How to set up an Agency Flashcards
Agreement - Actual authority
Expressly created by contract
- in this case all the normal elements of a contract must be present
- the agent is instructed as to what particular tasks to perform and the precise powers he has in carrying out those tasks
Agreement - implied authority
Act either from the nature of a relationship or to enable the agent to carry out their express actual authority
- if the agent is appointed in a particular business he/she will have authority to do what is usual, incidental or customary in that business - e.g. Company secretary booking conference room/catering
- limits on authority: implied authority can arise when the principal limits the agents authority in some way but has not told the third party about this limit
Implied authority case
Summers v Solomon (1857) - Solomon/P owned a jewellers shop and employed his nephew A, A ordered jewellery from Summers/TP and P paid for it. A left and ended agency but ordered more jewellery in P’s name and disappeared after he got the jewellery.
HELD: P had conducted himself as to make TP believe A had the authority to order the goods. As TP had no notice of termination they could recover the price from P.
Ratification
Someone may act as an agent without any authority or they may act in excess of their authority.
The principal may adopt the contract by ratifying it.
Conditions for ratification
i) The principal must exist at the time the agent makes the contract - Keiner v Baxter (1866) - the company didn’t exist at the time the contracts were made
ii) The agent must make the contract as agent and not as the principal and must have named or disclosed the principal - if the third party believe the agent is acting for himself the principal cannot ratify
Keighley Maxsted v Durant (1901) - KM
Instructed A to buy wheat at 44shillings/3d but agent bought at a higher price from D in his own name without saying he was acting for anyone. KM later ratified but then changed their mind and didn’t pay.
HELD: As the agent had not declared he was acting for the principal, the principal could not ratify the contract. Agent liable.
Conditions for ratification II
iii) Principal must have legal capacity - a minor (under 18 years) cannot act as a principal as a general rule because a minor cannot make valid contracts
iv) The unauthorised act must be capable of being ratified - if the act is illegal or cannot be ratified EG. Drugs or 15k worth of shares because agent got a tip off
v) Time limit for ratification - ratification must take place within the time agreed by the parties or if no time limit is agreed it must be done within a reasonable time
Bird v Brown (1850) HELD: There could be no stoppage of the goods after the demand of the goods by the buyer’s trustees. Ratification too late.
Effect of ratification
The effect is retrospective, it dates back to the time the contract was made
Bolton & Partners v Lambert (1889)
Dec13th, A acting on behalf of BP, accepted an offer by L to take a lease of BPs property. However, A did not have authority to do this. Jan13th L withdrew his offer. BP then ratified A’s act.
HELD: BP had retrospectively validated the contract and Lamberts attempt to withdraw the offer was ineffective.
Estoppel
Agency by estoppel arises if P by words or conduct, allows A to appear to a TP to be her agent.
If TP then makes a contract with A, P will be estoppel from denying A’s authority.
Barrett v Deere (1828) The debtor went to the creditors counting house to pay a debt. He handed payment over to a rogue who disappeared with the money.
HELD: This was sufficient to discharge the debt, it was reasonable for the debtor to believe that the rogue was the creditor’s agent and had the creditors authority.
