AGENCY LAW PT.2

Question 1

2 TYPES OF AGENT’S AUTHORITY

Answer 1

1) ACTUAL AUTHORITY
- authority that is given to an agent expressly or impliedly

2) OSTENSIBLE/ APPARENT AUTHORITY
- agent is said to have a result of the principal’s word/conduct which lead to a third party believe that the agent has the authority to act on behalf of the principal. or retired agent but without notice to third party.

• principal is prohibited from denying that the agent had such authority

Question 2

3 types of PRINCIPAL

Answer 2

i - Named principal
ii - Disclosed principal
iii - Undisclosed principal

Question 3

1) NAMED PRINCIPAL

Principal whose identity has been brought to the knowledge of the third party.

What are the effects of named principal?

Answer 3

1. Agent incurred not personal right or obligation with 3rd party
2. Agent drop out as soon the contract is made
3. Contract binds principal only
4. Only principal can sue or be sued by the 3rd party

Question 4

2) DISCLOSED PRINCIPAL

Principal whose existence is made known to the third party but whose identity has not been disclosed to the third party.

What are the effects of disclosed principal?

Answer 4

1. The contract that the agent had entered with the third party shall be binding on the principal
2. But agent is personally liable by the contract that he entered with the third party

Question 5

3) UNDISCLOSED PRINCIPAL

Principal whose existence is not made known to the third party. Third party would be contacting the agent only. It is only subsequently brought to the knowledge of the third party that the person is an agent.

What are the effects of undisclosed principal?

Answer 5

1. Principal will be bound as long as the agent acted within his authority
2. The principal cannot ratify the contract when the agent acted beyond his authority

Question 6

2 WAYS OF TERMINATION OF AGENCY

Answer 6

1) By the act of the parties

2) By the operation of law

Question 7

1) BY THE ACT OF THE PARTIES (TERMINATION)

3 act of the parties:

Answer 7

1. Mutual consent
2. By revocation of authority by the principal
3. By the renunciation of the agency by the agent

Question 8

2) BY THE OPERATION OF LAW (TERMINATION)

6 operation of law that terminate the agency:

Answer 8

1. By the performance of the contract of agency
   “an agency is terminated when the business of the agency is completed”
2. By the expiration of the period fixed or implied in the contract of agency
3. By the death of either the principal or agent
4. By the principal or agent becoming unsound mind
5. By bankruptcy or insolvency of the principal
   “upon being bankrupt/ insolvent, his rights and liabilities are vested in the official assignee, thus ending the agency”
6. By frustration (event which render the agency unlawful)