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AGENCY LAW Flashcards

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1
Q

What is the definition of AGENCY?

A

A relationship that subsist between the
- PRINCIPAL and
- AGENT who has been authorized to act or represent him in dealing with others

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2
Q

Reason to have an agent?
( 5 example )

A
  1. To save time and work
  2. For the Agent expertise
  3. For urgent matters
  4. Logistic problem
  5. Social status of the parties
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3
Q

Give the definition of Agent and Principal

A

AGENT:
- a person employed to do any act for another or to represent another when dealing with third person

PRINCIPAL:
- the person for whom such act is done, or who is represented

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4
Q

2 types of contract in agency

A
  1. Contract between Principal and the Agent
    - agent gets his authority to act
  2. Contract between Principal and Third party
    - through the work of agent
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5
Q

Who can be a principal?

A

i - Age of majority (18 years old and above)
ii - Sound mind

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6
Q

Who can be an agent?

A

Anybody can be an agent

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7
Q

If an agent is below 18 years old or unsound mind, what happened?

A

1) The agent is not liable towards the Principal for any act done by him as an agent

2) The principal is liable for the authorized act of the agent

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8
Q

3 types of Agent

A
  1. UNIVERSAL AGENT
    - agent with extensive power
    - can do all the act that the Principal can do
  2. GENERAL AGENT
    - act generally in transaction relating to a particular trade/business
  3. SPECIAL AGENT
    - appointed to do specific act
    - authority is limited to do that specific act only
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9
Q

Classification based on function (7 answer)

A

1) DEL CREDERE AGENT
- undertake that the third party will perform his obligation in consideration with extra commission. will be liable if 3rd party fails to perform obligation.

2) FACTORS
- commercial agent that is entrusted with the principal’s goods for sale. sell the goods in his own name without disclosing the principal. has lien over the goods if commission not paid by the principal.

3) BROKER
-commercial agent employed to make contract between principal and 3rd party for commission. find buyer, find seller, negotiate and make contract.

4) AUCTIONEER
- sell goods by auction. start as agent for seller, after accept bid, become agent for buyer.

5) BANKERS
- agent for customer. bank employees are agent for the bank.

6) PARTNER

7) DIRECTORS

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10
Q

5 WAYS OF CREATION OF AGENCY

A
  1. Express appointment by the principal
  2. Implied appointment by the principal
  3. Ratification by the principal
  4. By necessity
  5. By holding out (doctrine of estoppel)
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11
Q
  1. EXPRESS APPOINTMENT (CREATION)
A

The principal make an appointment of agent either orally or in writing

S.140 Contract Act
“an authority is said to be express when it is given by words spoken or written”

  • If an agent act beyond his authority, it will not bind the Principal
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12
Q
  1. IMPLIED APPOINMENT (CREATION)
A

S.140 CONTRACT ACT

“when the principal either by word of mouth or conduct, holds-out that the other person has the authority to act for him

or

“it can be implied from the surrounding circumstances that the principal had given authority to the agent to act on his behalf”

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13
Q
  1. RATIFICATION (CREATION)

When agent do something on behalf of the principal beyond his authority. The principal may accept and ratify the act of the agent.

A

S.149 CONTRACT ACT
“where acts are done one person on behalf of another but without his knowledge or authority, he may elect to ratify or to disown the acts. if he ratifies them, the same effect will follow as if they had been performed by his authority”

  • agent is appointed but had exceeded his authority
  • a person who has no authority has acted as if he has authority
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14
Q
  1. RATIFICATION (CREATION)

What are the condition to be fulfilled?
(8 answers)

A
  • act is unauthorized
  • act must not be unlawful
  • must act as an agent for the principal
  • agent must have a principal who is actually in existence
  • principal must have contractual capacity
  • principal must have full knowledge
  • must ratify the whole act
  • ratification can’t hurt the 3rd party
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15
Q
  1. BY NECESSITY (CREATION)

An agency that arise as a result of an emergency or urgency of the situation.

3 situation that arise agency by necessity:

A

s.142 CA
“an agent has authority, in an emergency, to do all such acts for the purpose of protecting his principal from loss as would be done by a person of ordinary prudence, in his own case, under similar circumstances”

  1. Wife who has been deserted by her husband and could not support herself, may pledge her husband credit.
  2. Person who is entrusted with a property may do certain act when it becomes necessary in order to preserve that property for him.
  3. A captain of a ship, may pledge the ship as security for the cost of repair, for it to continue the voyage.
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16
Q
  1. BY NECESSITY (CREATION)

What are the condition to be fulfilled? (3 answers)

A

i - it was impossible for the agent to get instruction from the principal

ii - the agent’s action must be necessary in order to prevent loss to the principal

iii - agent acted in good faith

17
Q
  1. ESTOPPEL (CREATION)
A

When the principal has led third party to believe that someone was his agent when in fact he was not and the third party has relied on that representation to his detriment.

Principal will be estopped or prohibited from denying that the second named person is his agent.

18
Q

9 main duties of an agent

A

1) Obey principal instruction
“an agent is bound to conduct the business of his principal according to the directions given by his principal”

2) Agent must exercise care and diligence and use skills as he possess
“an agent is bound to conduct the business of the agency with such skills as is generally possessed by the persons engaged in similar business”

3) Render proper account when required
“an agent is bound to render proper account to his principal on demand”

4) Agent to pay the principal all sums received

5) Agent cannot sell the principal’s property unless principal consented

6) Communication with principal
“duty of an agent, to use all diligence in communicating with his principal and in seeking to obtain his instruction”

7) Non-disclosure of confidential information

8) Not to delegate

9) Agent must not let his own personal interest conflicts with his duties

19
Q

When will agent’s personal interest be in conflict with his principal’s interest?
(3 answers)

A

a) Being a party to a transaction with principal
- cannot become a party to a transaction that is against his principal’s interest

b) Acting on behalf of both parties
- can’t work for both side without their consent

c) Agent could not make a secret profit

20
Q

What are the consequences when an agent made secret profits?
(6 answers)

A
  1. The principal can repudiate the contract
  2. Principal may recover the amount of secret profit from the agent
  3. The principal may refused to pay the agent his commission
  4. The principal may dismiss agent
  5. Principal can sue agent and 3rd party giving the bribe and claim for damages for entering into the contract.
  6. Both agent and 3rd party that gives bribe may be guilty of criminal offenc.
21
Q

DUTIES OF PRINCIPAL TOWARDS HIS AGENT
(3 answers)

A

1) PAY COMMISSION OR ANY OTHER REMUNERATION
- amount, time of payment depend on terms of contract
- no not agreement, agent ask for reasonable on quantum meruit basis
- agent will not be paid if there is misconduct

2) NOT TO PREVENT AGENT FFROM EARNING HIS COMMISSION
- principal can’t appoint sec agent to deprive the first agent of his commission
- principal can’t directly negotiate with 3rd party that is introduced by the agent

3) INDEMNIFY AGENT FOR ACT DONE
- principal must indemnify or reimburse the agent for any losses and liability incurred by his agent for any lawful act

LAW (12 decks)

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