Law Of Agency

Question 1

How is an agency created? (3)

Answer 1

By Agreement (express or implied)
By ratification
By neccessity

Question 2

How is an agency by agreement brought about?

Answer 2

Express agreement -
Can be formal in writing
Can be informal (oral)

Implied agreement -
By conduct of the parties
(means no express authority only implied authority)

Question 3

How is an agency by ratification brought about?

Answer 3

This is created retrospectivly after the agent has carried out their task

(Only validates past acts, not future)

Question 4

How is an agency by neccessity brought about?

Answer 4

When a person is entrusted with goods, if in an emergency occurs and it is neccessary to do something to preserve the goods.

Only applies where it was impossible to contact the owner for verification

Question 5

What are the duties of an agent? (5)

Answer 5

Obey instructions
Exercise proper care & skill
Perform duties personally
Act in good faith towards the Principle 
Account for monies recieved on behalf of the Principle

Question 6

What rights does the Agent have? (3)

Answer 6

Remuneration
Indemnity - for any reasonable expenses
Lien

Question 7

What can the Principle do if Agent commits a breach of their duty? (6)

Answer 7

1. Sue the agent for damages
2. Sue in Tort - for return of property
3. Dismiss the agent if its a serious breach
4. Sue the agent to recover bribes taken
5. Rescind any contracts formed fraudulently
6. Sue for account if full financial details are not disclosed

Question 8

Is the Principle liable for their Agents deeds?

Answer 8

Yes

Question 9

Is what is known by an Agent presumed to be known by the Principle?

Answer 9

Yes

Question 10

What is express actual authority?

Answer 10

Instructions given to the agent

Question 11

What is implied authority?

Answer 11

Agents have implied authority to do anything which is incidental to or neccessary for the carrying out of their express instructions

Also known as usual authority

Question 12

What is apparent authority?

Answer 12

3rd party doesnt know limits of agents authority, therefore they rely on what appears to be the authority of the agent.

The Principle is bound by the Agents apparent authority

The Principle must hold the Agent out as entitled to act on their behalf

Question 13

How does Apparent authority arise? (3)

Answer 13

Where the Agent has restricted authority

Where the Agent has never been appointed

Where the Agency has been terminated

(Agent can be sued here by 3rd party)

Question 14

When the contract is formed with a disclosed principle, what happens the Agent?

Answer 14

The Agent drops out
Principle & 3rd party can enforce the contract or sue each other
Agent cannot sue or be sued

Question 15

What happens if a contract is made with an undisclosed Principle? i.e. 3rd party is unaware they are dealing with an Agent

Answer 15

The Principle can enforce the contract

The 3rd party has the ‘right of election’ i.e. can enforce the contract or sue the Principle or the Agent but not both

Question 16

How is an Agency terminated? (9)

Answer 16

By agreement
By performance
Lapse of time 
Withdrawal of authority 
Renunciation by agent 
(Both could be breach of contract & be liable for damages) 
Death of either party
Bankruptcy of Principle
Insanity of either 
Frustration

Question 17

Whst is Frustration of a contract?

Answer 17

Where it is impossible, illegal or futile to carry out duties

Question 18

Who does an Insurance Agent act on behalf of in non consumer insurance?

Answer 18

Uniquely for both paties - insurer & proposer

Question 19

Who does an Insurance Agent act on behalf of in consumer insurance?

Answer 19

The consumer

Unless -
The agent collects info from consumer under express authority of insurer
The agent enters into the contract as the insurers agent
The agent does something in their capacity as the AR of the insurer

Question 20

What is an Agent?

Answer 20

A person who has authority or power to act on behalf of another person, known as the Principle

Question 21

What is an Agents task?

Answer 21

Usually to bring about a contract between their Principle and a 3rd party

Question 22

What extras do Insurance Intermediaries do?

Answer 22

Provide general advice on risk mangement and loss prevention
Assist in negotiating claims

Question 23

What happens in non consumer insurance if the Agent fails to pass on important info about the risk to the Insurance company?

Answer 23

The insurers can avoid the policy for non disclosure.

The proposer can then be left with an uninsured loss.

Question 24

What type of contract is used if the Agent receives no commission, fee or other payment?

Answer 24

A legal contract

A contract of agency if they are paid

Question 25

Does the Agent have the authority to bind the Principle into contract?

Answer 25

Yes

Question 26

What terms are laid out in a Agency by express agreement? (4)

Answer 26

Authority & powers of the Agent
Duties to be performed
Commission or other remuneration
Period of the agreement

Question 27

If an appointment of an Agent is made in the form of a deed, what is it known as?

Answer 27

Power of attorney

If agent is given power to sign deeds on principles behalf then they must be appointed in this way

Question 28

What are the two types of authority an Agent can have?

Answer 28

Actual Authority
- express or implied

Apparent Authority (ostensible)

Question 29

If an insurance Agent does not supply full or honest info about the risk on the proposal form what happens?

Answer 29

If, at the time, the agent was acting on behalf of the insured - the insurer can avoid the contract for breach of pre contractual information duty. Insured can then sue the Agent for breach of duty

If acting on behalf of the insurer, contract cannot be avoided as law will assume the insurer was aware of the full facts. Insurer can sur the Agent

Question 30

What does a fiduciary relationship mean?

Answer 30

It is based on duties of good faith