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Business Law > Module 6: Law of Agency > Flashcards

Module 6: Law of Agency Flashcards

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1
Q

What is agency?

A

Between the principal the agents
Empowers the agent to act on the principals behalf
Agent acts as principals intermediary

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2
Q

What will the actions of the agent affect?

A

The legal position of the principal

Frequently bring principal into contractual relationship with a 3rd party

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3
Q

Resultant contract after agent contracts on principals behalf?

A

Between principal and 3rd party

Agent drops out and generally acquires no rights or obligations

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4
Q

How may the authority of an agent arise?

A

Agreement between principal and agents

Matter of law e.g. company law provides that company director is company’s agent

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5
Q

What are the 4 ways an agency relationship may be created?

A

Express agreement
Implied agreement
Ratification
By necessity

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6
Q

What is express agreement for agency?

A

No special formalities required
Writing or verbal
Principal and agent must have necessary contractual capacity

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7
Q

How is agreement implied for agency?

A

By actions of the parties
As a result of the relationship between parties
As a matter of law e.g. director of company

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8
Q

What is ratification?

A

When no agency actually exists

Party claims to have acted on behalf of another as his agent

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9
Q

What conditions must be satisfied for ratification?

A

Agent must have made clear he was acting for a known principal
Principal must have been in existence at time contract was made and have capacity
Must be in possession of all material facts when making decision to ratify
Ratification must be timeous

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10
Q

How can agency be created by necessity?

A

Result out of emergency situation where impossible to contract the principal
E.g. carrier of perishable goods delayed sell rather than go off
Acts for free
Entitled to recover outlays incurred on behalf
Has duty to take care of dealings and may be liable to damages

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11
Q

The authority of an agent to bind his principal?

A

Resultant contract between principal and 3rd party
Bound and acquires rights and obligations
Agent drops out and gets none

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12
Q

With what authority is the principal bound by the agent?

A

Express authority
Implied authority
Ostensible authority

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13
Q

What is express authority?

A

Expressly given
Verbal or in writing
Define nature

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14
Q

What is implied authority?

A

Implied from the nature of the agents activities or from what is usual or customary

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15
Q

Watteau v Fenwick 1893

A

Pub manager doesn’t have express authority to buy goods other than beer
Orders cigars but doesn’t pay
Pub owner was liable because buying cigars fell within the usual authority of a pub manager
Only if supplier told of limited nature of manager’s authority would pub not been bound

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16
Q

What is actual authority?

A

Express and implied together

17
Q

What is ostensible (apparent) authority?

A

Authority which an agent appears to have but does not actually have
3rd party reasonably entitled to believe he has
Principal may still be bound even if not authorised
Principal may limit but if 3rd party doesn’t know can still be bound by agent

18
Q

International Sponge Importers v Andrew Watt and Sons 1911

A

Ostensible authority of salesman
ISI knew cheques made out to salesman personally
Salesman kept cheque and ISI tried to claim payment from W
W did not have to pay
ISI failing to object allowed W to rely on ostensible authority of the salesman to accept cheques

19
Q

If agent exceeds his actual authority but principal bound on basis of ostensible authority what could happen?

A

Agent in breach of agency agreement
May sue or terminate
Agent may be liable to pay damages
Forfeits commission

20
Q

What happens when an agent acts out of actual AND ostensible authority?

A

Principal not bound by contract

Agent personally liable

21
Q

What may be included in express agreement regarding agent remuneration?

A

Commission basis
Salary
Basic salary or retainer plus commission

22
Q

What if there is no express agreement with regards to agent remuneration?

A

Right to be paid at the customary rate in that trade
In absence of this rate the agent will be paid a reasonable rate calculated on a quantum meruit basis - what his efforts merit

23
Q

Dudley v Barnet 1937

A

Estate agents found new tenants and arranged they’d take over lease
Existing tenants accepted different offer and refused to pay commission to estate agents
Estate agents entitled to be paid despite not going through principal
Remuneration if contract not carried out

24
Q

Reimbursement of Expenses and indemnity for agents?

A

Entitled to recover

Entitled to be indemnified by the principal where he was acting within his actual authority

25
Q

What is a general lien?

A

Type of right in security which gives the agent the right to retain goods or money until any claim which agent has against principal is satisfied

26
Q

What doe The Commercial Agents Regulations 1993 contain?

A

Min rights to agents who buy/sell on behalf of principal
‘Commercial agents’
Agency agreement may validly exclude some of these rights

27
Q

Some key provisions of the Commercial Agents Regulations 1993?

A

Written contract on request
Implied right to commission where introduced by agents and within period after termination
Promptly paid
Min notice periods
Limitations on restraint of trade clauses- must be in writing, cover only the area, no more than 2 years

28
Q

What are the duties of an agent?

A

Carry out principal’s instructions- if none trade practice
Act in person- delectus personae unless express/imlied authority to delegate
Exercise skill and care
Account his principal
Act in good faith and allow principal the full benefit

29
Q

What is delegatus non potest delegar?

A

A chosen delegate must not sub-delegate

30
Q

Black v Cornelius

A

Architect had implied authority to delegate certain matters to a surveyor

31
Q

What should an agent do to ensure he acts in good faith?

A

Not make any secret profit without knowledge/consent of principal
Must account for discounts
Not gain financial advantage without knowledge and consent

32
Q

Consequence of agent making a secret profit?

A

Terminate and dismiss
Forfeit rights to remuneration
Sue to recover profit

33
Q

How can agency be terminated?

A 
By mutual agreement
By principal at any time- in notice
By agent at any time- not to detriment of P
By principals business coming to an end
By death of either party
Expiry of fixed term contract

Business Law (17 decks)

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