Agency Case Law Flashcards
Case Law
Authority of an agent- Ostensible (apparent) authority
Freeman & Lockyer V Buckhurst Park Properties (Mangal) Ltd
Case: The Board of directors allowed one of its members to act as the managing director without him being formally appointed. The director entered into various contracts with third parties on the company’s behalf. On one occasion, this director appointed a firm of architects and the architects asked to be paid by the company.
Held: The director did not have actual authority to act on the company’s behalf when he entered the contracts with the architects. However he was acting with his ostensible authority and the architects has good reason to believe that he had the necessary authority to bind the company.
Case Law
Authority of an agent- Implied, actual authority
Hely-Hutchinson v Brayhead Ltd (1968)
Case: Chairman of BOD & Chief executive of B Ltd acts as the company’s managing director even though he has not been officially appointed. He entered into a variety of transactions on behalf of the company, one of which the company refused to fulfil.
Held: Although the director derived no authority from his position as chairman of the board (no express, actual authority), he did acquire such authority from his position as chief executive and the company was bound by the contract he had entered into on its behalf.
Case Law
Authority of an agent- express, actual authority
Ireland v Livingston (1872)
Case: The principal contracts agent to buy 500 tonnes of sugar (and up to 50 tonnes over). The agent ships 400 tonnes sugar and fully intends to ship the remaining goods in another ship. The principal refuses to accept 1st delivery.
Held: The agent carried out principals order in good faith and had acted within express actual authority therefore the principal was bound to accept delivery.
Agency Case Law
Agency by ratification
Kelner v Baxter (1866)
Case: K sold wine to B who claimed to be an agent for a company that had not yet been registered. The wine was consumed but no payment made.
Held: B was personally liable to K for payment since a principal who does not exist at the time the contract was made cannot later ratify it.
Agency Case Law
Mandatory & Agent
Copland v Brogan (1916) (An important one to remember)
Case: Teacher asked taxi driver to cash checks at the bank on an unpaid basis (was a favour). However driver lost the money and the teacher sued due to negligence.
Held: A mandatory must take the same sort of care that would be expected of him in the management of this own affairs. He did not take reasonable care of the teachers money so he was liable for the loss.
Agency Case Law
Capacity of the principal and the agent
Tinnevelly Sugar Refining Co v Mirrlees, Watson & Yaryan Co Ltd (1894)
Case: Darley & Butler claimed to be acting on behalf of Tinnevelly. D&B entered a contract with Mirrlees to purchase machinery. At the time D&B entered the contract with Mirrlees, Tinnevelly did not exist ( not yet registered as a company. Therefore not a legal person). Machinery broke down and Tinnevelly sued Mirrlees for breach of contract.
Held: Tinnevelly was not a party to the contract with Mirrlees because D&B couldn’t have been acting as agents for a principal (Tinnevelly) that did not yet exist.
It’s not possible to act as an agent for non-existing principal.
Agency Case Law
Agency by holding out
Hayman v American Cotton Oil Co (1907)
Case: American Cotton Oil advertised that McNairn (McN) is an agent (also sent out letter to customers stating this). Ferguson Shaw & Sons (FSS) bought goods from McNairn (agent) and paid before delivery. McNairn then becomes insolvent and creditors attempted to claim the goods FSS has bought. FSS turned to ACOC demanding that they honoured the contract that McNairn had negotiated on its behalf. ACOC denies that McNairn has ever been its agent. FSS sues ACOC.
Held: ACOC placed advertisements which gave the impression to third parties dealing with McNairn that he was an agent acting on behalf of ACOC. Therefore ACOC is liable and needs to compensate FSS.
Agency Case Law
Agency by ratification
Keighley Maxstead & Co v Durant (1901)
Case: Roberts is an agent (authorised to buy wheat for Keighley) who trades with Durant but does not disclose his agency agreement with Keighley. Keighley refuses to take delivery (because the price was higher than originally authorised) and Durant sues Keighley for damages.
Held: Roberts had not told Durant that he was working for Keighley. Therefore no agency exists as the principal was not disclosed. Durant should sue Roberts ( as there was an identifiable principal).
Agency Case Law
Agency of Necessity
Courturier v Hastie (1856)
Case: Cargo on a ship begins to rot. So the Captain lands at nearest port and sells cargo in order to prevent it from being written off completely. The cargo owner sues the captain for full price.
Held: The captain of the ship was acting as an agent of necessity in an emergency situation in order to prevent further losses to his principal. The captain couldn’t contact the principal for further instruction. Therefore the agency existed by necessity and no further recovery of sales proceeds was possible.
The 3 conditions of agency of necessity were met.
Agency Case Law
Agency of Necessity
SACHS v Miklos (1948)
Case: The defendant agreed in 1941 to store some of the claimants furniture without charge. By 1944 the defendant lost touch with the claimant and letters written to his last known address were returned. To gain space the defendant sold the claimants furniture and when the claimant later returned he sued and the defendant claimed an agency of necessity had arisen.
Held: There was no agency of necessity in the case as no emergency has arisen when the furniture was sold. Its not as though the house that furniture was stored in had been destroyed and the furniture was left exposed to thieves or the weather. The house was available for storage of furniture.
Agency Case Law
Ostensible (Apparent) authority
Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd
Case: The BoD of Buckhurst allowed one of its members to act as the managing director without him being formally appointed as such. This director entered into various contracts with third parties on the company’s behalf. On one occasion, this director appointed a firm of architects. The architects asked to be paid by the company.
Held: The director did not have actual authority to act on the company’s behalf when he entered the contracts with the architects. He was acting within his ostensible authority and the architects had good reason to believe that he had the necessary authority to bind the company.
Agency Case Law
Liability of the agent (Disclosed principal)
Santa Carina (1977)
Case: Defenders were known agents but for an unnamed principal. Pursuers supplied ship bunkers on instruction of the defenders but they were never paid for. The pursuers sued the defenders for beach of contract. The defenders claimed that they were acting as agents and the pursuers were perfectly aware of this situation.
Held: The principal was a disclosed principal and therefore pursuers should not sue agent they should have sued the principal.
Agency Case Law
Liability of an agent (undisclosed principal)
Stewart V Shannessy (1900)
Case: Shannessy acted as an agent for a company and decided to employ Stewart on its behalf. When letter of employment was signed by Shannessy he did not make agency explicit and it looked as if he was employing Stewart personally (e.g. instruction & payments from Shannessy). He later dismissed Stewart who then sued for arrears of pay.
Held: Shannessy was personally liable to Stewart since he had signed the letter and had not given any indication that he was acting as an agent for the company.
Agency Case Law
Rights of an agent (receiving payments)
Dudley V Barnet (1937)
Case: The agent had been given the task of finding a suitable tenant for the principal’s premises. The agent recommends a letting tenant but principal refuses and accepts a third party’s offer. He refuses to pay the agent on the basis that he did not benefit from his advice. The agent sued for payment.
Held: Principal is liable to the agent for the commission.
Agency Case Law
Rights of an agent (Expenses)
Stevenson & Sons V Duncan (1842)
Case: Principal refuses to honour a contract negotiated on his behalf by agent. Agent has acted within both actual and ostensible authority. 3rd party sues agent for damages for breach of warranty authority. In return, the agent then sues principal.
Held: Agent is entitled to be indemnified or compensated for the losses he experienced as a result of the principal’s failure to honour the agreement with the third party.
