Agency Law 3

Is an agent liable if it acts outside the authority?

- Where a person purports to be acting as an agent, but in fact the principal does not exist, the agent is liable on the contract made with a third party. - If a principal exists but the agent acts outside the authority, representing to the third party that he has authority to act th, the agent will be for breach of warranty of authority. - The amount of damages awarded is calculated so as to put the third party back in the position he would have been in had the warranty not had been breached.

When would an undisclosed principal not be able to intervene even if the agent ha authority to act?

- Where the third parties show he would have refused the contract if he had been aware it was an undisclosed principal. - The agent denied he was acting for an undisclosed principal. - Contract itself may include a term that either expressly excludes agency or is inconsistent with the existence of the agency.

What is disclosed agency?

- A disclosed agency is where an agent indicates expressly, or through conduct, that he is acting as an agent. - The actual name of the principal does not have to be disclosed to the third party. - Where a principal is disclosed, the agent will incur no liability unless the agent has expressly accepted liability at the time of making a contract, or the principal does not actually exist.

Who can terminate an agent?

- An agency relationship may be terminated by operation of the law or by the parties themselves. - A principal, subject to certain limitations, can withdraw his authority to act at any time, although, if the principal does not inform a third party that he has withdrawn the authority, the agent may have apparent authority and may be able to bind the principal.

Humble v Hunter (1848)

- An agent chartered out his principal's ship without disclosing he was acting as an agent. He signed a contract describing himself as the owner of the ship. - The principal could not enforce the contract because the word 'owner' in the contract itself was inconsistent with an agency relationship.

What is an undisclosed agency?

- An undisclosed agency is where the third party is not told of the principal's existence and believes that the agent is acting on his own behalf. - When this occurs, the third party and agent can initially sue and be sued on the contract. - However, provided the agent has authority to act, the principal will usually be able to intervene and enforce the contract against the third party.

How is agency terminated through operation of the law?

- If one of the parties dies, the relationship is automatically cancelled. - If an agent continues to act after his principal's death, the agent will be personally liable for any contracts completed. - If either the principal or agent become bankrupt, the agency relationship is usually terminated. Mental incapacity of the principal will discharge any agency relationship, unless the agent has been given a Leasing Power under the Mental Capacity Act 2005.Ths type of authority to act has to be registered with the Office of Public Guardian and allows the agent to act even when the principal becomes mentally incapacitated. - Agency contracts can become frustrated e.g. contract becomes impossible.

When is an agent terminated by parties?

- Some agencies are expressly made for a definite period of time and will end on expiry of that fixed term; others have a fixed purpose and terminate when the purpose has been performed. - Agreement: Both parties mutually agree to end the relationship by giving a reasonable amount of notice. - One party may revoke the agreement by giving the other notice, even though the other wishes to continue the relationship. However, unless the principal informs the third party that he has withdrawn his authority, the agent may have apparent authority. - Irrevocable agreements: A Lasting Power of Attorney cannot be revoked once it is registered with the Office of the Public Guardian and the person no longer has mental capacity.

What is the liability of the agent to the third party?

•General rules that once contract concluded agent steps back and has no rights or obligations under the contract. •Where agent acts for a disclosed but unnamed principal, then principal (not agent) liable under contract to 3rd party. •Where an agent purports to act on behalf of a principal but is in fact acting on his/her own behalf s/he will be liable under the contract - Railton v Hodgson (1804) 4 Taunt 576n

When no authority is given to the agent is the principal liable?

•Purpose of agency is to render a binding contract between principal and third party. •For this to occur the agent must have some form of authority. •Where no authority, principal is not liable but remedies may exist against agent.