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LAW OF AGENCY
Governed by Part X of the Contracts Act 1950. s.135 of the Contracts Act 1950 : An "agent" is a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the "principal". Agency - relationship which subsists between a principal & an agent, where the agent has been authorized to act for the principal or represent him in dealing with others / 3rd party. Agent - A person who is employed by the principal to do an act on behalf of the principal or to represent the principal in dealings with the 3'd party Principal - A person who authorizes the agent to act on his behalf
LAW OF AGENCY
CONTRACTUAL RELATIONSHIP BETWEEN PRINCIPAL AND AGENT WHERE THE AGENT DERIVES AUTHORITY CONTRACTUAL RELATIONSHIP BETWEEN PRINCIPAL AND THIRD PARTY TO WHOM THE AGENT DEALS WITH
CAPACITY
AGENT: S.137 ANYONE CAN BE AN AGENT BUT THE PRINCIPAL HOLDS RESPONSIBILITY PRINCIPAL: S.136 AGE OF MAJORITY & SOUND MIND CHAN YIN TEE V WILLIAM JACKS & CO (MALAYA) LTD
FORMATION
By express appointment
By implied appointment
By necessity
By ratification
IMPLIED FROM CIRCUMSTANCES OF THE CASE BY WORDS OR CONDUCT S.140 (Chan Yin Tee V William Jacks)
IMPLIED AGENCY
AGENCY BY RATIFICATION
EFFECT: PRINCIPAL IS BOUND RETROSPECTIVELY FROM THE DATE OF THE ACT BY AGENT AND NOT THE DATE OF THE CONTRACT S.149
AGENCY BY RATIFICATION
HOW? AGENT EXCEEDS OR HAS NO AUTHORITY PRINCIPAL CAN CHOOSE TO REJECT OR ACCEPT S.149
CERTIFICATION OR ACCEPTANCE OF AN ACT DONE WITHOUT AUTHORITY EFFECT: PRINCIPAL IS BOUND RETROSPECTIVELY FROM THE DATE OF THE ACT BY AGENT AND NOT THE DATE OF THE CONTRACT S.149 (Bolton & Partners V Lambert)
PRINCIPAL MUST HAVE CAPACITY AT THE TIME OF THE ACT AND RATIFICATION (Boston Deep Sea Fishing & Ice Co V Farnham)
RATIFICATION WITHIN REASONABLE TIME (Metropolitan Asylum Board V Kingham & Sons kes telur)
AGENT ACTING AS AN AGENT AND NOT IN HIS OWN NAME (Keighley Maxted & Co V Durant the wheat case)
PRINCIPAL MUST BE IN EXISTENCE (Kelner v Baxter the hotel case where the principal company was not yet registered)
AGENCY BY NECESSITY/EMERGENCY
An agent has authority, in an emergency, to do all such acts for the purpose of protecting his principal from loss as would be done by a person of ordinary prudence S.142
AGENT ENTITLED TO ADDITIONAL PAYMENT FOR HIS EFFORTS IN PROTECTING PRINCIPALS INTEREST
AGENCY BY ESTOPPEL
PRINCIPAL DOES NOT INFORM 3RD PARTY THAT AGENCY HAS TERMINATED FREEMAN & LOCKYER V BRUCKHURST PARK PROPERTIES LTD director acted on behalf of company & contracted with 3rd party with the other directors knowledge
CLASSIFICATION OF AGENCY
CLASSIFICATION
ACCORDING TO EXTENT OF AUTHORITY
UNIVERSAL AGENT HAS EXTENSIVE POWERS, ALMOST LIKE PRINCIPAL E.G. POWER OF ATTORNEY GENERAL AGENT POWERS NORMAL TO NATURE OF BUSINESS OR TRADE
ACCORDING TO FUNCTIONS
FACTOR/ COMMERCIAL AGENT SELLS GOODS UNDER HIS OWN NAME AND HAS LIEN AS COMMISSION
BROKERS
AUCTIONEERS
BANKER AS AGENT FOR CUSTOMER AND BANK EMPLOYEES AS AGENT FOR THE BANK
AUTHORITY OF AGENT
TYPES OF AUTHORITY
ACTUAL AUTHORITY
EXPRESSED ORALLY OR IN WRITING S.141 ANY NECESSARY LAWFUL ACT ANY USUAL LAWFUL ACT
APPARENT AUTHORITY
BASED ON REPRESENTATION MADE BY PRINCIPAL TO 3RD PARTY
CONTRACT IS BINDING ON PRINCIPAL EFFECTS RD DEPENDS WHETHER 3 PARTY AWARE OF EXISTENCE OF PRINCIPAL
CATEGORIES OF PRINCIPAL
NAMED PRINCIPAL
DISCLOSED PRINCIPAL
UNDISCLOSED PRINCIPAL
NAMED PRINCIPAL
AGENT HAS NO RIGHTS/LIABILITIES EXCEPTIONS:
S.183 agent cannot personally enforce s.179 - Only principal can sue / be sued under the contract Condition: agent must act within his authority
If agent agrees to accept liability CHIN YUEN TUNG V BEP AKETIK If contract is in the agents own name If agent signs negotiable instrument in his own name without disclosure of agency KAVENA MEYDIN V KOMERAPPA CHITTY Agent exceeds authority and not ratified breach of warranty Agent is liable under custom / norm of trade
DISCLOSED PRINCIPAL
AGENT HAS NO RIGHTS/LIABILITIES
S.183 agent cannot personally enforce s.179 - Only principal can sue / be sued under the contract Agent presumed liable S.183(a), (b) & (c) s.186 both agent and/or /both principal may be liable EXCEPTION #1: where contract is made by an agent for the sale or purchase of goods to overseas merchant; Merchant does not standing and credit of principal Contract is vide local agent No privity of contract unless expressed in agreement EXCEPTIONS #2 Name of principal not disclosed Agent remains liable even if/after 3rd party discovers principal Agent can be released by 3rd party EXCEPTIONS #3: Even if principal disclosed cannot be sued/immunity e.g. sovereign, ambassador, minor, unsound mind
UNDISCLOSED PRINCIPAL
WHERE AGENT HAS AUTHORITY TO BIND PRINCIPAL IDENTITY OR EXISTENCE OF PRINCIPAL NOT DISCLOSED RIGHTS OF 3RD PARTY CAN CLAIM AGENT/ PRINCIPAL S.186 AGENT CAN BE PERSONALLY LIABLE PERNAD TRADING SDN BHD V PERSATUAN PELADANG BAKTI MELAKA (Kes Baja) 3rd Party can choose who to sue unless there is undue delay or he represents he wont sue principal RIGHTS OF THE PRINCIPAL CAN REQUIRES 3RD PARTY TO PERFORM THE CONTRACT AND VICE VERSA S.184(a) PRINCIPALS RIGHTS SUBJECT TO RIGHTS & LIABILITIES AS BETWEEN AGENT AND 3RD PARTY (S.185) e.g. 3rd partys rights to set-off or counter claim vs principal OR agent PRINCIPAL WHO DISCLOSES HIMSELF BEFORE COMPLETION OF CONTRACT CANNOT ENFORCE CONTRACT VS 3RD PARTY IF 3RD PARTY CAN PROVE THAT IDENTITY OF PRINCIPAL IS MATERIAL S.184(b) RIGHTS OF AGENT AGENT CAN ENFORCE HIS OWN CONTRACT VS 4RD PARTY CANNOT ENFORCE IS HE FALSELY REPRESENTS HIMSLEF AS AGENT IN THE TRANSACTION S.189
IF NO INSTRUCTIONS FROM PRINCIPAL, MUST ACT ACCORDING TO THE CUSTOMS PREVAILING IN BUSINESS OF THE SAME KIND. TO EXERCISE CARE & DILIGENCE AND USE ALL SKILLS HE POSSESSES IN CARRYING OUT HIS WORK TO RENDER PROPER ACCOUNTS WHEN REQUIRED TO ACT IN GOOD FAITH AND NO CONFLICT OF INTEREST NOT TO MAKE SECRET PROFIT FROM THE PERFORMANCE OF HIS DUTY TO PAY HIS PRINCIPAL ALL SUMS RECEIVED ON THIS BEHALF
An agent is bound to conduct the business of his principal according to the directions given by the principal, or in the absence of any such directions, according to the custom which prevails in doing business of the same kind at thepiace where the agent conducts the business. When the agent acts otherwise, if any loss be sustained, he must make it good to his principa[ and if any profit accrues, he must account for it
E.G.SAME SERVICE AS PROFESSIONAL (UNLESS PRINCIPAL ALREADY NOTICES LACK OF SKILL) OR IF SELLING GOODS, TO SELL AT BEST PRICE ANDREWS V RAMSAY & CO
AGENT OBLIGED TO TELL PRINCIPAL OF OTHER BETTER OFFERS EVEN IF CONTRACT ALREADY CONCLUDED KEPPEL V WHEELER
LYELL V KENNEDY AGENT IS BOUND TO KEEP MONEY/PROPERTY SEPARATELY FROM HIS OWN PROPERTY
S.167
IT IS THE DUTY OF AN AGENT, IN CASES OF DICCULTY, TO USE ALL REASONABLE DILIGENCE IN COMMUNICATING WITH HIS PRINCIPAL AND IN SEEKING TO OBTAIN HIS INSTRUCTIONS
WHEN?
IN CASESOF EMERGENCY OR DIFFICULTY IF IMPOSSIBE, AGENT CAN USE OWN DISCRETION TO SAFEGUARD THE INTEREST OF THE PRINCIPAL S.142
S.169 - 'lf an agent, without knowledge of his principal, deals in the business of the agency on his own account instead of on account of his principal, the principal is entitled to claim from the agent any benefit which may have resulted to him from the transaction'.
PRINCIPAL CAN RECOVER FROM THE AGENT ANY BENEFIIT THE AGENT MAY HAVE OBTAINED EVEN IF THERE IS NO LOSS
AGENT MUST DISCLOSE TO THE PRINCIPAL EVERYTHING RELATING TO THE CONTRACT BUT NOT TO THE OTHER PARTY
MUST PAY ALL PROFIT AND MONIES INTO THE PRINCIPALS ACCOUNT
SECRET PROFIT
S.168
bribe/ secret commission/any financial advantage which is over and above the commission agreed under the agency contract If the principal does not consent to it, remedies are available (ANDREWS V RAMSAY & CO)
lf an agent deals on his own account in the business of the agency, without first obtaining the consent of his principal and acquainting him with all material circumstances which have come to his own knowledge on the subject, the principal may repudiate the transaction, if the case shows either that any material fact has been dishonestly concealed from him by the agent, or that the dealing of the agent have been disadvantageous to him.
S.171: SUBJECT TO THE DEDUCTIONS SPECIFIED IN SECTION 170, THE AGENT IS BOUND TO PAY TO HIS PRINCIPAL ALL SUMS RECEIVED ON HIS ACCOUNT
S.174: AGENTS HAS RIGHT TO RETAIN PRINCIPALS PROPERTY IN HIS POSSESSION UNTIL HIS REMUNERATION IS PAID
AGENT ONLY HAS RIGHT TO RETAIN ION BUT NOT POWER TO RESELL/SELL THE GOODS UNLESS WITH THE PRINCIPALS CONSENT
WHERE THE PRINCIPAL HIMSELF APPROVES THE DELEGATION OF AUTHORITY (DE BUSSCHE V ALT)
DELEGATED ACT IS PURELY CLERICAL OF ADMINSTERIAL (ALLAM & CO V EUROPA POSTER SERVICES LTD SOLICITORS) (JOHN MCCANN & CO V POW SALES AGENT)
IN CASE OF EMERGENCY
CANNOT PURPOSELY STOP OR HINDER AGENT FROM EARNING COMMISSION E.G. PRINCIPAL REFUSES TO ACCEPT CONTRACT MADE BY AGENT OR PRINCIPAL APPOINTS ANOTHER AGENT
INDEMNIFY & REIMBURSE AGENT S.175: ALL COSTS, LOSS LIABILITIES INCURRED IN THE EXERCISE OF THE AGENTS AUTHORITY BORNE BY THE PRINCIPAL (HICHENS, HARRISON , WOOLSTON & C0 V JACKSON & SONS
TERMINATION OF AGENCY
TERMINATION BY ACT OF PARTIES (AGENT AND PRINCIPAL)
BY OPERATION OF LAW
SOHRABJI V ORIENTAL SECURITY ASSURANCE 3 MONTHS NOTICE INSUFFICIENT TO TERMINATE A 50 YEAR OLD AGENCY
SYARIKAT JAYA V STAR PUBLICATION (M) SDN BHD 6 MONTHS NOTICE SUFFICIENT TO TERMINATE A SOLE AGENCY
TERMINATION EFFECTIVE WHEN COMES TO THE NOTICE OF THE AGENT & 3RD PARTY (S.161)
IF AGENT OR 3RD PARTY DOES NOT KNOW OF THE REVOCATION/ TERMINATION NOT EFFECTIVE (PICHAPPA CHITTY V AH JAH)
FIXED AGENCY EARLY TERMINATION + DAMAGES FOR BALANCE TENURE IF INSUFFICIENT CAUSE S.158
DEATH OR PRINCIPAL OR AGENT (S.154) PROVISO: (i) No termination if agent has interest in agency property (S.155) (ii) Due notice must have been given to agent (S.161) (iii) agent must take reasonable steps to protect interest of principal (s.162)
INSANITY OF PRINCIPAL OR AGENT (S.154) YONGE V TOYNBEE BANKRUPTCY OR INSOLVENCY OF PRINCIPAL EVENT OCCURS WHICH RENDERS THE AGENCY UNLAWFUL