Agency

Question 1

What is an Agent?

Answer 1

the three-way relationship between a principal, an agent and a third party (parties).

Question 2

Who is an Agent?

Answer 2

The person who has authority to act for and on behalf of another, the principal, in contracting legal relations with another, third party, can create, alter or discharge legal obligations of a contractual nature between principal and third party.

Question 3

Who is the Principal?

Answer 3

the person on whose behalf the transaction is made.

Question 4

Who is the third party?

Answer 4

the person with whom the transaction is made to.

Question 5

who is the agent?

Answer 5

the person who carries on the transaction.

Question 6

What are the categories of Agents?

Answer 6

• General & Special Agent
• Mercantile Agent
• Del Credere Agent
• Commercial Agent

Question 7

What must a principal have to enter into a contractual relationship?

Answer 7

must have sufficient legal capacity, if the contract between the principal and third party is to be valid; the contract could be void or voidable.

Question 8

What is capacity the matter of?

Answer 8

• age of legal capacity (Scotland) Act 1991
• mental capacity Act 2005

Question 9

What did s.39 of the Companies Act 2006 state about the Principal’s capacity - Juristic Person?

Answer 9

validity of an act done by a company shall not be called into question on the ground of lack of capacity by the reasoning of anything in the company’s constitution.

Question 10

Agents Capacity

Answer 10

agent who lacks the capacity to enter into a contract on his behalf may yet be able to enter into a contract on behalf of the principal who has the necessary capacity.

Question 11

Are formalities required for agency agreements?

Answer 11

No, could be made orally or written or executing a deed.

Question 12

express authority

Answer 12

derived from the express agreement, written or verbally arranged except in a commercial agent appointment.

Question 13

implied authority

Answer 13

derived from agency agreement, verbally or conduct of the principal or agent. Could be incidental, customary or usual.

Question 14

when does apparent or ostensible authority arise?

Answer 14

where the agent was previously authorised but the agents authority has been limited or terminated, but a third party is unaware and deals with the agent as though he still has the authority.

Question 15

What is Ratification?

Answer 15

unilateral act on the part of the principal can be expressed or implied from the principal’s conduct. Seeks to mend an agent’s lack of authority to act on behalf of the principal with a third party.

Question 16

What is a necessity?

Answer 16

arises where there is an urgent need for action to protect the interest of another from an irreparable outcome.

Question 17

what are the elements of the apparent or ostensible authority include?

Answer 17

• The principal should give the impression that there is actual authority through words or conduct.
• Must be a casual link between the action or inaction of the principal and the belief of the third party.
• Third-party must have relied on the representation and must have suffered loss as a result of that reliance.

Question 18

What are the key requirements for ratification?

Answer 18

• Principal in existence
• Principal must have legal capacity
• Agent must enter the transaction as an agent
• Time limit
• Contract must not be void or illegal
• Principal must make an informed choice

Question 19

Agency by operation of Law

Answer 19

parties to an agency arrangement did not intend for an agency relationship to arise, but this is deemed irrelevant where the operation of law imposes such a relationship and the consent of the parties is bestowed by law.

Question 20

what are the four necessary requirements for Necessity?

Answer 20

• actions must be necessary
• a communication impossibility
• actions were reasonable, prudent and in good faith
• principal was competent at the time of the agents act

Question 21

Partners in a partnership statutes?

Answer 21

Partnership Act 1890 s.5
Limited Liability Partnership Act 2000 s6(1)

Question 22

Directors of a company

Answer 22

Companies Act s.172

Question 23

the administrator and receiver of a company

Answer 23

Insolvency Act 1986 sch B1 para 69 s.57(1)

Question 24

Negotiator in a consumer credit agreement

Answer 24

Consumer credit Act 1974 s.56(2)

Question 25

what are the agents duties?

Answer 25

• follow instructions
• skill and care
• keep accounts
• not to take secret profits
• not to transact between principal and agent
• fully disclose to the principal
• not to disclose confidential information
• not to delegate
• relieve the principal from his liability where agent has acted in excess of authority

Question 26

what are the agents rights?

Answer 26

• right to remuneration and commission at common law, under the commercial agents (council directive) regulations 1993
• right to reimbursement relief and lien

Question 27

what are the principal’s duties?

Answer 27

• general duty to act in good faith
  commercial agent (council directive) regulation 1993;
• provide commercial agent with the necessary documentation and obtain relevant information needed for the performance of the agent’s activities
• inform commercial agents on time once he suspects that the transaction volume promised to the agent would be considerably lower.
• advise the commercial agent once he has turned down or failed to execute any transaction which had been procured by the agent.