Chapter 3 - Agency

Question 1

3 parties in an agency contract

Answer 1

Principal
Agent
Third party

Question 2

Agency by contract

Answer 2

Consent may be expressed or implied either orally or written

Question 3

Agency by estoppel

Answer 3

Actions of the PRINCIPAL not the agent
Conduct of the principal give the third party the impression that the person who purports to contract is the agent of the principal. The third party acts upon this information.

Also created where authority is withdrawn but the third party is not told

Question 4

Agency of necessity

Answer 4

Where a person is faced with an emergency in which property/ interests are in imminent jeopardy and a person needs to act without authority.

Question 5

Agency of necessity: Conditions to bind (5)

Answer 5

NEED ALL 5

1. No practical way of contacting the principal
2. There was a pressing need for action
3. He acted in good faith
4. Actions were prudent and reasonable
5. *** should be some prior contractual agreement between the parties already

Question 6

Agency by ratification (/retrospect)

Answer 6

Validates past acts of the agent to create an agency relationship retrospectively - as if they were authorised to act from the start

Question 7

Agency of ratification: Conditions (4)

Answer 7

1. Principal was in existence at the time of the agent’s act
2. Principal had legal capacity to make the contract at time of act & ratification
3. The agent, at the making of the contract, names the principal
4. Ratification occurs within a reasonable time

Question 8

Duties of an agent (7)

Answer 8

1. Accountability - provide all information and money to principal
2. No conflict of interest - Don’t put themselves in situation where their interest conflict with the principal’s
3. Performance - Agent for reward has contractual obligation to perform agreed task. Can refuse illegal acts.
4. Obedience - Must act strictly within principal’s instructions, insofar these are lawful and reasonable.
5. Skill - Maintain standard of skill and care to be expected in his profession..
6. Personal performance - Must undertake the task themselves and not delegate.
7. Confidence - Must keep confidentiality.

Question 9

Rights of an agent (3)

Answer 9

1. Indemnity - Entitled to be repaid their expenses & indemnified against losses.
2. Remuneration - Entitled to be paid any agreed remuneration, either expressed or implied.
3. Lien - Right to exercise lien over property owned by principal until pending payments are received.

Question 10

Authority of an agent (3)

Answer 10

1. Actual expressed authority - Expressly given by principal in respect to a contract.
2. Actual implied authority - Authority to do things usual (in office i.e. director) or incidental (in role e.g. sale of house) to an expressed authority.
3. Authority is created by the principal either expressly or by inaction. (i.e. Principal tells third party that the agent is allowed to negotiate contracts).