Agency

Question 1

Agency Law

Answer 1

Describes the relationship which exists where one party, the agent, acts on behalf of another, the principal.

Question 2

What are the 3 Parties involved in an agency relationship?

Answer 2

• The principal- is the individual who wants a task performed, and engages someone else to do it on their behalf.
• The Agent - The agent is the individual the principal engages to do something on their behalf.
• Third party - The third party is the person the agent contracts with on behalf of the principal.

If the agent is acting within their authority the contract is binding between the principal and the third party.

Question 3

Agency by consent

Answer 3

An agency agreement can be created by Consent may be express or implied

this can be expressed or implied by the actions of the principal and the agent. It can be created orally or formally in writing. An agency must be created by deed (giving the agent power of attorney) if the agent is to execute deeds on the principal’s behalf.

Question 4

Express Agreement

Answer 4

Principle specifically appoints the agent and acts on behalf of the principle

Question 5

Implied agreement

Answer 5

this arises when an agency relationship is created due to the relationship between the parties.

Question 6

Agency by estoppel

Answer 6

• The principle implied there is an agency relationship and fails to notify 3rd parties
• The principle allows his or her agent to appear to have more authority than he or she actually has

Question 7

Agency of necessity

Answer 7

Arises where a person is faced with an emergency and not possible for the agent to communicate with the principle
- Agent is acting in good faith in the best interests of the principle

Question 8

Agency by ratification

Answer 8

Ratification validates past acts of the agent to create an agency relationship, as if the agency were authorised to act from the beginning
(third party needs to be aware of this)

Question 9

Duties of an agent - Accountability

Answer 9

An agent must provide full information to the principal of his agency transactions and account to him for all the monies arising from them e.g bribes

Question 10

Duties of an agent - No conflict of interest

Answer 10

The agent has an obligation to avoid situations where their own personal interests conflict with those of the principal.

Question 11

Duties of an agent - Performance

Answer 11

the agent should properly perform the task he or she has been engaged to do and is justified in refusing to perform an illegal act

Question 12

Duties of an agent - Obedience

Answer 12

the agent should obey the principles legal and reasonable orders

Question 13

Duties of an agent - Skill

Answer 13

An agent must maintain and deploy the standards of skill and care to be expected of a person in their profession.

Question 14

Duties of an agent - Personal performance

Answer 14

the agent should do the work by themselves

Question 15

Duties of an agent - Confidentiality

Answer 15

The agent should keep confidential what he or she knows about the principle’s affairs event after the agency relationship has finished

Question 16

what are the effects of a breach of duty by an agent?

Answer 16

• a breach of agency agreement and agent is liable to the principle for any loss
• serious breach the principle may dismiss the agent and refuse to pay him or her any commission
• the principle may recover any benefit obtained or profit made by agent
• where a third party is fraudulently party to the breach the principle may avoid the contract

Question 17

Rights of an agent - Indemnity

Answer 17

The agent is entitled to be repaid his expenses, provided his acts are done properly within the limits of his authority

Question 18

Rights of an agent - Remuneration

Answer 18

The principal must pay the agent the agreed remuneration for the tasks performed.

Remuneration can be expressly agreed, or can be inferred from the normal trade or professional practice. If no amount of remuneration has been specified, the agent is entitled to a reasonable amount.

Question 19

Rights of an agent - Lien

Answer 19

If the principal owes money to the agent, the agent is able to retain and hold the principal’s goods until such time as the debt is paid. This is called a ‘lien’.

Question 20

Authority of the agent - Actual express authority

Answer 20

Expressly given by the principal in respect of a particular contract

Question 21

Authority of the agent - Actual implied authority

Answer 21

-Authority to do all things usual or incidental to an express authority, employment or office
- Created due to relationship between agent and principle

Question 22

Authority of an agent - Ostensible authority

Answer 22

• Authority is created by the principal either expressly or inaction
• Is often wider than actual authority

Question 23

Liability of the parties - Agent has authority and was known to be an agent
(Disclosed principle)

Answer 23

• Third Party: May sue and be sue by the principal
• Principal: May sue and be sued
• Agent: Usually none

Question 24

Liability of the parties - Agent had authority but is not known to be an agent
(undisclosed principle)

Answer 24

This means the third party does not believe they are contracting with someone else, they believe they are contracting with the agent on their own behalf.

The third party can sue the agent, or if they later discover the existence of the principal they may elect to sue them instead.

Question 25

Liability of the parties - Agent had no authority

Answer 25

• Third Party: No rights against principal but may have claim against the agent
• Principal: No obligations
• Agent: Potential liability under the tort of deceit breach of warranty of authority

Question 26

situations will an agent be liable on a contract?

Answer 26

• Where it is usual business practice for the agent to be liable
• Where the agent acts on their own behalf even though they purport to be acting for the principal

Question 27

4 ways in which an agency can rise

Answer 27

• Agent by consent
• Agency by estoppel
• Agency of necessity
• Ratification

Question 28

Ostensible authority

Answer 28

the authority that the principle represents to other persons they have given to the agent