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MO5 Insurance Law - 2022 - Chapter 1 and 2 > Law of Agency > Flashcards

Law of Agency Flashcards

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1
Q

What is an agent?

A

Person who brings contracts between a principal and a third party

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2
Q

What power to an agent have?

A

Power to act on behalf of the principal.

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3
Q

What is an insurance broker in terms of an agent?

A

An agent

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4
Q

What is the most common agency relationship?

A

By agreement (or consent)

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5
Q

How does an agency by agreement come about?

A

Usually through a contract of agency

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6
Q

What basis can an agency by agreement be on?

A

Express or Implied Basis

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7
Q

What type of contract is an express agreement on?

A

A formal contract set out.

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8
Q

What does an express agreement stipulate?

A

Authority
Duties
Wat payment to expect
Period of agreement

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9
Q

What form can an express agreement be in?

A

Form of a deed ie power of attorney

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10
Q

What is an implied agreement based on?

A

Based on the conduct of the parties and the relationship between them.

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11
Q

What is an agency by ratification?

A

Agreement made retrospectively. The agent acts and then the principal confirms and ratifies the action after the event. Under the doctrine of ratification.

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12
Q

What conditions must be satisfied for a successful ratification?

A
  • Agent must carry out activity on principals behalf.
  • Principal must be the person the agent had to mind at the time of the act.
  • Principal must have existed and had a contractual capacity at the time of the act.
  • Ratification must take place in a reasonable time
  • Void or illegal acts can’t be ratified
  • Whole contract must be ratified
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13
Q

How is an agency by necessity created and how does it normally arise?

A

When the principal cannot be contracted for instruction and the agent takes necessary actions on their behalf.

Normally arises when a person is entrusted with another’s goods and takes steps to preserve them.

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14
Q

In genreral law who does an agents loyalty lie with?

A

The principal

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15
Q

In insurance who does a broker commonly act on behalf of?

A

The insurer and insured.

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16
Q

What would a broker be doing when acting for the insured?

A

Giving advice
Completing a proposal form
Formulating a claim

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17
Q

What would a broker be doing when acting for the insurer?

A

Granting cover
Collecting premiums
Asking the proposer questions on the insurers behalf
Survey’s for insurer
Express/Implied authority to collect premiums

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18
Q

What sets out the rules determining which party the agent is acting for in any transactions in Insurance?

A

Consumers Insurance (Disclosure and Representation) Act 2012 CIDRA

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19
Q

What does CIDRA stand for?

A

Consumers Insurance (Disclosure and Representation) Act 2012 CIDRA

20
Q

What is DOG PA?

A

Duties of an agent

21
Q

What does DOG PA stand for?

A

Due care and Skill
Obedience
Good Faith/trust
Personally perform the role
Account for any monies received

22
Q

What can the principal do if an agent fails in their duties?

A

They can sue the agent for damages in tort or contract
They can dismiss the agent
They can refuse the commission if a breach is fraudulent

23
Q

What is imputed knowledge?

A

Anything that the agent knows must be passed to the principal.

24
Q

What are the three rights of an agent?

A

Remuneration
Indemnity
Lien

25
Q

What is remuneration?

A

Right to receive commission

26
Q

What us indemnity as a right to an agent?

A

Paid for expenses connected to the role ie if they travel to secure the deal, the travel expenses

27
Q

When would an agent lose there indemnity right?

A

If they breach there duties or act illegally or void by statue

28
Q

What is lein?

A

The right to retain property owned by the principal for security for money owed

29
Q

What authority does an agent have the majority of the time?

A

Actual Authority

30
Q

What are the two types of actual authority?

A

Express and implied

31
Q

What is express actual authority?

A

Instructions given to the agent by the principal. Orally or written.

32
Q

What is implied actual authority?

A

Incidental or necessary authority for the agent to carry out express instruction.

33
Q

What is apparent/ostensible authority?

A

Third parties typically deal with the agent so they may not know the authority an agent has or the agent may have no real authority.

The principal is bound regardless.

34
Q

How can aparent/ostensible authority arise?

A
  1. When the principal has restricted the authority of a validly appointed agent.
  2. The apparent agent has never been appointed
  3. Unknown to the third party, the authority of an agent has been terminated
35
Q

What are the two main types of principal?

A

Disclosed or undisclosed

36
Q

What does a disclosed principal mean?

A

The TP is aware of the principal
The TP is aware they are dealing with an agent

37
Q

Can the TP and principal enforce a contract to each other where the principal was a disclose principal?

A

Yes

38
Q

Can an agent be sued when there is a disclosed principal?

A

No and they cant sue either

39
Q

What is an undisclosed principal?

A

The existence of the principal is not known
The TP is unaware they are dealing with an agent

40
Q

Can an undisclosed principal enforce a contract against a TP?

A

Yes

41
Q

Can a TP enforce a contract with an undisclosed principal?

A

Yes or they can enforce it against the agent. They have to pick one not both though.

42
Q

What is the right of election?

A

Where there is an undisclosed principal, the TP can enforce a contract against the agent or the principal, but not both.

43
Q

With an undisclosed principal, the TP can sometimes sue the agent. What could they sue them for?

A

Breach of warranty of authority
Action in tort

44
Q

What is an agents breach of warranty?

A

If the agent has no authority/exceeds authority so the principal is bound this is a breach of warranty. Even if the agent thought they were authorised.

45
Q

What is an action in tort against an agent?

A

If an agent commits a tort when acting in the course of their authority, the principal will
be liable.

The principal will be liable if the agent makes fraudulent statements to a third party so as to commit the tort of deceit. However, if the agent knows the statement to be false or acts recklessly, they will be liable as well.

The agent will not be liable if they innocently pass on false information given to them by the principal.

46
Q

How can an agency be terminated?

A
  1. Agreement between parties
  2. Performance of a particular task complete
  3. Lapse of time
  4. Withdrawal of authority
  5. Renunciation by the agent
  6. Death
  7. Insanity
  8. Bankruptcy
  9. Frustration
47
Q

What happened in the Watteau vs Fenwick case?

A

Defendant = Fenwick
Fenwick appointed Mr humble as pub manager
Mr Humble as an agent of Fenwick purchased cigars from Watteau
Fenwick had forbid Mr Humble to buy cigars
Fenwick refused to pay
Watteau took Fenwick to court
Fenwick lost as Watteau was a third party unaware of Mr Humble being forbidden to buy cigars but aware he was an agent of Fenwick.
Mr Humbles actions bound Fenwick

Leading case in Apparent/Obtensible Authority.

MO5 Insurance Law - 2022 - Chapter 1 and 2 (10 decks)

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