Law of Agency

Elements of a valid ratification

* At the time of making the contract, agent must make known that he is acting on behalf of and intends to bind the principal who subsequently ratifies the contract. * At common law, principals (including corporations) who were not yet in existence when agent makes contracts on their behalf cannot validly ratify such contracts afterwards. However, in recent times, in s.72 of CAMA, ratification of pre-incorporation contracts is now valid. * Principal must have had contractual capacity when contract was made or act was done. * Principal must be aware of all material facts concerning the act or contract made. * Illegal or void acts of the agent cannot be ratified.

Requirements for agency by cohabitation

* Both man and woman must cohabit in such a way that people take them for husband and wife. * Husband and wife must live in a domestic environment which shows they are family.

Capacity of Principal

* He must have full contractual capacity to have an agent. * Principal that is mentally incompetent, an infant or a corporation, he either has no capacity or limited capacity to appoint an agent.

Limitations to agency by cohabitation

* If goods are supplied exclusively on wife's credit. * If the trader has been expressly warned by the husbans not to supply goods to wife on his credit. * If the husband has warned his wife not to pledge his credit. * If necessaries are extravagant or excessive. * If wife already has adequate necessaries or enough allowance to purchase them.

Requirements for estoppel

* Principal must have made a clear statement or conduct in such a manner that will lead third parties to believe that an agency exists. * Third party must have known of such statement or conduct and must have relied on it. * Third party's position must have changed or been affected as a result of the reliance.

Requirements for agency by necessity

* There must have been a prior contractual relationship between the parties. * Presence of genuine emergency or imminent commercial necessity. * It must have been impossible to communicate with principal to get instructions. * Agent must have acted in good faith for the benefit of principal.

Attorney at Law

*A legal practitioner who acts for another in legal matters. * He can be liable in negligence even if he has a contract with the principal relieving him of such liability (s.9 Legal Practitioner Act 1975)

Appointment of agent

*Appointment under seal is necessary where agent is authorized to make contracts under seal. It is termed power of attorney. *Appointment in writing is required where disposition of land or an interest in land is concerned. * Other appointments could be made in any form, including parole

Agency and Trusts (similarities)

1. Agents and trustees act on behalf and for the benefit of others 2. They may be able to transfer title to bona fide purchaser 3. Certain equitable reliefs are available to a principal and a beneficiary of a trust

Agency and Servants (differences)

1. Agents are mainly employed to make contracts and sell off property while servants are often employed for other tasks 2. Agent can work for many principals while servants can work for only one master 3. Agency can be revoked summarily while a servant cannot be dismissed without notice or lawful justification 4. Servant is under direct control and supervision of master while agents aren't

Agency and Bailment (differences)

1. Bailee does not represent the bailor while agent represents his principal 2. Bailee cannot make contracts on behalf of bailor and cannot make him liable while agent can

Agency and Trusts (differences)

1. Trustee is legal owner of property while agent isn't 2. Beneficiary not responsible for trustee's acts but principal is for agent's acts 3. Trust must be created in writing but agency can be made in any form 4. Agent can revoke agency but trustee has no power to end trust 5. Only principal has power to remove his agent but court sometimes remove trustees

Del Credere Agent

A mercantile agent who stands as surety for the 3rd party as regards the contract between the latter and the principal * He receives an extra commission called del credere commission * Indemnity doesn't extend to other breaches of contract by the other parties, it only applies to failure to pay debts

Mercantile agent

A person having in the customary course of his business as such agent authority to sell goods or consign goods for the purpose of sale, or to buy goods, or to raise money on the security of goods (s.1 of The Factors Act 1889)

Factor

A person to whom goods are assigned for sale by a merchant residing abroad or at a distance away from the place of sale. * Sells on his own name without disclosing that of his principal * Entitled to receive payment

Agency by estoppel

A person who by words or conduct has allowed another to appear to the outside world to be his agent, with the result that third parties deal with him as an agent, cannot afterwards repudiate this apparent agency, if to do so would cause injury to the third parties.

Agency

A relationship between an agent, principal and a third party. The agent has undertaken to act on behalf of the principal and he has the authority to create legal relations between the principal and a third party.

General agent

Acts in all matters concerning a particular trade or business. Or acts in the ordinary course of his trade, business or profession, eg lawyer

Agency by implied contract

Agency is formed not expressly but implied through the conduct of both principal and agent, especially the principal whose action could give authority to such agent.

Pearson v Rose & Young Ltd.

Agent had possession of car but not registration book. He deceitfully obtained book from plaintiff. Without authority to sell, he sold the car to a bona fide purchaser. Held that purchaser had no title because agent had car with consent but had the registration book without consent.

Broker

An agent employed to make bargains and contracts between persons in matters of trade, commerce and navigation. *A mere negotiator *Has no possession of goods * Cannot sell in his own name *Fowler v Hollins

Auctioneer

An agent who sells goods and property by public auction. He is rewarded in form of a commission. He acts as agent for both principal and buyer. He can sue personally for goods sold and delivered as auctioneer.

Special agent

Appointed for a particular purpose not being in ordinary course of his trade or profession

Baring v Corrie

Explains difference between factors and brokers

Capacity of agent

He doesn't need to have full contractual capacity since he doesn't make contracts for himself but creates one between his principal and a third party

qui facit per alium facit per se

He who acts through another acts by himself

Debenham v Mellon

Husband and wife were managers of hotel where they lived and cohabited. Wife had allowance for clothes and husband forbade her to pledge his credit. Wife bought clothes from plaintiff and incurred debts. Husband not liable.

Thomas Gabriel & Sons v Churchill & Sim

It was held that the responsibility of the del credere agent was restricted to the insolvency of a third party introduced by him, but that the agent was not responsible for the due performance of the main contract and the principal was not entitled to litigate by him disputes out of contracts made by him

Agency by ratification

The agent doesn't have authority to act but subsequently, the principal accepts and acknowledges such act.

Great Northern Rly Co. v Swaffield

The plaintiff, a railway corporation carried a horse to its destination, due to delays not caused by plaintiff, the horse couldn't be delivered to consignee as agreed. There was nowhere the plaintiff could keep the horse in its premises so, the horse was placed in a stable where they had to pay. Defendants were held liable to pay the plaintiff for the stable keeper's charges

Agency by express agreement

This agency is created in form of a contract, thereby showing consent of both principal and agent. It is usually in written form, parole or deed.

Agency by necessity

This is created when a person is obliged to act in emergency situations to prevent an irreparable loss to the property or damage to the interest of the principal.

Agency by cohabitation

When a married couple cohabits, the wife has an implied authority to act as the husband's agents and pledge his credit for necessaries suitable to their lifestyle.

Phillipson v Hayter

Wife has authority to contract for necessaries and things suitable to the husband's lifestyle provided such things are domestic articles usually managed by wife.

Universal agent

has authority to act on behalf of principal in all matters without restrictions