Agency

Question 1

What are the 4 ways in which an agency can be created?

Answer 1

• by consent
• by estoppel
• by necessity
• by ratification

Question 2

What are the 2 ways in which an agency can be created by consent?

Answer 2

1) Express agreement - principal actually appoints agent in writing or oral.
2) Implied agreement - agreement implied from parties’ conduct or relationship

Question 3

Describe estoppel using an example

Answer 3

When a director has been agreeing contracts on behalf of a company and the company has always been fine with it. If one of the contracts is then breached, the company is liable even though they didn’t properly express consent.

Question 4

Does there need to be pre-existing agency relationship between the principal and the agent for estoppel to occur?

Answer 4

No

Question 5

What are the requirements to act in necessity?

Answer 5

• emergency situation
• agent cannot contact principal
• agent acting in good faith for best interests of principal
• cannot be a complete stranger

Question 6

Explain ratification

Answer 6

Properly appointed agent exceeds authority or person having no authority acts as an agent, the principal is not liable under that contract unless they ratify it

Question 7

If a contract is ratified…

Answer 7

• principal becomes liable
• principal bound from when contract was made
• agent relieved of liability
• no authority for agent on future acts

Question 8

Principal can only ratify if…

Answer 8

• they exist at time of contract
• principal has legal capacity
• agent identified the principal
• they are made aware of contract terms

Question 9

In order to ratify, the principal must…

Answer 9

• ratify whole contract
• ratify within a reasonable time
• communicate clear intention to ratify

Question 10

What are the duties of an agent? Spacopc

Answer 10

• accountability
• no conflict of interest
• performance
• obedience
• skill
• personal performance
• confidentiality

Question 11

What are the rights of an agent?

Answer 11

• indemnity (repaid expenses)
• remuneration (entitled to a reasonable amount if not specified)
• lien (can withhold assets until payment)

Question 12

What are the 3 types of authority of an agent?

Answer 12

• actual express
• actual implied
• ostensible/apparent

Question 13

Actual express authority

Answer 13

Principal clearly states their authority

Question 14

Actual implied authority

Answer 14

Implied by customary behaviour os past conduct, e.g. partner acting on behalf of partnership

Question 15

Ostensible authority

Answer 15

Similar to estoppel. Not actual authority.

Question 16

Liability

Answer 16

• principal is liable unless clearly stated otherwise by parties
• agent liable unless third party become aware of principal, then third party can sue either