Introduction to Agency & Key Principles COPY Flashcards
Garnac Grain Co Inc. v HMF Faure and Fairclough, Ltd [1968]
Orthodox view is that CONSENT of both the agent and the principal is essential to found a relationship of agency.
LORD PEARSON:
“The relationship of principal and agent can only be established by the consent of the principal and the agent. THEY WILL BE HELD TO HABE CONSENTED IF THEY HAVE AGREED TO WHAT AMOUNTS IN LAW TO SUCH A RELATIONSHIP, EVEN IF THEYH DO NOT RECOGNISE IT THEMSELVES AND EVEN IF THEY HAVE PROFESSED TO DISCLAIM IT. The consent must, however, have been given by each of them, either expressly or by implication from their words or conduct.”
So consent is essential - but inferrable from conduct, even if the parties don’t think they’re acting as agent and principal and have expressly said they aren’t.
Lloyd v Grace, Smith & Co. [1912]
A solicitor’s clerk had general authority to conduct conveyancing business on behalf of his firm - persuaded a widow to instruct him to sell some properties on her behalf - she gave him title deeds and signed two documents he gave her, which were not explained to her - in fact, they conveyed the legal estates to him!
Q: was the firm liable for the clerk’s fraud?
H of L held; YES
His authority obviously did not include defrauding the firm’s clients; but because of the position they had put him in, the clerk was held to have a POWER to bind his principals in relation to this transaction.
From a modern perspective, more a case about vicarious liability in tort – clerk committed tort of deceit and firm is vicariously liable for his tort because they have put him in a position where he is able to commit the tort - but that doctrine developed much later.
Case is example of where POWER can exceed AUTHORITY.
Mercantile International Group Plc v Chuan Soon Huat Industrial Group Ltd [2002]
English company distributed products of a Malaysian company on UK market.
Conceded that relationship was ORIGINALLY one of agency - UK company was paid on a commission basis.
When Malaysian company terminated arrangement, Englush company sued for compensation under Commercial Agents Regulations.
Malaysian company argued that, by the time of termiantion, the English co was acting as a principal in its own rights, not an agent, because it had acquired the right to fix prices at which they resold the goods - argued that this freedom was inconsistent with agency - that prices are normally in the ‘principal’s CONTROL’.
C of A held; NO - still agency.
Whilst fact that Enlgish co. could fix prices was an important factor to take into account, it was not conclusive evidence as to the relationship of the parties.
Smith Stone & Knight Ltd v Birmingham Corporation [1939]
This case was actually about when a company is liable for actions of its subsidiary, but dictum can also be applied to the question os whether some is an agent of another?
ATKINSON J:
“(1) Were the profits treated as profits of the [parent] company?
(2) were the persons conducting the business appointed by the parent company?
(3) Was the [parent] company the head and brain of the trading venture?
(4) Did the [parent] company make the profits by its own skill and direction?…
(6) Sixthly, was the [parent] company in effectual and constant control?”
Many of these questions can be applied by analogy to agency – particularly question six: “effectual and constant control” by the principal?
Branwhite v. Worcester Works Finance, Ltd. [1969]
Another case on CONSENT - held; no agency relationship arose here.
LORD WILBERFORCE (dissenting) - spoke about Lord Pearon’s dictum in Garnac Grain
“The significant words, for the present purpose, are “if they have agreed to what amounts in law to such a relationship.” These I understand as pointing to the fact that, while agency must ultimately derive from consent, the consent need not necessarily be to the relationship of principal and agent itself (indeed the existence of it may be denied) but may be to a state of fact upon which the law imposes the consequences which result from agency. It is consensual, not contractual. So interpreted, this formulation allows the establishment of an agency relationship in such cases as the present”.
Thus, the parties need not actually have used language of agency for the law to infer that they intended to create an agency relationship – the parties may not even appreciate the legal concept of agency but may nonetheless create an agency relationship if what they have done is best reflected by the legal concept of agency.
S.53 (1)(a) Law of Property Act 1925
(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by his AGENT THEREUNDTO LAWFULLY AUTHORISED IN WRITING, or by will, or by operation of law
THUS, AN AGENT CREATING OR DISPOSING OF AN INTEREST IN LAND ON BEHALF OF HIS PRINCIPAL, MUST HAVE AUTHORITY TO DO SO IN WRITING!
NYK Bulkship (Atlantic) NV v Cargill International SA [2016]
Complicated series of events in the Nigerian oil market - Issue arose as to whether a sub-sub charterer of a ship should be regarded as the agent of the owners of the ship.
UKSC held NO and had interesting discussion as to what agency means when used as an express term of the charterparty.
Held; the word “agent” in that particular context was not necessarily being used in the strict legal sense – it was being used here with a wider meaning than the conventional one.
Formalities for Creating an Agency Relationship
In general, no rules on formalities - agency relationship can be created without them, purely orally, etc.
Main exceptions:
- When creating Lasting Powers of Attorney
- s.53 (1)(a) LPA 1925 (agent creating or disposing of interest in land on behalf of his principal must be given authority to do so in writing)
Maclaine Watson & Co. Ltd v Department of Trade and Industry [1988]
The International Tin Council – an organisation that had been created by a number of States interested in the market of tin, including the UK - its job was to maintain buffer stocks of tin to keep the price stable - but the members started to speculate in tin - did not work out - went insolvent.
Trade creditors looked for a solvent defendant to sue - sued British Govt on basis that (1) they were one of the creators of the Council, and (2) that Council was acting as an AGENT for the States that created it, and that contracts were really between them and the States.
H of L REJECTED - held;
The member States would NEVER have consented to the Tin Council acting as their agent - simply no evidence of any intention on their part.
Thus, LACK OF CONSENT proved fatal to an agency relationship
Reinforces Lord Pearson in Garnac Grain - consent is essential.
Lasting Powers of Attorney
= A document by which a principal appoints an agent to carry out a particular transaction on his behalf - e.g. if you are selling your house but abroad at the relevant time.
General Powers of Attorney end when grantor becomes mentally incapacitated or dies.
So in order to deal with the affairs of, say, an elderly person who has become mentally incapacited, need to use a LASTING POWER OF ATTORNEY.
Mental Capacity Act 2005, s.9, which substituted the idea with ‘lasting powers of attorney’.
The difference is that in a lasting power of attorney, the donor can empower the attorney not just to deal with their property/finance matters, but also health matters – e.g. can authorise lasting attorney to turn off life support machine.
For obvious reasons, there are strict formalities that must be complied with to set it up – must be done in a set form and signature of the donor must be witnessed by two witnesses.
When you have a lasting power of attorney, and want to activate it, must notify Office of the Public Guardian.
G. (A) v G. (T) [1970]
You can’t use agency as a way enlarging your own contractual capacity.
E.G. a minor can’t enlarge their ability to carry out legal transactions by appointing an agent to carry out the act.
But someone with a disability CAN appoint an agent to carry out any transaction which they could’ve carried out themselves.
Old case - “affilitation summons” - application by mother of an illegitimiate child against alleged father for maintenance £.
Missed time limit - but not barred if the father had acknowledged he was the father before time limit.
Here, father’s parents had made payments to the mother before time limit - effectively admitting that their son was the father.
Father was a minor - Did parents have the right to say this, acting as his agents?
Held (C of A); YES
Although you can’t use agency to enlarge the contractual capacity of the person with the disability/minor, the person with the disability/minor can appoint an agent to do anything which he could do himself – the father could have made payments to the mother (not a legal transaction that a minor can’t do) – therefore, he could authorise his parents as agents to do the same.
