Agency Flashcards
What is agency?
Agency is the relationship between two parties whereby one, the agent, is considered in law to represent the other, the principal, in dealings with third parties, with a view to forming a contract between the principal and the third party
What legislation is agency regulated under in Scots Law?
Commercial Agents (Council Directive) Regulations 1993
Definition: Principal
The principal (P) is the party which instructs the agent to carry out certain tasks or duties
Definition: Agent
The agent (A) is the person who is authorised to act for another (the principal (P)) in the making of legal relations with third parties (eg to sell the principal’s goods or manage the principal’s business)
Definition: Third Party
The party with whom the agent deals on behalf of the principal
What are the 3 separate relationships in agency?
- principal and agent
- agent and third party
- principal and third party
What are the 2 contracts in agency?
- principal and agent
- principal and third party
What are the 3 types of agents?
General agent - who is engaged to carry out any or all of the business of a principal
Special agent - is authorised to carry out one specific particular transaction or a series of identifiable transactions
Commercial agent - a self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of another person
What are the 5 ways that an agency relationship can be establoshed?
- Express agreement
- Implied agreement
- Holding out
- Necessity
- Ratification
What is an express agreement?
This is where P actually appoints A as his agent. The agreement can be made verbally or in writing, including email and text message – there is no special form or process required
What is an implied agreement?
This is where P has not expressly agreed that A should be his agent. However, the agreement can be implied from the parties’ conduct or relationship.
What is the holding out relationship?
This is where one party holds another out as his agent, and a third party believes that he is acting as an agent. (The third party receives the impression that someone is an agent)
The agent can be deemed to have ostensible / apparent authority
What is the necessity relationship?
Agency can be created in situations of necessity where in an emergency or critical situation an agent carries out essential actions for a principal without having been instructed to do so. The following conditions must be met :
(a) the agent could not obtain the required authority from the principal because communications were impossible (less common now due to mobile phones/email etc but perhaps in cases of civil disturbance or extreme weather or in cases of ill health)
(b) that there was real and definite commercial necessity
There must be an existing contractual agreement between the parties
Springer v Great Western Railway (1921)
Necessity Relationship
Facts: a cargo of tomatoes arrived at Weymouth station. The defendant railway company was contracted by the claimants to deliver the tomatoes to Covent Garden. There was a railway strike and the railway company noticing that the tomatoes were in poor condition, sold them locally.
Held: it would have been possible for the railway company to seek the instructions of the owners of the tomatoes by sending a telegram. They had been contracted to carry, not to sell, the tomatoes. To give them the right to sell, circumstances must exist which put them in the position of agents of necessity for the owners. As the railway company could have communicated with the owners, there was no agency of necessity.
Great Northern Railway v Swaffield (1874)
Necessity Relationship
Facts: there was a contract between the two parties whereby GNR agreed to transport the defendant’s horse to a particular railway station from where it would be collected.
When no one arrived to pick it up, the station master, having tried unsuccessfully to contact the defendant, placed the horse in a stable overnight.
Held: GNR was entitled to recover the costs of stabling because it had become the agent of the defendant by necessity