Chapter 4 - Agency Flashcards
Does the agent require full contractual capacity
No
Does the principal require full contractual capacity
Yes
T/F
Agency can be created orally or in writing
True
What is the exception to agency being created orally or in writing
if agent is to execute deed on principal’s behalf, then agency must be created by deed (agend given POA)
In commercial transactions how is it usual to appoint an agent
in writing - not essentail
When does agency by estoppel arise
when words/conduct of principal give third party the impression that the person who purports to contract is an agent of the principal
third party as a result acts upon this
T/F
Agency by estoppel can only arise where the conduct of the apparent principal creates it
True
T/F
Agency does not arise by estoppel if it is the agent who holds themselves out as agent, not the principal
True
When does agency of necessity arise?
Where a person is faced with an emergency in which the property/interests of another person are in imminent jeopardy and in order to preserve that property/those interests, it becomes necessary to act for that person without authority
Agent seeking to bind a principal on grounds of agency by necessity must show that
- agent had no practical way to contact principal
- actions arose from pressing need for action
- acted in good faith in interest of principal
- action was reasonable and prudent in the circumstances
Sachs v Miklos 1948
M agreed to store S furniture, after time, M needed storage space. Couldn’t trace S so sold furniture, M pleaded agency of necessity
Held no agency of necessity since no emergency and furniture sold for own convenience
T/F
ratification only validates past pacts of the purported agent and gives no authority for the future
True
T/F
Where A makes contract on behalf of P when they have no authority, P may later ratify the contract, retrospectively establishing an agency at the time the contract was made
True
What conditions must be satisfied for a principal to ratify
- principal must have been in existence at time of agent’s act
- principal must have legal capacity to make contract themselves both when act carried out and at time of ratification
- agent must name or sufficiently identify principal at the time of making the contract
Can principal select parts of the contract to ratify
No - must ratify entire contract
What must a principal do to ratify the contract
Communicate a sufficiently clear intention of ratifying, either by express words or by conduct
Y/N
A valid agency relationship can be created by
Law - if necessity
Yes
Y/N
A valid agency relationship can be created by
Ratification
Yes
Y/N
A valid agency relationship can be created by
Consent between the parties
Yes
Y/N
A valid agency relationship can be created by
The agent holding themselves out as an agent
No
Duties of agent
Accountability
No conflict of interest
performance
obedience
skill
personal performance
confidence
Rights of an agent
Indemnity
remuneration
lien
Agent duty - accountability explained
agent must provide full information to P of agency transactions and account for all monies arising from them. If they accept from the other party comission/reward to make the contract, considered a bribe and contract is fraudulent
Boston Deep Sea Fishing and Ice co v Ansell 1888
A was MD of C, accepted commission from suppliers on order he placed with them for goods supplied to the company. He was dismissed and company sued to recover commissions
held company was justified in dismissing A and he must account to it for commissions
Agent duty - on conflict of interest explained
Agent owes to their principal a duty not to put themselves in a situation where their own needs conflict with those of the principal
Agent duty - performance explained
agent who agrees to act as agent for reward as contractual obligation to perform agreed task, any agent may refuse to perform an illegal act
T/F
Unpaid agent is not bound to carry out their agreed duties unless there is other consideration
True
Agent duty - obedience expalined
agent must act in accordance with principal instructions if they are lawful and reasonable. Even if they believe disobedience to be in principal best interest, must not disobey (unless illegal/unreasonable acts)
Agent duty - skill explained
Agent undertakes to maintain the standard of skill and care to be expected of a person in their profession
Agent duty - personal performance expalined
agent owes duty to perform their tasks themselves and not delegate it to another (selected often due to personal qualities)
Agent duty - confidence explained
agent must keep in confidence what they know of principals affairs even when agency relationship ceased
Agent rights - indemnity explained
Agent is entitled to be repaid their expenses and to be indemnified by their principal against losses and liabilities if acts are proper and in limits of authority. may recover expenses even if not legally bound to pay.
Rights of agent - remuneration explained
agent entitled to be paid agreed remuneration for their services by the principal. Must have been agreed expressly/inferred from circumstances
Agent rights - lien explained
agent has right to exercise a lien over property owned by principal (right to retain and hold goods pending payment of sums owed to them)
Duty of agent or principal
Duty not to retain benefit from agency relationship
Agetn
Duty of agent or principal
Duty to pay agreed remuneration, even if no benefit derived from acts
Principal
Duty of agent or principal
Duty of confidence
Agent
What describes agent’s right of lien
right to retain property owned by the principal until they have been paid
How may an agents authority be given
expressly, impliedly or ostensible/apparent on basis of principal’s conduct
What is actual express authority
explicitly given by the principal to the agent to make a particular contract
T/F
The contract made by the agent is binding on the principal and other party only if the agent was acting within the limits of their authority from the principal
True
What does an agent have implied authority to do
all things incidental to the actions expressly authorised
to do all things that are usual by virtue of the agent’s office
Watteau v Fenwick 1893
C owned hotel, employed previous owner to manage it. Against C’s instructions, previous owner bought cigars on credit from supplier. Supplier sued C on contract, C argued not bound as previous owner had no authority to make it
Held was within usual authority of a manager of hotel to buy cigars on credit and C was bound by the contract, since restriction on actual authority had not been communicated
what is ostensible (apparent) authority
that which their principal represents to other persons (with whom the agent deals) that they have given to the agent.
Is ostensible authority restricted to what is usual and incdental
No - principal may expressly or by inference from their conduct confer on the agent any amount of ostensible or apparent authroity
T/F
It is not necessary that the agency agreement be in the form of a contract
True
Freeman & Lockyer v Buckhurst Park Properties 1964
Two individuals carried on business as property developers. One abroad and the business of the company was left entirely under control of the other who had no actual/apparent authority to entre into contracts as an agent, and was never formally appointed as MD, was allowed to. C sued company for work done on MD instruction.
Held although no actual delegation and authorisation, company had led C to believe that the individual was the MD and as such an authorised agent and the claimants had relied on it.
T/F
Representation of authority must be made to the third party and must be shown that the third party relied on the representation
True - if no causal link between loss and reliance on representation, third party will not be able ot hold principal liable
T/F
Agent has no rights and liabilities on the contract, unless it appears that the parties intended otherwise
True - intention may be express/inferred from circumstances
T/F
Where the agent does not name the principal, it is more likely that they will be considered to be a contracting party
True - but if clear the parties intend they should only act as an agent, they will drop out of the picture
Particular circumstances where agent may incur personal liability
under rules of trade usage,
where they add their name as party to a negotiable instrument
where they make a contract under seal, unless they do so as a trustee for the rpincipal or unless the law provides
What happens where the agent has authority, but is not known to be an agent
in these cases, where principal becomes known at a later date,
either agent or principal may sue on the contract
either the agent or principal may be sued on the contract
ONLY where agent’s authority existed at the time of making contract, and the contract cannot be said to have been intended to operate only between the contracting parties
What happens if agent has no authority
the principal cannot sue or be sued on the contract unless they choose to ratify it. agent may be liable for tort of deceit
Four ways in which agency can arise
agency by consent
agency by estoppel
agency of necessity
ratification
T/F
a principal may, in certain circumstances, ratify the acts of the agent which has retrospective effect
True
what is the definition of ostensible authoirty
The authority that the principal represents to other persons they have given to the agent
T/F
An agent may disobey the instructions of the principal if they believe disobedience to be in the best interests of the principal
False
Three types of authority agent may have
actual express authority
actual implied authority (incidental and usual)
ostensible or apparent authority
T/F
Provided agent has authority and is known to be an agent, they can never have any personal liability under the contract and only the principal can be liabile
false
What happens when agent has authority but is not known to be agent and principal becomes known at later date
Either agent/principal may sue on the contract
either agent or principal can be sued on the contract
What happens when agent has no authroity
the principal cannot sue or be sued unless they choose to ratify it
T/F agency of necessity will arise where there is no pre-existing contractual relationships and a person can be bound by the act of a complete stranger
False
T/F - agency by estoppel
The third party must show they have relied on a representation that the contracting party was acting as an agent for their principal
True
T/F - Agency by estoppel
It is not necessary to show that the claimants loss was caused by reliance of the third party on representation that the contracting party was acting as an agent for their principal
False
T/F
For an agency by estoppel to arise there must be a pre-existing agency relationship between the principal and the agent
False
T/F
The duties of an agent are limited to what was agreed and incorporated into the agency contract between agent and prnicipal
false
T/F
An agent and principal have a fiduciary relationship between them
True
In the absence of express provision regarding remuneration of an agent, what is payable
a reasonable amount of remuneration
What is express authority
that which is expressly given to the agent
What is implied authority
that which is given in regard to what is expressly authorised or which is usual by virtue of the agent’s position
