The Origin and Extent of Agency Power

Question 1

In which circumstances is an agent considered to have authority to bind the principal?

Answer 1

Where the authority is actual or apparent.

Question 2

What is a power of attorney?

Answer 2

A document which sets out the powers to be conferred upon the agent.

Question 3

What are the types of power of attorney?

Answer 3

1. Special- for a specific task
2. General- General, wide-ranging powers to act on behalf of another.

Question 4

What circumstances require a written power of attorney?

Answer 4

Where an agent is to represent a principal in the sale of land.

Question 5

What are the various contractual ways of establishing actual authority?

Answer 5

1. Mandate contract
2. Employment contract
3. Independent agents
4. Composite contracts

Question 6

What is the contract of mandate?

Answer 6

A contract in which the mandatary undertakes to perform a task (known as the mandate) for the mandator.

Question 7

Which case deals with the mandatary as an unempowered agent who is obliged to carry out certain instructions, but who cannot bind the mandatary contractually?

Answer 7

Eileen Louvet Real Estate v AFC Property Development

Question 8

What is actual authority?

Answer 8

Authority conferred by the principal by words or conduct.

Question 9

What is apparent authority?

Answer 9

Authority recognised by the law and holds against the principal in circumstances where noa actual authority has been conferred, but where it appears to a third person that the agent was indeed acting with the principal’s authority.

Question 10

What are the forms of actual authority?

Answer 10

1. Express
2. Tacit
3. By operation of law
4. Ratification

Question 11

What is express actual authority?

Answer 11

Authority conferred expressly either orally or in writing.

Question 12

How is tacit actual authority tested?

Answer 12

Assessing the principal’s intentions by inferring from the principal’s conduct and the surrounding circumstances.

Question 13

What is actual authority by operation of law?

Answer 13

A person may have the power, by operation of law to represent another.

Question 14

What is actual authority by ratification?

Answer 14

When a principal approves and adopts the actions of an agent that were initially unauthorised.

Question 15

What are the requirements of ratification?

Answer 15

1. Act must be ratifiable
2. Principal must choose to ratify
3. The whole transaction
4. Principal must have the capacity to do so
5. In the proper method
6. In the time allowed.

Question 16

What is the requirement of ratifiable acts?

Answer 16

For the act to be ratifiable, the agent must have intended and professed to act as agent on behalf of another.

Question 17

What is the requirement of “the principal’s choice to ratify”?

Answer 17

Election must be made with full knowledge of all the relevant facts and circumstances or with the object of confirming the agent’s actions, whatever the circumstances may be.

Question 18

What is the requirement of “capacity to ratify”?

Answer 18

Principal must have contractual capacity to be able to ratify a contract notionally entered into on their behalf.

Question 19

What is the requirement of “methods of ratification”?

Answer 19

1. Communicating the ratification in words to the 3rd party or agent
2. By conduct in that the principal conducts himself that ratification is the only reasonable interpretation of his actions.

Question 20

What is the leading case on apparent authority?

Answer 20

Monzali v Smith.

Question 21

What does Monzali v Smith say?

Answer 21

Where any person, by words or conduct, represents or permits it to be presented that another person has authority to act on his behalf, he is bound by the acts of such other person with respect to any one dealing with him as an agent on the faith of any such representation, to the same extent as if such other person has the authority which he was so represented to have.

Question 22

What are the essential elements of estoppel?

Answer 22

1. A representation made in words or by conduct including silence/inaction
2. Representation must have been made by the principal to the person who raises estoppel (representee)
3. Principal must reasonably have expected that her conduct may mislead the representee
4. Representee must reasonably have acted on the representation to his own prejudice.

Question 23

What happens if someone takes responsibility for administering the affairs of another without any authority at all to do so, where the person cannot be reached and where the assisting party incurs expenses in doing so?

Answer 23

Negotiorum gestio.

Question 24

What is negotiorum gestio?

Answer 24

When one person voluntarily administers the affairs of another without the latter’s authority, there is created between them a quasi-contractual relationship of negotiorum gestio, into which the dominus is bound to reimburse the gestor for expenses the gestor may incur or losses the gestor sustains in the administration of the dominus’s affairs.