AGENCY LAW

1. DEFINITION OF AGENCY
R/ship where one person known as agent
acts for another =
legal r/ship with third-party.
2. AGENCY EXPLAINED
Agency involves 3 parties
 Principal who passes authority
 Agent = legal relations between P & A
 Third party
3. WHO IS AN AGENT & WHO IS A
PRINCIPAL?
 Agent = person authorized to act for
another = legal relations
 Principal = Party who employs another to
act on his behalf.
4. RELATION BETWEEN AGENCY & CONTRACT
 Relation between A&P is contractual
 Privity of contract between P&T
 No privity between A&T
5. CAPACITY OF AGENT
 P&T must have contractual capacity
 Immaterial whether agent has contractual
capacity
6. WHO CAN APPOINT AN AGENT?
 Anyone with contractual capacity
 Only for lawful purpose
7. NATURE OF AGENCY
 R/ship formed by mutual consent

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  Fiduciary r/ship
 Mixture of contract law & tort law

8. CREATION OF AGENCY
An agency r/ship may arise in any of the 6
ways:
• Express agreement
• Implied agreement
• Ratification = Kelner v. Baxter, Brook v.
Hook (forged signature)
o Principal must have been in existence at
time of act
o Existence must have been disclosed by
agent
o Principal must have capacity to ratify
o Act must be capable of ratification
(void/voidable)
o Shd be done within a reasonable time
o P must have knowledge of all material
facts
• By necessity = GNR v. Swaffield
o Necessity shd be created by real
emergency not mere convenience
o It must be impossible to obtain
instructions from P
o Agent must act bonafide in the interests
of all
• By estoppels = Lockyer
• Agency by marriage/cohabitation

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 Husband free to rebut presumption in
following ways:
 Wife adequately provided
 Forbade her to pledge his credit
 Shopkeeper previously warned not to
give credit
 Public notice in newspaper i.e. not
answerable
 Wife’s order excessive or extravagant
Miss Gray v. Earl of Catchcart = clothes
215/950
9. Types of agent
• Universal agent = POA = handles all
affairs
• General agent = represents P in all b/s of
a certain kind
• Special agent = authority to act on a
particular occasion or for a particular
purpose.

AUTHORITY
An agent must act within the scope of his/her
authority
There are two types of authority
 Actual authority
 Apparent authority

ACTUAL AUTHORITY

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The authority that a principal in reality has
granted to an agent
 Express actual authority
The actual authority of an agent specifically
stated or written by the principal
 Implied actual authority (usual authority)
The actual authority of an agent that the
principal has not specified but has purposely
or through negligence allowed the agent to
believe has been granted

APPARENT AUTHORITY (OSTENSIBLE)

The authority that a principal purposely or
through negligence allows a third party to
believe that the principal's agent has
although such authority has not in reality
been granted also called authority by
estoppels or ostensible authority. A principal
is bound by the acts of an agent acting with
apparent authority.
Representation
Reliance
Loss
 Express authority
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Authority that is explicitly granted to an
agent by a principal called also expressed
authority stipulated authority
 Implied authority
The authority to perform acts that are
customary, necessary, and understood by an
agent as authorized in performing acts for
which the principal has given express
authority

• Watteau v. Fenwick

• Panorama Developments (Guildford)

Limited v Fidelis Furnishing Fabrics Limited
• Freeman & Lockyer v. Buckhurst park
Properties
DUTIES OF THE AGENT
 Carry out instructions/legalv. Illegal

 Care & skill = due diligence

 Not to delegate his authority

 Duty to account

 Good faith (personal interest)

RIGHTS OF AN AGENT

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o To receive renumeration
o Right of retainer
o Right of lien
o Indemnification
o Compensation
o Stoppage of goods in transit
DUTIES OF THE PRINCIPAL
o Obligation to pay renumeration
o Only where agent has earned it
o Even where P has derived no benefit from
A’s acts
o To indemnify A for acts lawfully done and
liabilities incurred in execution of authority
TERMINATION OF AGENCY
1. By operation of law
o Death
o Insanity
o Bankruptcy
o Enemy country

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 o Frustration
o Subsequent illegality

2. By agreement between parties

o By mutual agreement
o Performance
o Lapse of time
o Revocation
o By dismissal