Flashcards in The Law of Agency Deck (55)
What is agency?
One of earliest forms of arranging business affairs. The contract which exist when one person instructs or allows another person to act for them in what will be a binding legal arrangements with a third party.
(Authorisation to work on someone else's behalf, contract between parties granting authority, sometimes related to expertise e.g. selling home)
Common law elements as build over time
Who is an agent?
A person who has authority to act for and on behalf of another (called the principal) in contracting legal relations with third parties; and the agent representing the principal creates, alters or discharges legal obligations of a contractual nature between the latter and third parties. Agent only has liabilities for principles
What does the tripartite relationship mean?
Any agreement made by three parties, in Agency law refers to the situation where principal nominates an agent to act on their behalf and to form an agreement with third party. Agent working on principals behalf binding him into the third party in a contractual relationship without necessarily himself (the agent) becoming legal part of that relationship.
Tell about Agents ultimate disclaimer
As long as the agent conducts their business rightfully and without exceeding their liability, the principal is reliable
Tell about the feature of two contracts in an agency
Not all need to meet, but you need to provide clear instructions to your agents.
Why is it important that agents exist
Commerce would literally come to a standstill if businessmen and merchants could not employ the service of factors, brokers estate agents, but were to expected to do all by themselves. Sometimes it is just simpler to outsource things, this is why agents exist.
Types of agents - General agent
Acts as an agent a long period of time, over multiple transactions. Carries out multiple actions, often simultaneously for one principal, or even all the actions for one particular principal.
Types of agent - Special agent
Appointed to carry out one particular transaction
Types of agent - Mercantile agent
Factors Act 1889 - a lot of historical curiosity, industry related.
An agent who in the ordinary course of business has the authority either to sell goods, or to consign goods for the purpose of sale, or to buy goods, or raise money on the on the security of goods.
Can pass title even where the principal has not consented (or would not have consented to particular transaction). In the UK, most factors fall within the definition of a merchant agent under the Factors Act 1889 and therefore have the powers of such.
Define Mercantile agent
The agency of a factor who in the customary course of his business has authority binding on his principal to buy or sell goods, to consign goods for sale or to raise money by pledging goods.
Types of agent - Del Credere Agents
Where there is a fear from both sides that the other party won't held their end of the contract, this agent has a mediating nature. This arises where an agent provides a guarantee or indemnity to the principal. Minimises risks of any not paid goods.
Define Del Credere Agent
Def. A del credere agency is a type of principal-agent relationship where in the agent acts not only as a salesperson or a broker for the principal, but also as a guarantor of credit extended to the buyer.
List four types of agents
1) General agent
2) Special agent
3) Mercantile agent
4) Del credere agent
What is a commercial agent
A self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of another person (the principal), or to negotiate and conclude the sale or purchase on the behalf and in the name of principal.
This is also the nature of special and general agents.
List five ways of creation of agency
1) Express creation
2) Implied creation
3) Creation by ratification
4) Creations by Necessity
5) Creation by holding out
Tell about express creation of an agent
Either oral or written, formal or informal agreement between the principal and the agent. E.g. in real estate, agency is normally created by either a written listing agreement with a seller or a buyer agency agreement with a buyer.
Tell about implied creation of an agent
By the circumstances. Agency can also be created through an implied agreement. Meaning, the conduct of the both parties expresses an intent to create an agency relationship. This agent works on the principal's behalf through implied authority, rather than a stated agreement.
(Arises as a result of rule of law s5 Partnership Act 1890 - every partner is deemed or implied to be an agent of the firm and the other partners.)
Tell about creation by ratification
When no agency agreement, The principal comes later aware of the acts of an agent, and ratifies them either by expressly or by implication. Ratification puts the agent and the principal in the same position if they would have been in agency agreement in the first place
Define Agency by ratification
Agency by ratification arises when a person (the principal) ratifies (approves and adopts) an act which has already been done in his name and on his behalf by another person (who had no actual authority, whether express or implied to act on his behalf when the act was done)
What is concluded on Agents authority
If agent exceeds their liability, the agent is liable, unless the principal ratifies the agents action.
What are the conditions (6) for agency creation by ratification
1) Agent must be acting in the capacity of an agent and disclose this to a third party
2)Principal must be in existence at the time of the transaction
3) Principal must have capacity to take the action in question
4) The principal must be informed of all the facts behind the action
5) The ratification must be within relevant timescale
6) Action being ratified must be legal
Tell about creation by necessity
Arises when person A acts in an emergency in which person B's property is in imminent jeopardy and it becomes necessary in order to preserve B's property, fir A to act on B's behalf. Agency of necessity arises only when it is practically impossible for the agent to communicate with the principal before the act. Acts on the goodness of their heart.
Tell about creation by necessity case Fernie v Robertson (1871)
A house is owned by a senile old woman who later dies. When she was ill her daughter had cared for her and had instructed essential repairs on the house. It was held that this was an instance of negotiorum gestio. When the mother died her heir was liable to repay the daughter for these expenses. The reason for this was it was judged that the mother would have authorised the repairs had she been competent enough to do so.
Tell about creation by holding out
The principal is bound by the act of an agent if on an earlier occasion he has made others believe that other person doing some act on his behalf is doing with his authority. A has bit restricted B from making such statement. This arises due either positive encouragement of that impression by principal, or the fact that principal has taken no action to contradict the impression that agency exists.
There has been agency, but the withdrawal has not been communicated to a third party. (let everyone know that this agent is no longer authorised to work on your behalf. If they don't know, agent can still form a legally binding contract.
What are the agents duties to the principle? (8)
1) Duty to perform instructions
2)Duty to exercise skill and care
3)Duty to keep accounts (receipts)
4)Good faith/fiduciary duty
5) The duty to act personally
6)The duty to account
7)The duty to not disclose confidential information
8)The duty to avoid conflict of interest
Tell about the duty to perform instructions
An agent must abide by instructions under the agency agreement. Agent must act in way using best judgement or by custom of his profession where only general instructions are given. (Where instructions are unclear, principal cannot hold agent responsible/accountable for any loss due bad instructions). The agent is personally liable if they fail to follow clear instructions.
Tell about instructions case Gilmour v Clark (1853)
Obey P's Instructions - Principal instructed the Agent to put the goods on one ship/vessel; then the Agent's servant put the goods on another which sank. The Agent was liable for these actions and the loss.
Tell about instructions case Ireland v Livingston 1872
Livingston (principal) asked Ireland (agent) to procure 500 (+/- 50 tons) of sugar and have it shipped to any of a number of possible destinations in the UK. In Ireland’s market (Mauritius), procuring 500 tons was next to impossible. Ireland shipped 400 tons to Livingston, and Livingston rejected them. Decision: Livingston was bound to accept the sugar. Ireland within his actual authority was authorised to apply a reasonable interpretation to his agency agreement. As 500 tons was unavailable, it was reasonable to assume that 400 tons would be acceptable.
Tell about the Duty to exercise skill and care
Must perform agency agreement with skill and care of varying nature and extent. A member of profession must exhibit skills of a competent member of that trade or profession. If not a member of trade or profession - must exhibit skill and care which can be extended for an ordinary prudent man managing his own affairs. An agent will not be liable for errors occurring where he showed reasonable knowledge, skill and care.