AGENCY

Question 1

Agency law

Answer 1

(Agent) One party acts on behalf of another (principle).

Co directors who act on behalf of the company.

Question 2

Creation of agency - agency by consent

Answer 2

Express or implied

Orally or written (unless for a deed then must be written)

Question 3

Creation of agency - agency by estoppel (prevented from denying)

Answer 3

1. Words or conduct of PRINCIPLE given to third parties give the impression that the person who guides the contract is the agent.
2. Third party acts soon the above

Estoppel is still valid if agency is no longer but the third party HAVE NOT been informed - stops the principle from denying the existence of the agency (estoppel)

Question 4

Creation of agency - agency of necessity

Answer 4

Things of another person is in jeopardy, in order to preserve these items it becomes necessary to act without authority.

To bind a principle to this:

• No practical way of contacting the principle to get instructions
• Pressing need for action e.g. animals or perishable goods
• Good faith for interests of principle
• Action was reasonable and prudent
• Must be some prior contract

Question 5

Creation of agency - agency by ratification (retrospective)

Answer 5

Validates past acts of an agent.

Ratification of part of contract acts of all of contract

Principle must communicate intentions of ratifying e.g. refusing to return goods purchased by an agent (not doing nothing)

Only if:
- Principle exists at time of act

• Principle had legal capacity to make contract themselves at time of act AND ratification
• Agent must identify principle when making contract
• Ratification takes place in reasonable time

Question 6

Duties of an agent

Answer 6

1. Accountability - provide full info to principle e.g. bribes / inducement
2. No conflict of interest - owes a principle duty not to have his own interests clash with a principle
3. Performance - contractual obligation to perform task, needs consideration to be bound, agent may refuse to perform illegal act.
4. Obedience - strict in accordance with principles instructions (as long as lawful/ reasonable).
5. Skill and care - duty to maintain skill and care
6. Personal performance - must no delegate, however e.g. solicitor may be obliged to instruct a stock broker to buy or sell.
7. Confidence - confidentially even when relationship is over.

Question 7

Rights of an agent

Answer 7

Indemnity - repaid expenses, principle compensate for losses (if acts done in limits of authority) e.g. even expenses that agent did not legally obliged to pay.

Lien - retain assets until payments made by principal.

Question 8

Authority of agent

Answer 8

Actual express - clearly stated in contract e.g asking agent to buy 20 items for £5k

Actual implied - formal appointment - do all things usual in employment or office e.g partner having implied authority to buy goods

Ostensible authority - informal appointment - authority created by principal expressly or inaction e.g. company allows a director to act as MD even if not formally appointed.

Question 9

Liability of the parties

Answer 9

Agent had authority and was know to be agent:

• Third party may sue & be sued by principle
• Principle may sure & be sued
• Usally no liability for agent

Agent had authority but not know to be the agent:

• third party can choose to sue agent or principle
• principle or agent may sue on contract (agents rights are less)

Agent had no authority:

• Third party can sue agent
• Principle can’t sue
• Agent may be liable to ‘tort of deceit’ or ‘breach of warranty of authority’