Chapter 4 - Law of Agency LO4 Flashcards
Creation of agency (3)
- Agreement (consent)
- Ratification
- Necessity
Appointment by express agreement outlines
Authority and powers of agent
Duties to be performed
Commission or remuneration
Period of agreement
Appointment by implied agreement
Where one acts on and at request of another if commission or payment involved
Agent by ratification
After agent has carried out task
Conditions for ratification
- Must do it on principals behalf
- Principal must be in mind when agent doing act
- Principal must have full knowledge
- Principal must have existed and contractual capacity
- Reasonable time
- Void / illegal cannot be ratified
- WHole contract must be ratified
Agent by necessity
Impossible to get owner’s instruction at the time
Agent acting for insured
Insurers can avoid the policy, because agent’s knowledge will be deemed to be known by the insured
Insured can then sue agent
Agent acting for insurer
Insurers will not be able to avoid the policy, insurers were aware of the true facts
Insurers have the right to sue the agent
Agent is agent for proposer
- Gives general advice
- No authority given by insurers
- Fill in / alter proposal form
- Agent and proposer collude to defraud insurer
- Advice on how to formulate claims
Agent of insurer
- Express authority to handle proposal forms
- Handle forms to previous business - implied authority
- Instructed by insurer to ask questions and fill out prop form
- survey and describes property on insurers behalf
- collect premiums
- act without express authority and company ratifies them
Duties of agent
- Obey principals instructions
- exercise proper skill and care
- Perform duties personally
- Act in good faith
- Account for monies received in behalf of principal
Delegation (sub agent) can only happen when
- Principal authorises some or all to be delegated
- Tasks to employees within company
- Accordance to trade custom
- Out of necessity
Remedies for breach of duty
- Sue the agent for damages for breach of contract
- Sue agent in tort (Agent refuses to return property)
- Serious breach = dismiss agent without any compensation
- Sue to recover bribe
- Fraudulent breach = rescind any contract made through agent, refuse commission
- Sue for account if they fail to disclose financials
Imputed knowledge
Principal is aware of information which has been given to agent
Rights of and Agent
- Remuneration - Right to payment is usually implied,
- Indemnity - Principal pay back any costs they incur to carry out task
Agent may lose right to indemnity
- Act not authorised / ratified by principal
- breach of duty
- claiming for indemnity is illegal or void by statute
Express actual authority
Instructions which have been given to agent stating what is allowed
Implied actual authority
Agents have implied authority to do anything which is incidental or necessary to carry out express instructions (incur travel costs, postage fees)
Usual authoirty
Acts which are usually performed by the principal
Apparent (Ostensible) Authority
- Principal has restricted authority of an agent
- agents has never been appointed at all
- unknown to 3rd party agent authority been terminated
Watteau vs Fenwick
Apparent (Ostensible) authority
Disclosed principal
Where 3rd party knows who the principal is, agent drops out once contract is made
Agent cannot be sued unless
- Agent who signed the deed may be liable on it
- trade customs may make agent liable for contract
- Agent who sign their name on cheque or bill may be liable
Undisclosed principal can sue 3rd party if
- lacked or did not have capacity
- ## ratify the contract
