Agency Law Flashcards
Liability (where the agent acts for disclosed principal)
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
Exceptions
- Where the agent showed an intention to undertake personal liability i.e signing a contract in his own name
- Trade usage or custom
- Where the agent refuses to identify the principal
- Where the agent is acting on behalf of a fictitious principal
Where the agent acts for undisclosed principal
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
Agent’s fiduciary duty
- A must not allow his personal interest to conflict with those of P
- A must always act in the best interest of P
- A must not make a secret profit
- A has a duty to account to P for all money and property received (accountability)
Agent’s fiduciary duty (breach remedies to P)
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
Principal’s liability to the agent
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
Agent
person authorised to act for another (principal) and make legally binding contract on his behalf with third parties.
formally
through signed, sealed powers of attorney or written agency agreements
less formally
through employment arrangements
If the agent acts improperly (without authority
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.
An agent can make contracts for the principal within the scope of whatever authority the principal has given the agent.
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).
Agency relatiosnhip can be established:
express
implied
necessity
ratification
estoppel
Ratification
-agent exceeds his authority, or acts as an agent, principal has no liability unless P ratifies the contract
Ratification requires P to:
- 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
By estoppel
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)
Apparent/ ostensible authority
a person cannot deny something that has previously been held to be true.
ways in which authority is given to agent
Express
Implied
Apparent/ostentible
Express authority
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.
implied authority
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
Examples of implied authority
- partner in a partnership has implied authority to sell partnership goods and to receive payment of debts due to the firm; and
- company secretary has implied authority to make contracts relating to the routine administration of the company (see Chapter 16).
Agency what is
Relationship between a principal and agent in which the role of agent is to bring the principal into contractual positions with third parties
Agency relationship is established by
- Express
- Implied
- Ratification
- Estoppel
- Necessity
Agreement, express
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
Agreement, imply
Result of conduct of the two parties, the courts may imply an agency relationship
Estoppel agent
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
Ostensible/apparent
When an entity allows the agent to act as though they have authority even though such authority does not in fact exist
termination by
Agreement - sold chocolates, now task ended
Operation of law - travelling agent shud have driving license. But if they don’t have license
Automatically terminated by
Death of agent or principal
Insanity of agent or principal
Bankruptcy of the principal
Liability of agent
acting within the limits of authority the agent,
Incurs no liability under the contract
Cannot enforce contract
Maybe personally liable if
-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
