Law Of Agency Flashcards
What is the definition of agency?
The relationship which subsists between the principal and the agent who has been authorised to act for him or represent him in dealings with others.
What are the two contracts in agency?
- Between the principal and the agent
- Between the principal and the third party through the medium of the agent
True or False: An agent must possess full contractual capacity in dealings between the principal and third parties.
False
Who must have full contractual capacity according to S.136 of the Contracts Act 1950?
The principal
How can a contract of agency be created?
- By express appointment by the principal
- By implied appointment by the principal
- By ratification by the principal
- By necessity
- By the doctrine of estoppel or ‘holding out’
What is express authority in agency?
Authority given by words spoken or written.
What is implied authority in agency?
Authority inferred or accounted by the circumstances of cases
Fill in the blank: An agent can be a _______ and not possess full contractual capacity.
minor
What is the presumption regarding a wife’s authority in relation to her husband’s credit?
The wife has authority to pledge her husband’s credit for necessaries suited to their style of living.
Under what circumstances can a husband rebut the presumption of his wife’s authority?
- He expressly forbade his wife to pledge his credit
- He expressly warned the tradesman not to supply his wife
- His wife was sufficiently provided for
- His wife was given a sufficient allowance
- The order was unreasonable considering his income
What is agency by ratification?
When a principal accepts and confirms a contract made by an agent who exceeded his authority or acted without authority.
What are the conditions for a valid ratification?
- authorised
- unauthorised
- expressly act (KM&co v. D)
- have principal (K v. B)
- contractual capacity
- full knowledge of material facts
Ratify whole contract - within a reasonable time (MAB V. KS 1890)
- not injured
What is agency by necessity?
When an agent acts without express authority to preserve the principal’s property in emergencies.
What are the conditions for agency by necessity?
- Impossible to get the principal’s instruction
- Action necessary to prevent loss to the principal
- Agent must act in good faith
What is agency by estoppel?
When a person allows a third party to believe that another is their agent, and the third party relies on that to their detriment.
What are the duties of an agent to the principal?
- To obey the principal’s instructions
- To exercise care and diligence
- To render proper accounts
- To communicate with the principal
- Not to let own interest conflict with duty
- Not to make any secret profit
True or False: An agent can make a secret profit out of the performance of his duty.
False
What case illustrates the principle of agency by necessity?
Great Northern Railway v. Swaffield (1874)
What must happen for the principal’s ratification to be valid?
The principal must ratify the whole act or contract.
What does S.153 of the Contracts Act stipulate regarding ratification?
An act done without authority cannot affect a third party’s rights through ratification.
What happens if an agent does not act with sufficient skill?
The agent may be liable for any loss sustained by the principal.
What is the legal implication of a husband advertising to disclaim responsibility for his wife’s acts?
It does not relieve him from liability for her future debts if he has settled her past debts.
In the case of Kelner v. Baxter, what was the ruling regarding a non-existent principal?
A non-existent principal cannot ratify a contract.
What is the duty of an agent regarding secret profits?
An agent must not make any secret profit out of the performance of his duty.
Secret profit refers to a bribe such as payment of a secret commission or any financial advantage which an agent receives over and above the commission agreed by the principal and agent.
