Agency Law

Question 1

Liability (where the agent acts for disclosed principal)

Answer 1

Third party knows who is the principal
Not necessary for the principal to be identified to the third party
Agent has no liability, however there are exceptions

Question 2

Exceptions

Answer 2

1. Where the agent showed an intention to undertake personal liability i.e signing a contract in his own name
2. Trade usage or custom
3. Where the agent refuses to identify the principal
4. Where the agent is acting on behalf of a fictitious principal

Question 3

Where the agent acts for undisclosed principal

Answer 3

Existence of which has not been made unknown to third party.
Where party knows existence of P, he can elect to treat P or A as bound by the transaction

Question 4

Agent’s fiduciary duty

Answer 4

1. A must not allow his personal interest to conflict with those of P
2. A must always act in the best interest of P
3. A must not make a secret profit
4. A has a duty to account to P for all money and property received (accountability)

Question 5

Agent’s fiduciary duty (breach remedies to P)

Answer 5

P can repudiate the contract with the third party
A can be dismissed without notice
P can refuse to pay any money to A or recover any money already paid
P can recover any secret profit made or any bribe

Question 6

Principal’s liability to the agent

Answer 6

Agent has right:
-To claim remuneration or commission
Amount of remuneration to be paid is stated in the agency agreement. Where mot specified, the court will imply a term into the agreement requiring a reasonble amount to be paid

To claim indemnity against P for all expenses reasonably incurred in carrying out his obligations

To exercise a lien over P’s property. The lien allows the agent to retain possession of P that is lawfully in A’s possession until any debts due to A

Question 7

Agent

Answer 7

person authorised to act for another (principal) and make legally binding contract on his behalf with third parties.

Question 8

formally

Answer 8

through signed, sealed powers of attorney or written agency agreements

Question 9

less formally

Answer 9

through employment arrangements

Question 10

If the agent acts improperly (without authority

Answer 10

Principal will usually be bound to honour the commitment with the third party, but will be able to claim compensation for the agent’s breach of duty.

Question 11

An agent can make contracts for the principal within the scope of whatever authority the principal has given the agent.

Answer 11

An agent who is a minor (i.e. under 18 years) can be authorised by an adult principal to make commitments for the adult which would not be binding on the minor.

An agent cannot be empowered to make contracts by a principal who cannot make contracts due to a legal disability (e.g. mental incapacity).

Question 12

Agency relatiosnhip can be established:

Answer 12

express
implied
necessity
ratification
estoppel

Question 13

Ratification

Answer 13

-agent exceeds his authority, or acts as an agent, principal has no liability unless P ratifies the contract

Question 14

Ratification requires P to:

Answer 14

• have the contractual capacity to make the contract
• have been in existence both when the contract was made and ratified
• be identified when contract was made
• aware of all material facts
• signify clearly his intention to ratify the whole contract within reasonable time

Question 15

By estoppel

Answer 15

Implies by P that A is agent of him even he is not. then P is prevented from denying it.

Director ne 2,3 contract kiye claimant se. 4th contract k time BOD ne kaha authority nahi hai.
It is not valid as previous dealings show he has authority (apparent authority)

Question 16

Apparent/ ostensible authority

Answer 16

a person cannot deny something that has previously been held to be true.

Question 17

ways in which authority is given to agent

Answer 17

Express
Implied
Apparent/ostentible

Question 18

Express authority

Answer 18

Explicitly given to A

may be granted:
under an explicit agency agreement; or
under a partnership agreement; or
under an employment contract; or
by operation of law.

Question 19

implied authority

Answer 19

to do things which are necessary, conducive or incidental to performing the expressly authorised acts.

an agent occupying that position would usually have authority to do so.

have not been expressly prohibited by P

Question 20

Examples of implied authority

Answer 20

1. partner in a partnership has implied authority to sell partnership goods and to receive payment of debts due to the firm; and
2. company secretary has implied authority to make contracts relating to the routine administration of the company (see Chapter 16).

Question 22

Agency what is

Answer 22

Relationship between a principal and agent in which the role of agent is to bring the principal into contractual positions with third parties

Question 23

Agency relationship is established by

Answer 23

1. Express
2. Implied
3. Ratification
4. Estoppel
5. Necessity

Question 24

Agreement, express

Answer 24

Usually in writing, principal will appoint the agent, typically with specific authority

If agent has unrestricted power to act on behalf of the principal, this is a power of attorney and must be in writing

Question 25

Agreement, imply

Answer 25

Result of conduct of the two parties, the courts may imply an agency relationship

Question 26

Estoppel agent

Answer 26

When a person acts as agent of company without either express or implied agreement of principal
Then if in future they are beinh stopped then this is not allowed
They cannot deny (stopped from denying) that the somebody is their agent

Question 27

Ostensible/apparent

Answer 27

When an entity allows the agent to act as though they have authority even though such authority does not in fact exist

Question 28

termination by

Answer 28

Agreement - sold chocolates, now task ended
Operation of law - travelling agent shud have driving license. But if they don’t have license

Question 29

Automatically terminated by

Answer 29

Death of agent or principal
Insanity of agent or principal
Bankruptcy of the principal

Question 30

Liability of agent

Answer 30

acting within the limits of authority the agent,
Incurs no liability under the contract
Cannot enforce contract

Question 31

Maybe personally liable if

Answer 31

-Agent enters into a contract without disclosing the existence of principal
-the agent acts on own behalf even though claiming to act on behalf of a principal
- normal trade custom has established liability on the agent