AGENCY Flashcards

Question

What is the suggested middle ground re: ratification?

Answer 1

Principal would have to ratify within a particular amount of time - not to allow the defendant (third party) to withdraw and snatch, but also not be left in limbo waiting for ratification.

Answer 2

Gray v Baird Logistics (UK) Ltd - court follows Bolton. - Cannot withdraw from invalid contract if there is subsequent ratification.

Answer 3

Smith v Henniker-Major & Co - Company has a claim, director tries to assign that to himself - Calls a board meeting - but he is the only director who attends. He resolves on behalf of the company to assign this claim to himself. He believes this has been validly done. - 1999: issues proceedings in relation to this claim. - Defendant argues it is ineffective according to the company’s constitution - not appropriate for a sole director to assign a claim as an agent acting outwith his authority. - 2001: plaintiff is sole director, and he purports to ratify the earlier assignment. Held: ratification ineffective. One factor - serious allegations had been made against the defendants, would cause prejudice to them to deal with this problem. Had been significant delay. Unfair to rely on 2001 ratification for an assignment 3 years earlier.

Answer 4

Gray v Baird Logistics (UK) Ltd - Invalidly dismissed a director - outwith authority - Director then resigns - Board purports to ratify earlier invalidly dismissal Held: Although follows Bolton in principle - states in this instance would be unfairly prejudicial to third party to ratify backwards.

Answer 5

If Principal does not ratify.. Agent does not possess authority but he negotiates a contract on behalf of principal and third party -therefore if principal does not ratify - the third party has a claim against the agent for breach of warranty of authority. If A acts without authority, and it transpires that the third party does not have the contract that he thought he had, that third party has an action against A (breach of warranty of authority). Damages are available.

Answer 6

General rule: 3rd party does not have a contract with P P is protected. 3rd party can sue A for damages if they think they have a contract with P.

Answer 7

Frank Houlgate Investment Company v Biggart Baillie LLP - Investment company(F) introduced to C through reputable source. C convinces them to lend him 100k as initial investment. Asks for more, offers up property as security. BB works for C. Security granted. - Turns out that C is not owner, BB realise their client does not own the property, but they say nothing to the investment company (F). - F then give C more money. All goes wrong. - F claim that BBB acted on behalf of true owner of the property. Held: any warranty given by BB was only with regards their authority to act for C - no one else. Did not warrant he owned anything, just that they were in capacity to represent the client.

Answer 8

*Cheshire Mortgage Corporation Limited v Grandison; Blemain Finance Limited v Balfour + Manson LLP (joined cases) - Two identical cases - joined pursuers related to companies who provided security loans - fraudulent - did not own property - Both instruct their own solicitors - Fraudsters disappear - Claim defendants had breached warranty of authority Held: by the time the solicitors were involved the pursuers thought they knew who they were dealing with. Instructed by borrowers to draw up loan. IH affirmed OH.

Answer 9

The contract between the Principal and the 3rd Party

Answer 10

A contract is created between P and 3rd party through the medium A. A is not a party to this contract, and should not incur any liabilities to the 3rd party However, this general principle must be considered in the light of the presumption that the party signing a written contract is bound by that contract.

Answer 11

Yes Stewart v Shannessy - Shannessy employed Stewart as a representative for 2 companies that Shannessy himself was an agent for. - Shannessy writes to Stewart to confirm arrangement - on headed paper of one of the companies Shannessy was acting as agent for, but signs off using his own name. - Stewart later raises an action against Shannessy for payment for work carried out. - Shannessy claims he is just an agent, and the company is principal. IH: Shannessy was personally liable to Stewart because the letter was signed off in his own name with no indication he did not want to bind himself as Principal for that contract. Presumption where if you sign a document you are bound by it. ⁃ Thus the agent must make it clear they are acting on behalf of the client and not to bind themselves.

Answer 12

Digby Brown & Co v Lyall - Digby Brown signed ‘on behalf of our client’ - therefore making it clear they did not intend to be bound. - the commitment was on behalf of Principal as an Agent and they were the contracting parties.

Answer 13

Brebner v Henderson - Two signatories: director and secretary Held: titles of director and secretary did not prove that the document was signed on behalf of the company.

Answer 14

1. Agent acts for a disclosed and named principal. 2. Agent acts for a disclosed but unnamed principal. 3. Agent acts for an undisclosed principal 4. Agent acts on behalf of a non-existent principal

Answer 15

This occurs when it is unclear who the agent is acting for - the principal has not been identified.

Answer 16

The authority we do have points towards it being dependent upon whose credit (i.e. financial reputation) the third party relied upon when he entered into the contract: did the third party look to the credit of the agent, or to the credit of an unknown principal? Whose financial status was he looking at when entering into contract? This could be indicative of who the parties to the contract are.

Answer 17

1. Whose credit do they look to? - Lamont, Nisbet & Co v Hamilton: If the third party was relying on the agent's financial reputation then it is probable that a contract is formed between the third party and the agent. But if the third party is relying on the financial reputation of the unknown principal then it is likely that the contract is formed between the third party and the unknown principal. 2. Who is it the third party has elected to sue? - Ferrier v Dods: F not entitled to sue both agent and principal. On the basis he took the horse back to the owner, it was implied he was electing to sue the principal.

Answer 18

The agent may act on behalf of a principal, but this fact may be entirely concealed from the third party. From the third party’s perspective, the ‘agent’ appears to be a principal. A contract is then formed, and the third party considers that his or her contracting party is the agent. The real principal may, at a later stage, disclose his or her existence. Following disclosure, the principal may choose to sue the third party under the contract formed by the agent. The third party may also (once aware of the principal’s existence) choose to sue either the principal or the agent.

Answer 19

Rolls Royce Power Engineering plc v Ricardo Consulting Engineers Ltd - RR have a subsidiary called Alan, who enters into a contract with Ricardo. - RR argue that Alan was entering into this contract as their agent, and RR could sue on the contract as third party. Held: contract not ordinary contract - nature of the services to be provided by Ricardo, including employees of Ricardo’s and Alan’s working together for a common objective. If the person is of great importance to the contract - the normal rule that the undisclosed principal can reveal and sue is set aside.

Answer 20

1. following normal rules of interpretation of the contract, the terms indicate, either expressly or by implication, that there is no concealed principal; 2. if delectus personae is present; 3. Possibly also if concealment of the principal was intended as a deception of the third party

Answer 21

Dyster v Randall & Sons - P gets friend A to contract with 3rd party to buy land. - P does not want to disclose to 3rd party that he is Principal since if they knew would not agree - 3rd party complains that there has been a breach of stipulations. - 3rd party, at the request of A without authority of P (undisclosed principal), wants to cancel contract and A agrees and purports to cancel contract. - but A is acting without Principal’s authority. Held: mere undisclosure of the person who would benefit from the contract is no defence. It’s only if the qualities of who you are contracting with is fundamental to you contracting mean P can avoid liability.

Answer 22

Said v Butt - theatre critic asks friend to buy a ticket as agent. - Refused entry - Claims damages for breach of contract - as undisclosed principal - Action fails Held: Non-disclosure of the fact the ticket was bought for Said prevented it from being formed. Identity of ticket holder was fundamental for creation of this contract. Identity of party key. (mistaken contract formation?) contrast with Dylan

Answer 23

Third party can elect whether to sue the Agent or the Principal. Once made an election is final.

Answer 24

liability between the agent and principal is alternative must pick one to sue.

Answer 25

Certain older cases suggested that where an agent acts for a non-existent principal, that agent may become personally bound in a contract with a third party. In these cases the principals were unincorporated associations, and thus lacked contractual capacity. Arguably therefore the parties intended the agent to be personally bound, knowing that the principal could not be bound. Meekin v Easton (1889) - TP sues individuals who signed promissory note Held: those individuals were personally liable. Because church was not a legal person - did not have capacity to contract.

Answer 26

Halifax v DLA Piper LLP - solicitor acting on behalf of a non-existent client (a consortium which was never formed) was not personally liable given that none of the parties intended that the solicitor be personally bound. If it was never in the contemplation that the agent would be personally liable, then they will not be personally liable.

Answer 27

Imageview Management Ltd v Jack [2009] - Jack is from trinidad and tobago, wants to come to UK to play profesh football. - Enters into agreement with football agent. J agreed to pay a 10%of his income if he gets signed. Agent gets him a job with Dundee. - Agent agrees separately with club that the club will pay agent 3k if he gets J a work permit to play. This is not disclosed to Jack. - When Jack finds out a year later, he stops paying commission. - Agent raises an action for commission. Held: although it is possible for Agent to enter into another deal, this second one was collateral and he only got it in his position as Agent for Jack and getting him signed to the club. Therefore, Agent was not entitled to commission. Jack was entitled to be paid the entire 3k of ‘secret profit’ without the Agent receiving anything.

Answer 28

1. account to the principal for any benefits received from third parties, in whatever form they are received, Neilson v Skinner & Co (1890) 17 R 1243 2. not disclose any information which is confidential to the principal, Liverpool Victoria Friendly Society v Houston (1900) 3 F 42 3. not enter into any transactions which would place him or her in a position of conflict of interest vis-à-vis the principal. Transactions between agent and principal will be scrutinised carefully and may be void, see the highly significant case, * McPherson’s Trustees v Watt 4. not accept any secret commission or bribes, see: Imageview Management Ltd v Jack [2009] 1 Lloyd’s Rep 436, FHR European Ventures LLP & Ors v Mankarious & Ors [2013] EWCA Civ 17; [2014] Ch 1; [2014] UKSC 45; [2015] AC 250.

Answer 29

*McPherson’s Trustees v Watt (1877) 5 R (HL) 9. - Agent acts in sale of houses from trustees to brother. - Trustees seek reduction of transaction b/c Agent was both brother's agent and also the trustee’s agent - potential conflict. He was also buying some of the houses for himself - also had an interest in the transaction. Held: 'Agent' held as buyer even though brother was - because of conflict of interest. Transactions between agent and principal will be scrutinised carefully and may be void, see the highly significant case

Answer 30

Rosetti and Anor v Diamond Sofa Co Ltd [2012] - Agent for sofa company, at time of contracting he tells them he works for 2 other furniture manufacturers but their ranges do not conflict. - Later on, Diamond become aware that the Agent is working for 2 other sofa manufacturers. They did not object as they understood that the ranges did not conflict. - CoA: general position: agent has a fiduciary duty to principal (act body and soul) so as not to act for the benefit of the third party competitor without permission of the Principal. Therefore Agent cannot work for any other manufacturers, except those 2 the Agent told Diamond about at contract. Diamond not reacting to the later 2 manufacturers and not acting, was Not enough to be consent. Agent must establish that the Principal gave informed consent.

Answer 31

where the Agent’s business is such they will be acting for numerous Principal’s e.g. estate agents and the Principal would know this as it is so obvious. Agent in position of trust, so if you breach it you must pay benefits of breach - not just damages.

Answer 32

*Parks of Hamilton Holdings Ltd v Colin Campbell [2014] Agent must fully indulge information - just giving half the fact is not consent.

Answer 33

1. Fiduciary duty 2. Good faith 3. to follow instructions 4. skill and care 5. keep accounts 6. not to delegate 7. right of relief

Answer 34

both: - common law and - Commercial Agents Regulations, reg 3(2)(c)

Answer 35

The agent must perform the agency contract using the skill and care reasonably expected from a reasonably competent and careful member of the particular profession.

Answer 36

Yes - very rare in modern context though.

Answer 37

Delegation may be permissible according to the custom of a trade - what normally happens in that particular sector

Answer 38

Where the agent has entered into a contract in excess of his or her authority and this leads to a loss on the part of the principal, the principal may recover that loss from the agent.

Answer 39

Milne v Ritchie (1882) | - Price paid for house was higher than Principal was prepared to pay, Agent had to make up the difference.

Answer 40

1. P's Duty of Good Faith 2. P's duty to continue business 3. A's right to remuneration (common law + regs) 4. A's right to commission (common law + regs) 5. A's right to reimbursement

Answer 41

Kennedy v Glass (1890) HELD: agent entitled to be paid remuneration, may be for commission - if it is not expressed they may be entitled to be paid a reasonable sum for services rendered.

Answer 42

commercial agent is entitled to ‘the remuneration that commercial agents appointed for the goods forming the subject of his agency contract are customarily allowed in the place where he carries on his activities, and, if there is no such customary practice, a commercial agent shall be entitled to reasonable remuneration taking into account all the aspects of the transaction’, see reg 6(1).

Answer 43

Walker, Fraser & Steele v Fraser’s - The agent is entitled to commission where the contract was ‘brought about, or materially contributed to’ by his or her actings.

Answer 44

Depending on the terms of the agency contract, the principal MAY be under a duty to continue his or her business to secure the agent’s remuneration.

Answer 45

The agent has a right to reimbursement of his or her expenses, and relief of his or her liabilities whilst carrying out contract, and may exercise a lien to secure payment.

Answer 46

When an agent contracts on behalf of a principal, he or she will not normally guarantee that the third party will properly perform the contract with the principal. The agent may, however, grant such a guarantee, in which case the agent is said to act del credere. This is no longer common, and may have been superseded by other commercial practices, such as the use of documentary credits.

Answer 47

Termination of Contract: 1. completion of the transaction; 2. mutual agreement; 3. death, bankruptcy or mental incapacity of the principal or the agent; 4. material breach by the agent; 5. principal ceasing to carry on business.

Answer 48

1st January 1994 Apply to agreements in existence on that date.

Answer 49

- ‘A self-employed intermediary who has - continuing authority to negotiate the sale or purchase of goods - on behalf of another person (the principal) or to negotiate and conclude the sale or purchase of goods on behalf of and in the name of the principal.

Answer 50

Reg definition of 'negotiate' don’t require a process of bargaining, but it does require more than self-service at petrol pump: Parks v Esso Petroleum Company Ltd [1999] - Parks (agent) runs service station for Esso. - Parks is entitled to commission for amount of petrol sold. - Agency agreement terminated, parks claims he has rights under the regulations. - Court must consider - does he fit within this definition? Held: parks did not have authority to negotiate and conclude the sale of goods and purchase on behalf of esso. He was an agent, but not a *commercial* agent in terms of the regulations.

Answer 51

P J Pipe and Valve Co v Audco India Ltd [2005] - Held as a commercial agent even though he was not empowered to agree with third party on terms or pricing. - Agent did affect crucial introductions between principal and third party, and paid a crucial role in third party interest in the principal's products.

Answer 52

YES Light & ors v Ty Europe Ltd, If agent appoints agent to do something, there is no relationship between principal and the sub-agent. Regs do not apply.

Answer 53

1. Did it take place in UK? (Did she take economic risk?) 2. Did self-employed agent have continuing authority to negotiate and conclude purchase of goods in name of the principal.? 3. Is there a direct contractual relationship (sub-agent has no claim in principal)?

Answer 54

NO Ingmar GB Ltd v Eaton Leonard Inc [2001] - A principal established outside EU, with an agent in the EU, cannot contract out. Regulations will apply in relation to any agent within the UK, or in EU.

Answer 55

1. Indemnity and compensation rights - Parties can stipulate indemnity or compensation in the contract - if contract is silent then compensation applies (must specify if you want indemnity)

Answer 56

Compensation

Answer 57

See regulation 17(3). The provisions seek to ensure that the commercial agent obtains the benefit of his or her work which would otherwise accrue to the principal on termination of the agency contract. Payment is subject to a maximum of one year’s commission (reg 17(4)). So: Indemnity is at termination If an to the extent they’ve brought new customers or significantly increased work. And the principal continues to derive benefit of that work. And the agent has lost commission as a result of termination Max one year’s commission

Answer 58

The commercial agent is entitled to compensation for the damage which he suffers as a result of the termination of his relations with the principal. Reg 17(7) provides two non-exclusive examples of when such damage is deemed to occur. - See reg 17(6) to 17(7).

Answer 59

* King v Tunnock Ltd 2000 - This case suggests that a benchmark of two year’s gross commission may be used as a guide for the courts to calculation of compensation. - This benchmark is not found within the Regulations, but is adopted from French law, on which the compensation provisions in the original directive were loosely based. Case criticised in many subsequent cases

Answer 60

*Lonsdale v Howard & Hallam [2006] HoL: compensation is payable under the regs, calculated in ref to value of agency on the assumption the relationship had continued. So what is that relationship worth?