Agency Law Flashcards
Who is an agent?
A legal person who acts on behalf of another.
Who is a legal person?
Someone whose activities are governed by laws and are recognised by legislation.
What are the five types of agents?
1) General agent.
2) Special agent.
3) Commercial agent.
4) Commission agent.
5) Del Credere agent.
What is an agency?
A relationship where one person decides to delegate their authority to another and appoints them to undertake specific jobs.
What is a principal-agent relationship?
Principal authorises an agent to act on their behalf, results from a manifestation of consent.
What is actual authority?
An express agreement to establish the authority of the agent to bind the principal.
What is apparent authority and what are the three requirements?
Principal represents to the third party that the agent possesses the authority to act on their behalf.
1) Must have been a representation identifying them as the agent.
2) Principal or someone acting on their behalf must have conveyed this.
3) Third party must have acted on the basis of this representation.
What are the three ways of determining an agency?
1) Whether a manifestation of assent was given by the principal.
2) Whether the relationship exists because the act by the alleged agent brings some degree of benefit to the principal.
3) The apparent principal must have some control over the agent, control determines vicarious liability.
What is vicarious liability?
When you have not done something wrong yourself but a person acting on your behalf has and so you are vicariously liable.
What are the five steps of creating an agency?
1) Express/implied agreement.
2) Implied agreement.
3) Necessity.
4) Estoppel.
5) Ratification.
What is estoppel?
Stopping someone from going back on their original word and contradicting an earlier statement agreed to by law, prevents parties from being unjustly wronged by the inconsistencies of others’ words.
What is agency by estoppel and what three ways can it be found?
Where the agent seems to have the authority to act on behalf on the principal but is not authorised to do so.
1) Agreement has ceased and principal has failed to notify third party, principal is vicariously liable.
2) The agency relationship never existed but the principal allows the third party to believe the agent has authority to act.
3) An agreement exists but the agent exceeds their authority, principal allows third party to believe the agent has more authority than they actually do, principal is liable for every action agent takes above their authority.
What is agency by necessity and what are the three implications?
Agent is control of principals’ property and is unable to contact them, must be a genuine emergency and the agent must act in good faith in the principals’ interest. If so:
1) Agent can claim expenses incurred.
2) Agent has a defence is sued for trespass for disposing of goods.
3) Third party who has acquired goods from agent gets good title to them.
What is agency by ratification and what are the seven implications?
Where the agent has acted beyond their authority to establish a contract with a third party the principal may ratify the agreement afterwards.
1) Even where agent has no authority the authority can be given when the principal adopts the agreement.
2) Ratification must be within a reasonable time.
3) Principal must adopt the whole contract.
4) Principal must have existed at the time of the contract and be identified as such.
5) Principal must have legal capacity.
6) Agent must expressly/impliedly indicate they are acting as such.
7) Ratification must be communicated to the third party.
What are the four consequences of ratification?
1) Agent is freed from any liability of acting without authority.
2) Agent is entitled to remuneration where appropriate.
3) Third party obtains title to property transferred in contract.
4) Contract is binding on the principal.
What are the four duties of an agent?
1) Exercise reasonable care and skill.
2) Perform agreed tasks personally and respect limits of authority.
3) Maintain confidentiality.
4) Avoid conflicts of interest - not take bribes and make a secret profit, must transfer all profit to principal, and must act in the interest of principal.
What are the three rights of an agent?
1) To claim indemnity - protection/insurance that returns agent to their original position before the event.
2) To remuneration - money paid in exchange for work.
3) To a lien over the principals’ property - form of security interest over property to secure payments such as of debts.
What are the liability of an agent?
Where the agent states they are working for the principal and makes a contract on their behalf, the agent has no liability under the contract and cannot sue or be sued for a breach even if it was their fault.
What is the exception to the liability of an agent?
Where the third party believes the agent is acting on their own behalf then they are initially liable under the contract and third party can take action against them.
What are the seven reasons of the termination of an agency?
1) Agency loses authority of the principal.
2) Death of either party.
3) Mutual agreement.
4) Conclusion of a fixed term contract.
5) Purpose of agency is achieved.
6) Frustration.
7) Bankruptcy.
What three things must the agent do under The Commercial Agent Regulations 1993?
1) Make proper efforts to negotiate and conclude transactions.
2) Communicate relevant information to the principal.
3) Comply with the reasonable instructions of the principal.
What two things must the principal do under The Commercial Agents Regulations 1993?
1) Act in good faith to the agent by providing relevant information and the volume of commercial transactions.
2) Acceptance or otherwise of transactions made by the agent.
