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.
What remedies are available to the principal if the agent makes a secret profit without consent?
- The principal may repudiate the contract (s.168)
- The principal may recover the amount of the bribe from the agent (s.169)
- The principal may refuse to pay the agent his commission
- The principal may dismiss the agent for breach of duty
- The principal may sue the agent and the third party giving the bribe for damages
Example case: Tan Kiong Hwa v. Andrew S.H. Chong [1974] 2 MLJ 188.
What is the principle of ‘Delegatus Non Potest Delegare’?
A delegate cannot delegate (general rule).
Under what circumstances can an agent delegate his authority?
- Where the principal approves of the delegation of authority
- Where it is presumed from the conduct of the parties
- Where customs of the trade or business permits delegation
- Where the nature of the agency requires delegation
- In case of necessity or unforeseen emergency
- Where the act to be done is purely ministerial or clerical
Example case: De Bussche v. Alt (1878).
What duties does the principal owe to the agent?
- To pay the agent the commission or other agreed remuneration
- Not to willfully prevent or hinder the agent from earning his commission
- To indemnify and reimburse the agent for acts done in exercise of his duties.
What are the two types of authority an agent can have?
- Actual authority
- Apparent/Ostensible authority.
Define Actual Authority.
Authority given by agreement, which can be expressly given (oral or written) or implied.
What is Apparent/Ostensible Authority?
Authority given by law where a principal leads a third party to believe that the agent has authority to act on their behalf.
How can an agency be terminated?
By the act of the parties
* By mutual consent
* By unilateral revocation by the principal
* By unilateral renunciation by the agent
- By operation of law.
-by the performance of the contract agency
-by the expiration of the period of fixed or implied in the CA
-by the death of either agent or p
-by subsequent insanity either the p or a
-the banckruptcy or insolvent of the p
What must be provided when terminating an agency?
Reasonable notice must be given in either revocation or renunciation.
True or False: The principal can revoke the agent’s authority at any time without consequences.
False.
What is the effect of termination of an agency on third parties?
Termination does not take effect regarding third persons before it becomes known to them.
What happens if an agent has an interest in the property that forms the subject-matter of the agency?
The agency cannot be terminated to the prejudice of such interest, in the absence of an express contract.
Fill in the blank: The principal cannot revoke the agent’s authority after the authority has been partly _______.
exercised.
What are the implications of a principal revoking an agent’s authority without adequate notice?
The principal must compensate the agent for the amount they might have earned under the contract.
