Agency

Question 1

In legal terms what is an agent?

Answer 1

Agent is authorised by a Principal to bring them into a contractual relationship with a third party.

Question 2

What are the 3 main ways a principal/agent relationship can arise?

Answer 2

• Consent - most common way relationship arises, known as “agency by agreement”, consent can be express or implied
• Necessity - arises where a person is entrusted with someone elses goods and it becomes necessary to act a certain way in order to preserve their property
• Ratification - where an agent acts without authority but the principal accepts the act as been done by the agent on their behalf

Question 3

In most cases an agent represents one party - true or false?

Answer 3

True - independent intermediaries are an exception to this as they may act for both parties

Question 4

When is an agent acting on behalf of the insured?

Answer 4

They give advice on choosing the insurance policy and advise on claims.

Question 5

When is an agent acting on behalf of the insurer?

Answer 5

Insurer authorises intermediary to recieve/handle proposal forms, intermediary surveys a property on the insurers behalf and collects premiums.

Question 6

What are the duties of an agent?

Answer 6

Obedience, personal performance, due care/skills, good faith and accountability.

Question 7

What are the duties of a principal?

Answer 7

Renumeration - pay the agent (normally in the form of comission)

Indemnity - agent has the right to claim indemnity against all expenses when acting on their behalf

Question 8

What is an undisclosed principal?

Answer 8

A person using an agent for negotiations with a TP who has no knowledge of who the principal is.

Question 9

Actual authority can be implied or express, what’s the difference?

Answer 9

Express - authority given verbally/written down to the agent (TOBA)

Implied - agents will also have to undertake certain activities which haven’t been outlined in the TOBA but will be implied (i.e. travel costs met by the principal where the agent has to travel to a certain place to complete obligations)

Question 10

Apparent authority

Answer 10

It’s unlikely a TP will be aware of the extent of the agents authority - this is catered for in law known as “apparent authority”.

Case - Gloystarne & Co V Mr G S Martin

Question 11

Which case summarises apparent authority?

Answer 11

Gloystarne & Co V Mr G S Martin

Question 12

What are 3 reasons why an agency/principal relationship might be terminated?

Answer 12

• Mutual agreement
• Either party withdraws
• Death/bankruptcy of either party