggests there is implied authority.

Question 19

Can third parties bind principals?

Answer 19

Yes if they were unaware that the agent was not an agent - hence agency by estoppel. If they have not been made aware of anything on the contrary then they have acted with an agent.

Question 20

What is apparent authority?

Answer 20

It is authority that exists because the conduct of the principal extends it to be the case. A will probably have had some authority to begin with and then P does something that extends it to the point of being a full agent capable of doing more than originally agreed.

Question 21

What does it mean for a principal to be disclosed?

Answer 21

There existence has been made known to the third party.

Question 22

When is the agent liable?

Answer 22

When they have shown the intention to take personal liability. Where they have refused to identify the principal. When they have acted on behalf of someone who isn’t real - there is no one else who could be liable. Where the contract is made under seal.

Question 23

What is an undisclosed principal?

Answer 23

The third party has not been made aware that there was a principal and they believed that they had been contracting with the agent. Allows the third party to pick who they want to contract with when they find out.

Question 24

When CAN’T an undisclosed principal intervene?

Answer 24

When the terms of the contract are not consistent with the existence of the agent. When the identity of the principal or agent is of material importance. The agent didn’t actually have the authority to make the contract.

Question 25

What happens if the agent didn’t have the authority?

Answer 25

There is no contract because they did not have the power to make it in the first place. The principal can ratify if they wish. It does make the agent liable for any losses suffered by the third party.