Agency Flashcards
What is agency?
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 is agency regulated by?
The common law and the Commercial Agents Regulations 1993
What is a principal?
The principal is the party which instructs the agent to carry out certain tasks or duties
What is an agent?
The agent is the person who is authorised to act for another in the making of legal regulations with third parties
What is a third party?
The party with whom the agent deals on behalf of the principal
What are the three separate relationships?
Principal and agent, agent and third party, and the principal and third party
What does an agent represent?
The principal, and creates a legal relationship between the principal and a third party
What are the different types of agents?
General, special and commercial agent
What is a general agent?
An agent who is engaged to carry out any or all of the business of a principal
What is a special agent?
An agent who is authorised to carry out one specific particular transaction or a series of identifiable transactions
What is a commercial agent?
A self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of another person
What is an example of agency?
A travel agent is appointed by a holiday company to make bookings with customers
How is an agency relationship established?
Express agreement, implied agreement, holding out, necessity or ratification
What is express agreement?
Where P actually appoints A as his agent (orally or in writing)
What is implied agreement?
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 holding out?
Where one party holds another out as his agent, and a third party believes that he is acting as an agent - an agent can be deemed to have ostensible/apparent authority
What is necessity?
Where in an emergency or critical situation an agent carries out essential actions for a principal without having been instructed to do so
What is ratification?
If an agency relationship does not exist, but one party acts on behalf of another, the latter may subsequently ratify the action with the effect of forming an agency relationship retrospectively
Ratification may be express or implied by the actings of the principal
What does the authority of an agent determine?
The powers that the agent has on behalf of the principal and for which acts the principal is liable
What are the two main categories of authority?
Actual and ostensible
What is the actual authority of the agent made up of?
Express authority and usual or implied authority
What is express actual authority?
The authority that P has explicitly given to A
What is usual or implied actual authority?
An agent has implied authority to do things which are reasonably incidental to the performance of an expressly authorised act, an agent occupying that position would usually have authority to do, and have not been expressly prohibited by the principal
What is apparent/ostensible authority?
Arises where the agent is held out by the principal as having authority
How does apparent or ostensible authority bind the principal?
The principal must have created a particular impression, usually by means of some form of direct representation or allowing a set of circumstances to continue, etc
Can a third party rely on apparent/ostensible authority when he knows of the lack of actual authority?
No
What are the remedies available to the principal if an agent is in breach of their fiduciary duty?
The principal can repudiate the contract with the third party, the agent can be dismissed without notice, the principal can refuse to pay any money owed to the agent or he can recover any money already paid, and the principal can recover any secret profit made or any bribe
What are the agent’s duties/principal’s rights?
To perform instructions, good faith/fiduciary duty, exercise skill and care, and to keep accounts
What are the agent’s rights/principals duties?
To be remunerated and reimbursed, to be relieved of liabilities and to enjoy rights of lien and security
What does a right of lien mean?
It allows the agent to retain possession of the principal’s property that is lawfully in the agent’s possession until any debts due to the agent have been paid by the principal
What does the extent of an agent’s liability to a third party on a contract depend on?
The agent acts as an agent and the agent exceeds his/her authority
What happens if an agent discloses that they are an agent, that there is a principal and identifies the principal?
The principal will be bound into a contract with the third party and the agent will incur no personal liability
What happens if an agent discloses that he is an agent, that there is a principal but fails to name and identify the principal?
If the agent declines to name the principal when asked to do so, then the agent will incur personal liability
What happens if an agent fails to disclose the existence of a principal?
The agent incurs liability to the third party with whom he contracts unless the third party, on learning of the existence of the principal, elects to hold the principal liable
What happens if an agent has no authority or exceeds their authority?
Then the principal may ratify the contract and become liable. However, if the principal does not ratify, then the agent will be liable to the third party for breach of warranty of authority because he warranted or promised that he had authority which he did not possess
What are the different ways of ending an agency relationship?
Termination by the agent or principal, termination under the agency contract or termination by frustration
