Agency (II)

Question 1

What two kinds of duties does an agent owe his principle?

Answer 1

• Contractual duties

- Fiduciary duties

Question 2

How many contractual duties does an agent owe his principle?

Answer 2

3

Question 3

What are the three contractual duties an agent owes his principle?

Answer 3

1- Duty to obey lawful instructions of the principle and perform contractual undertakings
2-Duty to act w/ due care and skill in performance of his duties
3- Duties to perform his obligations personally (to not delegate)

Question 4

What is Duty to obey lawful instructions of the principle and perform contractual undertakings?

Answer 4

-the first contractual duty A owes P
-arises out of a bilateral agreement- Turpin v Bilton (1843)
Cases where A will not be liable for failing to obey:
1)Under unilateral agreement
2)Gratuitous Agent (A who acts for P w/o payment) BUT can still be liable under tort if he is breaching a duty of care.

Question 5

For R+L of principal on contract made by agent, what is disclosed agency where agent has actual authority and how will it affect these R+L?

Answer 5

In cases where A has actual authority (express/implied) to make contract for disclosed P then:

1) P entitled to enforce agreement against T and,
2) T entitled to do same against P

Bc contract takes effect as b/w P and T just as if they directly made it.

Question 6

For R+L of principal on contract made by agent, what is disclosed agency where agent has apparent authority and how will it affect these R+L?

Answer 6

• P is not entitled to enforce contract against T
• but, T may enforce contract against P

exception to rule regarding P not being entitled to enforce contract against T - In situation where principle is allowed to ratify and does so, P is not prevented.

Question 7

What are the R + L of the principal regarding undisclosed agency?

Answer 7

Generally, the undisclosed P can sue T even if T didn’t know the agent contracted on their behalf. But undisclosed P will only be able to bring claim against T if A had actual authority to make contract.

Question 8

Regarding R +L of the principal, what are the situations when the P will not be entitled to sue T or intervene in contract of A?

Answer 8

1) Where express term b/w A and T excluded r/s of agency ie) by excluding intervention of Undisclosed P.
2) Whereby implication term in contract b/w A and T exists that excludes intervention of Undisclosed P. (Humble v Hunter 1848)
3) Where T intended to contract w/ A personally, not as A. So where there is personal contract ie) T interested in A as musician or other personal interest. Or where identity/ personality of Undisclosed P of particular importance to T.

Question 9

For R+L of T on the contract made by the agent for disclosed agency with A having actual authority, how will R+L of T be affected?

Answer 9

-P + T both entitled to enforce contract against each other

Question 10

For R+L of T on the contract made by the agent for disclosed agency with A having apparent authority, how will R+L of T be affected?

Answer 10

-T can transfer contract against P but P cannot do the same to T
Reason why =P made representation to T, T didn’t to that to P

Question 11

For R+L of T on the contract made by the agent what happens regarding settlement with the agent?

Answer 11

Where A acting on behalf of a disclosed P + T settles w/ said A they will be deemed to have also settled w/ P provided A was acting with actual/apparent authority to accept monies on behalf of P.

In these situations A is likely to (but not always) have actual authority.

Question 12

For R+L of T on the contract made by the agent what happens regarding Agent acting on behalf of Undisclosed Principle?

Answer 12

• T entitled to sue A as soon as contract made
• Once P is disclosed, position changes to T being able to choose to sue A or P
• but T can’t switch choice once either A or P is elected to sue
• issue of proceedings is a strong evidence of election and unless rebutted by circumstances will signify election (Clarkson v Andjel 1964)

Question 13

For R+L of T on the contract made by the agent what happens regarding settlement with an undisclosed agent?

Answer 13

• Where T settles with U.D Agent, T deemed to settle with principle.
• Will be the case even if agent fails to account to P for this money.

Question 14

For R+L of A to T on the contract made by the agent, what is the situation regarding disclosed agency?

Answer 14

General rule = A cannot sue or be sued on contract made w/ T bc it is not A’s contract (Montgomerie v UK Mutual 1891)
But rule is subject to certain exceptions- where contract/circumstances show A accepts personal liability. But even with these circumstances P is likely to be liable.

Question 15

For R+L of A to T on the contract made by the agent, what is the situation regarding undisclosed agency?

Answer 15

Important to consider position from both when principal remains undisclosed and when he is revealed.

When P remains undisclosed:
A liable to T bc T thought he was contracting directly w/ A.

When Undisclosed P is revealed:
P also becomes liable. So both A + P liable and again T chooses who to sue (Clarkson 1964)

Question 16

For R+L of A to T on the contract made by the agent, what is the situation regarding breach of warranty of authority?

Answer 16

Yonge v Toynbee 1910- A also liable to T for breach of warranty where A falsely warrants authority to make contract which T relies on and suffers as a result of.

Question 17

Briefly explain the rights of agent against his principle?

Answer 17

Common law views P as needing more protection so rights of agents are quite limited though there are some depending on circumstances.

Question 18

What is the right of remuneration regarding rights of Agent against his principle?

Answer 18

• remuneration - A entitled to remuneration by P in case that there is term in agency agreement pertaining to this effect + agent needs to be acting within authority/ P has ratified A’s unlawful act.
• Term as to right of remuneration can be express/implied but court slow to imply a term into agency agreement (Attorney general v Belize Telecom 2009)

Question 19

What’s the other alternative to remuneration regarding the rights of Agent against his principle?

Answer 19

-A may be entitled to be paid on a quantum meruit bases (Benedetti v Sawiris 2014) so based on how much the benefit that was unjustly gained by the defendant at expense of claimant.

Note: commercial agents operate differently under Commercial agents (Council Directives) Regulations 1993.

Question 20

What is the right of indemnity regarding rights of Agent against his principle?

Answer 20

At common law A entitled to indemnity by P for the losses + liabilities incurred whilst acting on behalf of P, given A was acting w/ actual authority - Thacker v Hardy 1878.

exception to this = express term preventing such liability

P’s duty to indemnify may also arise in cases where A is liable in tort - Adamson v Jarvis 1827.

Question 21

What is the right of lien regarding rights of Agent against his principle?

Answer 21

Where A is owed money by P he is entitled to retain property of P until payment is made.

• not regular lien only arises in regards to Property of P (Bock v Gorrissen 1860)
• Right of lien can be excluded in contract
• Will only exist where property of P is in A’s possession. (Bryans v Nix 1839).

Question 22

What is the contractual duty to act with due care and skill in the performance of duties?

Answer 22

• A required to exercise care, skill an diligence in role of Agent
• standard required depends on circumstances
• duty implied by virtue of s13 of SG+S Act 1982 where A performs service in course of business
• Gratuitous A will owe same duty but only in tort as no contract exists (Chaudhry v Prabhakar 1989).

Note: Attempts to exclude/ restrict this duty fall under Unfair Contract Terms Act 1977.

Question 23

What is the contractual duty for an agent to perform his obligations personally?

Answer 23

Bc of fiduciary nature of r/s b/w parties, A must not delegate duties to sub-A unless:

• P expressly agrees / implies this, if not A’s acts will not be valid/ binding - John v Pow 1974. (note- principle may still be able to ratify A’s delegation)
• It is usual practice in trade of A and not inconsistent/unreasonable w/ contract b/w A and P - Solley v Wood 1852.
• nature of agency requires it be performed this way (Quebec v Quinn 1858)
• delegation = unforeseen by circumstance and,
• duty is ministerial not confidential

Question 24

What is the idea of del credere agency?

Answer 24

Phonogram v Lane 1982: Where contract made by ostensible agent, A cannot be sued, subject to when del credere agency exists.
-rare these days due to alternative methods of credit.

Question 25

What is the agents fiduciary duty to P?

Answer 25

• due to A having power to affect l/r’s b/w P and T thus occupying a trusted position, A will owe a fiduciary duty to P.
• equity imposes fiduciary duties on A to protect P
• A will owe these F-D to P w/ paid or acting gratuitously.

Question 26

What are the fiduciary duties A owes P?

Answer 26

• duty to avoid conflicts of interest
• duty to not make a secret profit or accept bribe
• duty to account to P for payments received
• duty to preserve confidentiality

Question 27

What is the fiduciary duty of the duty to avoid conflicts of interest?

Answer 27

• A must avoid instances where his personal interests clash with those of P (Aberdeen v Blakie Bros 1843)
• A must not use property of principle or information he got as A for his own benefit against P (Boardman v Phipps 1967)
• In the case where conflict of interest does exist, A needs to make P aware of this, so P can decide how to move (Clarkson v Mouat 1994)

Question 28

What is the fiduciary duty of the duty to not make a secret profit or accept bribe?

Answer 28

• Agent isn’t allowed to accept commission from T w/o P’s approval (Imageview v Jack 2009)
• In appropriate circumstances, P may have both personal + proprietary remedy against A and can choose which to use (FHR v Cedar Capital 2015)
• Hippisley v Knee Bros, 1950 - breach of FD to not make secret profit.

Question 29

What is the fiduciary duty of the duty to account to P for payments received?

Answer 29

A has 2 key duties to account to principle for payments received:
1- A must keep such monies separate from own unless permitted by agency to mix funds
2-must keep and maintain accurate accounts of transactions + furnish principle w/ them when requested (Turner v Burkinshaw 1867)
Duty to furnish P with accounts upon his request survives termination of agency agreement (Yasuda v Orion 1995).

A who fails to maintain these will put own funds at risk bc of presumption that any monies A cannot prove to be own will be deemed to belong to P (Lupton v White 1808.)

Question 30

What is the fiduciary duty of the duty to preserve confidentiality?

Answer 30

A = under absolute duty to preserve P’s confidentiality.

This includes not disclosing confidential info to T, higher than taking reasonable precaution and survives termination of agency agreement. Bolkiah v KPMG 1999.

Question 31

What are the remedies for breach of fiduciary duties?

Answer 31

-court has wide discretion for remedies to P for A breaching his fiduciary duties.
Remedies available where A makes a profit off of breach of his FD’s:
- P may dismiss A summarily w/o notice
- P may recover any profits made by A as result of his breach
-P pay rescind contract made w/ T and,
-where A received bribe, P can recover the amount A received as bribe/ bring claim in damages against A or party that paid bribe to recover losses as a result of said bribe.

Question 32

What types of termination of agency are there?

Answer 32

• Termination by agreement

- Termination by Law

Question 33

What is termination of agency by agreement?

Answer 33

• b/w P and A, agency can be terminated on agreement
• also can terminate when specific task of A is completed + on the fixed date by the agreement.

same effect may not exist b/w P and T. Also just bc A’s actual authority is terminated/ restricted, doesn’t mean A can’t bind P in relation to T if the T is aware of agents lack of authority.

Question 34

What circumstances of loss of legal capacity satisfy termination by operation of law?

Answer 34

-where P/ A loses legal capacity ie) by death (Campanari v Woodburn 1854) or mental incapacity

Mental incapacity: will terminate agency bc A is unable to comprehend acts P requires of him (Boughton v Knight 1872)
will terminate agency bc P can no longer act for himself so A cant act for him (Drew v Nunn 1879)

Question 35

What circumstances of P or A becoming insolvent satisfy termination by operation of law?

Answer 35

• where P = insolvent, agency immediately terminates bc P deemed as legally incapable
• where A = insolvent agency will terminate but depends on agreement itself and its terms

Question 36

In what circumstances does a contract b/w A and P becoming frustrated satisfy termination by operation of law?

Answer 36

-Where Agency agreement in contract, certain acts may frustrate contract ie) those events that render performance of contract as impossible/ illegal (Marshall v Glanvill 1917)

Question 37

What is a brief explanation of Commercial Agents (Council Directive) Regulations 1993 act?

Answer 37

• identifies regulations for commercial agents
• r/s b/w P and A governed under these regulations, T+ governed under common law.
• Reg 2 (def. of commercial A must be satisfied) then reg. 3 holds duties (these duties similar to under common law Crueton v Mark 2006)

Question 38

What is the definition of commercial agent under reg 2 of Commercial Agents (Council Directive) Regulations 1993 act?

Answer 38

REG 2:
A self-employed intermediary who has continuing authority to negotiate the sale/ purchase of goods on behalf of another person (P) or to negotiate and conclude the sale or purchase of the goods on behalf of and in the name of P.

Question 39

Where the agents function is to negotiate contracts of service, why won’t he be a commercial agent?

Answer 39

Bc Reg 2 highlights idea of continuing authority to negotiate sale or purchase of goods.

Question 40

Under regulation 2 of CA(CD)R 1993, does mention of ‘continuing authority’ mean the commercial agents authority is forever continuing and cannot be subject to time limits?

Answer 40

-No, doesn’t mean this
-can be subject to time limits, seen via reg 14 and 15 regarding possibility of commercial agency contracts being for fixed term
BUT- Case -3/04 states one off transactions don’t count as they aren’t seen as A having continuing authority.

Question 41

How is continuing authority to negotiate determined?

Answer 41

• By reference to terms of contract w/ P
• not by extent of frequency of exercise of carrying out that authority.
• This is bc agent might have authority to carry out functions which in the event he never performs/ performs occasionally - W Nagel v Pluczenik 2018

Question 42

When is one not a commercial agent?

Answer 42

• person acting on behalf of company in his capacity as an officer of a company
• Person acting as insolvency practitioner
• Partner acting as partner in his firm

Note- reg.s only apply to commercial agents who’s activities = PAID

Question 43

What are the duties of COMMERCIAL agent to his principle?

Answer 43

-REG 3 CA(CD)R 1993 = In performing his activities, commercial agent must look after interests of P and act dutifully and in good faith

• REG 3(2) Commercial agent must:
  1) Make proper efforts to negotiate, + where appropriate conclude the transactions he is instructed to take care of.
  2) Communicate to P all necessary info he has
  3) Comply w/ reasonable instructions given by P