Law of Agency

Question 1

Definition of an Agent

Give Ewan McKendrick definition of an Agent

Answer 1

“He is the authorised voice of one party (his principal) to act on his behalf in dealings with some third party” - Ewan McKendrick: Goode on Commercial Law 2010.

Question 2

How is authority bestowed on an agent?

Answer 2

Generally the agent will have authority given to him by his principal, but it is possible for it to be implied by the position held by the agent.

Question 3

Types of Authority

Define the three type of Authority

Answer 3

Express Authority: The Principal gives the Agent clear instructions to do something.

Ostensible / Apparent Authority: This occurs where the agent holds himself out as having some authority on behalf of the Principal

Implied / Customary Authority: Generally an agent in a recognised position in a particular market may well have “implied” or “customary” authority within that market activity.

Question 4

What is the leading case on Implied Authority?

Answer 4

Watteau v Fenwick (1893) - regarding the liability of an undisclosed principal.

Question 5

How Agency is Created

Name three methods

Answer 5

Expressly created

Through neccissity (i.e. through crisis)

Through ratification (This can be express or implied by conduct but is only effective if the Principal had a choice in the matter and was in full knowledge of the facts)

Question 6

Name the leading cases on creation of Agency

Answer 6

Agency of necessity:
Great Northern Railway v Swaffield (1874); it must be impossible to get instructions from the principal.

Ratified retroactively.
Cornwal v Wilson (1750) [Ratification by conduct].

Question 7

Duties of the Agent

List the 6 duties of the Agent

Answer 7

The duties of the Agent are similar to the duties of Directors under the Companies Act 2006 S.171-177. Broadly they are:

a) To carry out the instructions of the Principal
b) To act with due care and skill
c) A fiduciary duty (good faith)
d) Not to put himself in a position where his personal interests and agency duties conflict
e) Not to take bribes or make secret profits (IDC v Cooley (1972)
f) Must not delegate his duties without express permission from the Principal

Question 8

Rights of the Agent

List the 5 rights of the Agent

Answer 8

Remuneration
Commission
Indemnity
Lien
Mandate (i.e. contract)