Agency Flashcards
Who are the three main parties in agency?
(i) Principal
(ii) Agent
(iii) Third Party
Who is the usual legal relationship between in agency?
The Principal and the Third Party.
Distinguish between a general agent and a special agent.
A general agent carries out ALL the business of a principal
A special agent is ONLY authorised to carry out a particular matter for the principal.
Who must have necessary capacity to create an agency relationship?
The principal.
Can a principal employee and agent with say more capacity than himself to enter into voluntary obligations?
No, a principal by employing an agent CANNOT increase his personal capacity.
Discuss the facts of the case Tinnevelley Sugar Refining Co Ltd. v Mirlees, Watson and Yaryan Co Ltd (1894)
- An agent for the company (pursuer) entered in to a contract with the defener for the supply of certain pieces of machinery
- The machinery was defective and caused a great loss to the company
- The company raised an action for damages against the defender.
HELD - The company had not set forth title to sue. There was no principal in existence and an agent can not act as an agent before it was in existence.
Name the different ways one can become an agent.
(a) By express appointment
(b) By implied appointment
(c) By holding out
(d) By ratification
(e) Agency of necessity (negotiorum gesto)
How may an agent be appointed expressly?
Either in writing or orally as establshed in the case of Robert Barry and Co. v Doyle 1998
How may one become an agent ‘impliedly’?
(a) By the action of the parties - e.g. being in a certain position such as a hotel manager or a shop assistant carries with it being an agent
(b) By implication of law - set out in s5 of the partnership act 1890.
Name the case and type of agency relationship:
- Hotel manager locked guest in a room for 15 minutes and forced her to apologise to another guest
Mackenzie v Cluny Hill Hydropathic Co 1908
– This was held to be an implied agency relationship between the hotel manager and Cluny hill.
How did Panaroma Developments Ltd v Fidelis Furnishings Ltd 1971 show implied authority.
As a company secretary was hiring cars in the company name for personal use.
The secretary was working in the scope of her employment and was an agent of the company which gave her implied authority to hire cars.
How does ‘holding out’ work in creating an agent?
- This is where a person does not have authority to act in reality but the law will intervene and say that you are being treated like you were an agent because you were held out as such.
In the case of Freeman and Lockyer v Buckhurst Park Properties (mangal) Ltd. (1964), what happened?
- Freeman and Lockyer sued Buckhurst Park and its director for unpaid fees of architectural work carried out.
- The company’s (defender) articles stated that ALL 4 directors were needed to constitute a quoram
- Kapoor (one of the directors) had acted alone, as if he were managing director, and engaged the architects without proper authority.
- The company argued they were not bound for this reason
HELD - the company were liable to Freeman as even though he did not actually have authority to act on this matter, he had perviously entered in to similar contracts and was thus held out as having authority in this instance.
In the case of International Sponge Importers Ltd. v Andrew Watt and sons [1911], why could ISI NOT claim missing payments from customers?
The Court of Session and HOL both held that the customers who paid the agent personally COULD NOT be liable as they were entitled to conclude from previous dealings that the agent DID have authority to accept payments personally.
For an agent to be created by ratification, what are the 4 requirments that must be met?
(i) the agent MUST HAVE purported to act as an agent for an identifiable principal
(ii) The principal MUST be aware of ALL material facts
(iii) The principal MUST have been a competent principal at the time of the agent’s action.
(iv) Ratification MUST take place in time fixed by the parties, or if no time is fixed then within reasonable time.
What type of agency does ‘Keighley Maxstead and Co v Durrant 1901’ relate to, and what are the key facts of this case?
Relates to ratification and in particular where an agent must have purported to act for an IDENTIFIABLE principal
- K and Co authorised Roberts (agent) to buy wheat on a joint acount on behalf of them and himself
- Roberts, on his on behalf and without authorisation from the principal bought wheat at a higher price than authorised from Durant (third party)
- The agent did not disclose that he was also acting on behalf of K and Co.
- K and Co agreed to pay the higher price for the wheat but then failed to do so
- Durant had to sell the wheat for a cheaper price to another buyer and sued the agent for loss.
HELD - the agent was liable NOT the principal. A contract cannot be ratified by a principal where the agent acted without authority and did not disclose to the third party at the time of contracting that he was working on behalf of another.
Why was ratification not possible in the case of ‘Tinnevelley Sugar Refining Co Ltd. v Mirlees, Watson and Yaryan Co Ltd (1894)’?
One of the requirements of ratification of an agent is that the principal must be a competent principal at the time of the agent’s action.
- In this case there was no principal in existence at the time of the “agents action” and an agent can not act as an agent before it was in existence.
Why was ratification not possible in ‘Goodall v Blisland 1909’
As ratification did not take place within a time period.
- In this case a solicitor had authority to lodge objectionss at a licensing board, however, he had no authority to lodge appeals.
- The solicitor lodged an appeal without authority, and proceeded to have it ratified by the principal.
HELD - the lodging of the appeal could not be ratified as it was after the expiry of the appeal period.
When may agency of necessity (negotiorum gesto) arise?
Where a person feels compelled to act on behalf of others as a result of some emergency, and as a result, it is not possible for them to have been appointed by the principal for whom they are acting.
Describe the contrasting cases of ‘Great Northern Railway v Swaffield (1874) AND ‘Springer v Great Western [1921].
GREAT NORTHERN CASE:
- Plaintiff railway company transported a horse to a station on behalf of the defendant
- The horse arrived with no one there to collect it and thus the plaintiff sent it to a stable
- Months later the plaintiff paid stabling charges, then proceeded to recover the costs from the defendant.
HELD - plaintiffs claim succeeded, there was an agency of necessity here because the plaintiff was found to have no choice but to arrange for proper care of the horse.
GREAT WESTERN CASE:
- Great Western (Defenfant) agreed to carry plaintiff’s tomatoes from the Channel Islands to London, by ship then train
- Ship stopped for 3 days due to bad weather, eventually arrived then was delayed another 2 days due to the defendant’s employees being on strike
- Defendant, at the time, found tomatoes to be going bad so decided to sell them as they would be off by the time they arrived
-Plaintiff sued for damages
HELD - plaintiff awarded damages as the defendant could and should have contacted the plaintiff upon the ships arrival for instructions. Therefore, there was no agency of necessity.
What is actual authority?
This is where an agent is acting WITH authority either expressly given or impliedly.
How did Lord Denning define express authority in Hely-Hutchinson v Brayhead Ltd 1967?
“authority given by express words, such as when a board of directors pass a resolution which authorises two of theinr number to sign cheques.”
If an agent has express authority, and exceeds that authority will the principal be liable?
No, not unless it can be established that there is implied or actual authority.
What is implied authority?
Where an agent does not have express authority he may have implied authority, or implied authority may operate alongside express authority.
How is the scope of implied authority determined?
It depends on the type of agent:
- For special agents the scope is limited as they have been given specific instructions by the principal - therefore the principal would only be bound here if the agent acts within his actual authority.
- General agents will have a broader scope of implied authority
What scope of authority was there in ‘Morrison v Statter (1885)’?
This case concerned the duties of a head sheppard.
- Duties included overseeing workers and ON OCCASION purchasing sheep for the principal to very specific instruction
- the agent was instructed to buy sheep of a specific kind and for a specific price, he did not
HELD - he had not bound the principal as he was a special agent with special instructions and thus had acted outwith his scope of authority.
What did Lord Young state in the ‘Morrison v Statter (1885) case?
That where an agent employed by a principal to perfrom a specific piece of business for him, he must do so within the instructions given on that occasion AND if the agent does otherwise the principal will not be bound.
What type of agent and what scope of authority was present in ‘Mackenzie v Cluny Hill Hydro 1908?
- Manager of a hotel barricaded a guest in a room for 15 mins and forced her to apologise to another guest following a dispute.
- He was a GENERAL AGENT acting with IMPLIED AUTHORITY in that he has authority to deal with guest disputes in his role as hotel manager
Although his behaviour may not be tolerated by the principal he was acting within his employment with implied authority and thus the principal would be liable.
