Law of Agency Flashcards
What is agency?
The legal relationship between two parties in which one gives the other authority to act on their behalf.
How is agency relevant in business?
Businesses can only operate through natural persons acting on their behalf.
When is capacity to appoint an agent limited?
When the contract requires the principal to employ personal skills or discretion.
Do agents incur personal liability?
No.
What are the four requirements for authority by estoppel?
- Representation by the agent.
- Representation by the principal.
- Reasonable reliance on the representations made.
- Representations must have induced the third party to act.
When may authority be delegated?
a. When justified by trade usage.
b. When justified by prior dealings.
c. When the principal was aware a sub-agent would be used.
Is sub-agency a part of the primary contract?
No, it is a separate contract.
What are the 7 duties of an agent?
- Performance of authority.
- Keeping accounts.
- Showing good faith.
- Avoiding a conflict of interest.
- Not making a secret profit.
- Not delegating authority.
- Respecting confidentiality.
What are the duties of the principal?
- Reimburse and indemnify the agent’s expenses.
- Pay agent agreed remuneration.
What are the 3 ways of contracting under agency?
The principal is:
1. named.
2. unnamed.
3. undisclosed.
When does agency terminated?
Completion
Expiration
Insolvency
Death
Insanity
Consent
Supervening illegality
Agent’s renunciation (may incur liabilities)
Principal’s revocation (may incur liabilities)
What are the 4 formations of an agency contract?
Express authority - expressly given.
Implied authority - authority implied.
Authority by estoppel - authority given by not stopping the “authorised” party (representation).
Ratification - authority given after the fact.
