Chapter 4 - Agency

Question 1

Agency Law

Answer 1

Describes the relationship which exists where one party, the agent, acts on behalf of another, the principal.

Question 2

Agency by consent

Answer 2

Consent may be express or implied either orally or in writing.

Question 3

Agency by estoppel

Answer 3

Agency by estoppel arises when:

• The principal gives a third party the impression that the person that the third party is an agent

Question 4

Agency of necessity

Answer 4

Arises where a person is faced with an emergency in which interests of another person are in imminent jeopardy

Question 5

Agency by ratification

Answer 5

Ratification validates past acts of the agent to create an agency relationship, as if the agency were authorised to act from the beginning

Question 6

Duties of an agent - Accountability

Answer 6

An agent must provide full information to the principal of his agency transactions and account to him for all the monies arising from them e.g bribes

Question 7

Duties of an agent - No conflict of interest

Answer 7

The agent owes to his principal a duty not to put himself in situation where his own interests conflict with those of the principal

Question 8

Duties of an agent - Performance

Answer 8

The agent agrees to act as agent for reward has a contractual obligation to perform his agreed task.

Question 9

Duties of an agent - Obedience

Answer 9

The agent must act strict in accordance with his principal’s instructions.

Question 10

Duties of an agent - Skill

Answer 10

An agent undertakes to maintain the standard of skill and care to be expected of a person in his profession

Question 11

Duties of an agent - Personal performance

Answer 11

The agent is usually selected because of his personal qualities and owes a duty to perform his tasks himself and not delegate

Question 12

Duties of an agent - Confidence

Answer 12

The agent must keep in confidence what he knows of his principal’s affairs even after the agency relationship has ceased

Question 13

Rights of an agent - Indemnity

Answer 13

The agent is entitled to be repaid his expenses, provided his acts are done properly within the limits of his authority

Question 14

Rights of an agent - Remuneration

Answer 14

The agent is also entitled to be paid any agreed remuneration

Question 15

Rights of an agent - Lien

Answer 15

The agent has the right to exercise a lien over property owned by the principal e.g right to retain goods pending payment of sums owed to him

Question 16

Authority of the agent - Actual express authority

Answer 16

• Expressly given by the principal in respect of a particular contract

Question 17

Authority of the agent - Actual implied authority

Answer 17

• Authority to do all things usual or incidental to an express authority, employment or office

Question 18

Authority of an agent - Ostensible authority

Answer 18

• Authority is created by the principal either expressly or inaction
• Is often wider than actual authority

Question 19

Liability of the parties - Agent has authority and was known to be an agent

Answer 19

• Third Party: May sue and be sue by the principal

-Principal: May sue and be sued

• Agent: Usually none

Question 20

Liability of the parties - Agent had authority but is not known to be an agent

Answer 20

-Third Party: Can choose to sue either principal or agent

-Principal and Agent: Either the principal or agent may sue on the contract

Question 21

Liability of the parties - Agent had no authority

Answer 21

-Third Party: No rights against principal but may have claim against the agent

-Principal: No obligations

-Agent: Potential liability under the tort of deceit breach of warranty of authority