Chapter 4 - Law of agency Flashcards
Creation of agency
- Agreement (consent) - implied or expressed
- Ratification - created retrospectively
- Necessity - made through emergency
Remedies for breach of duty
- Sue the agent for breach of contract
- sue the agent for tort
- dismiss without notice of compensation for serious breach
- sue the agent to recover a bribe paid to agent
- for fraudulent breach, refuse commission and rescind contract
- sue the agent for account if the agent fails to disclose full financial details
Imputed (assign/represent) knowledge
Agents actions seen as the principals - so the principal becomes liable for agents actions and are bound by their decisions
Apparent (Ostensible) authority
Agent has no real authority, but it appears to the 3rd party that they have this authority and therefore can bind the principal
Authority of agent tree
- actual authority
- implied actual authority
- incidental authority
- usual authority
- express actual authority
- implied actual authority
- Apparent (ostensible) authority
Usual (customary) authority
Usually perform in that profession so it is assumed so
Why may there be termination of agency
Agreement between parties Performance Lapse of time Withdrawal of authority Renunciation of agent (agent withdrawers authority) Death of either agent or principal Bankruptcy Insanity Frustration
Agency will be automatically terminated
By lapse of time if the agreement was created for a specific period of time
A mutual agreement of the parties
By performance of the task specified in the agreement
On death of the principal
A lien is
a right to retain goods as security for the payment of debt
In arranging insurance for their business premises, the insured gave information about the nature of the risk to an insurance intermediary. The intermediary was acting on behalf of the insurer but failed to pass this information on to the insurer. In the event of a subsequent related claim, what would the position be?
The insurer would be bound by the contract because the insurer would be regarded as having the same information as the agent.
An agent for a disclosed principal commits the tort of deceit by knowingly making false statements to a third party. Who, if anyone, is liable if the third party suffers a financial loss as a result of these statements?
Both the agent and the principal.
Whilst Tim was on holiday, unknown to him his agent made a contract on his behalf. Tim is happy to ratify (give consent/to correct) the contract, but he does want to change a minor term. The services under the contract are scheduled to be carried out next week. What is the legal position regarding ratification of the contract?
Tim cannot ratify the contract excluding the minor term as the whole contract must be ratified.
When may an agent be legally allowed to delegate contractual duties to a sub-agent without the express permission of the principal?
o In accordance with trade custom
o Out of necessity
A principal has just unilaterally served the notice required to terminate the agreement with their agent. This is known as termination by
withdrawal of authority and NOT lapse of time
Gina is acting as an agent of the insured. She has provided advice to the proposer on business insurance and completed a proposal form on their behalf for them to sign. If it becomes clear with a subsequent claim that incorrect pre-contractual information has been provided, the insurer may
be able to avoid the policy. In this case, the insured may sue Gina for breach of duty.
