Why do we care about agency relationships? A good example would be an insurance agent. For example, a trustee for a trust. Agency by Agreement/ Contract: An agency relationship based on an express or implied agreement that the. Understand how the agency relationship is created. . of the principal if the general agent had the express or implied authority of the principal to hire them. For example, let us say that you manage a bakery and the owner asked you to 3 The implied agency relationship states that the conduct of both parties has.
Where the principal is a foreigner. In Asafa Foods Factory v. Where the principal is fictitious or non-existent, for example where an agent acts for a company not yet formed as illustrated by the locus classicus case of Kelner v. Where the agent turns out to be the principal, example in cases where the agent has no principal.
Where the agent signs a written contract in his name absolutely without qualification. Where the agent appends his signature to a deed or document under seal and executes it in his own name.
Where the agent signs his own name on a negotiable instrument such as a Bill of Exchange, cheque or promissory note or endorses or accepts such instrument by signing his own name. North East Line Corporation the Supreme Court opined that an agency can arise impliedly from the nature and condition of the parties or from the circumstances of the relationship. According to the apex court, the relationship of principal and agent may arise in 3 ways. It is instructive to note that the last two cases are usually referred to as agency created by operation of law.
The five ways of creating agency will now be considered seratim. Agency by express agreement: This type of agency is created by the consent of the principal through the express appointment of the agent by the principal.
Such appointment maybe made orally or by an informal writing. The powers of the agent are confined to those which are expressly conferred on him by the appointment. Finally, he exercises natural authority. Agency by implied agreement: This type may arise under two circumstances; firstly, it may also arise from express authority.
This happens in situations where an agent appointed to conduct a particular trade or business does all such things as are necessarily incidental to the 7 conduct of such trade or business. For instance, an agent appointed to sale goods may show or describe them to a prospective buyer and accept a deposit.
This was the case in Ryan v. Pilkington where it was held that although the estate agent was not expressly given authority to accept deposits, he acted within the ostensible scope of his authority.
Thus, the authority or the agent here is incidental or ostensible. Secondly, this type of agency may be implied from the conduct of the parties. The law will imply such an agreement if the parties have, by their conduct consented to a state of affairs which is explicable only in terms of agency.
Estoppel is the principle of law which prevents a person from asserting a reverse of what he has previously represented, if an innocent representee has materially changed his position in reasonable reliance on the previous representation.
This is aptly illustrated by the case of Summers v. Again, agency by estoppel may be created where a retiring partner retires without making a public announcement to that effect and the remaining partners enter into contract with persons who had previously dealt with the firm and who are aware of his membership but unaware of his retirement, in order to bind the affected partner by such contracts as he has by his conduct, held 8 himself out as a continuing partner.
Jardine, a member of the partnership, retired without notifying the public.
It was held that the retired partner was bound by contracts made by the remaining partners with persons who had previously has dealings the firm or who were aware of his membership. Thus, in Drew v.
That apart, for this agency to be created, the following conditions must be satisfied; 1 There must be a representation by the principal or someone authorized by him. By ratification we mean authority given by a principal to a transaction entered into on his behalf by an agent who lacked the requisite prior authority to act.
Agency by ratification is created where an agent or a person acting as one, acts in the name of a principal in existence, but without the principals authority, and the latter ratifies the act, making it as valid as if it had been done with his authority. In other words, its effect is that it relates back to the time when the agent made the contract and the principal becomes liable and entitled under the contract as if the agent had acted with authority.
This is exemplified by the case of Buron v. However, for ratification to be valid, the following conditions must be satisfied; a The contract must be professedly made on behalf of a named, identified and or identifiable principal. Thus, in Caligara v. As incorporation the company cannot, after incorporation ratify or adopt any such contract because there is in such cases no agency since there is no company yet in existence; therefore, the contract is that of the parties making it.
Thus, the principal cannot ratify beneficial aspects and reject the others. Here, the law confers power to act as agents without obtaining assent of the other persons. The type of agency which may be created under this category is Agency of Necessity. This arises when in emergency conditions a person is obliged to act in order to prevent irreparable loss or damage to another.
This type is constituted given the following conditions; a. Ojukuku, the Privy Council held that a principal, who appoints an agent knowing his skill and experience, should not expect or require from such 12 an agent a higher measure of skill or knowledge than that which an agent of his position and experience could reasonably be expected to posses. Duty to act with utmost good faith in relation to his obligation towards the principal. Duty not to delegate his duty This is the duty to personally perform his obligations under the agency contract and is based on the principle of Delegatus Non Potest Delegare; meaning authority given to one cannot be delegated to another.
Law of agency
This rule admits of the following exceptions; a Where the principles either expressly, or impliedly consents to the delegation. Duty of Undivided Loyalty to the Principal: Duty not to make Secret Profit This is consistent with the case of Coker v. Either the principal may have expressly conferred authority on the agent, or authority may be implied. Authority arises by consensual agreement, and whether it exists is a question of fact.
An agent, as a general rule, is only entitled to indemnity from the principal if he or she has acted within the scope of her actual authority, and may be in breach of contract, and liable to a third party for breach of the implied warranty of authority. In tort, a claimant may not recover from the principal unless the agent is acting within the scope of employment. Express actual authority[ edit ] Express actual authority means an agent has been expressly told he or she may act on behalf of a principal.
Implied actual authority[ edit ] Implied actual authority, also called "usual authority", is authority an agent has by virtue of being reasonably necessary to carry out his express authority. As such, it can be inferred by virtue of a position held by an agent. For example, partners have authority to bind the other partners in the firm, their liability being joint and several, and in a corporation, all executives and senior employees with decision-making authority by virtue of their position have authority to bind the corporation.
Law of Agency Relationship | Onyekachi Duru - omarcafini.info
Other forms of implied actual authority include customary authority. This is where customs of a trade imply the agent to have certain powers.
In wool buying industries it is customary for traders to purchase in their own names. This must be no more than necessary  Main articles: Apparent authority and Estoppel Apparent authority also called "ostensible authority" exists where the principal's words or conduct would lead a reasonable person in the third party's position to believe that the agent was authorized to act, even if the principal and the purported agent had never discussed such a relationship.
For example, where one person appoints a person to a position which carries with it agency-like powers, those who know of the appointment are entitled to assume that there is apparent authority to do the things ordinarily entrusted to one occupying such a position.
If a principal creates the impression that an agent is authorized but there is no actual authority, third parties are protected so long as they have acted reasonably.
Law of agency - Wikipedia
This is sometimes termed "agency by estoppel " or the "doctrine of holding out", where the principal will be estopped from denying the grant of authority if third parties have changed their positions to their detriment in reliance on the representations made.
Wills J held that "the principal is liable for all the acts of the agent which are within the authority usually confided to an agent of that character, notwithstanding limitations, as between the principal and the agent, put upon that authority. It is sometimes referred to as "usual authority" though not in the sense used by Lord Denning MR in Hely-Hutchinson, where it is synonymous with "implied actual authority".
It has been explained as a form of apparent authority, or "inherent agency power". Authority by virtue of a position held to deter fraud and other harms that may befall individuals dealing with agents, there is a concept of Inherent Agency power, which is power derived solely by virtue of the agency relation.
Even if the agent does act without authority, the principal may ratify the transaction and accept liability on the transactions as negotiated. This may be express or implied from the principal's behavior, e. Liability[ edit ] Liability of agent to third party[ edit ] If the agent has actual or apparent authority, the agent will not be liable for acts performed within the scope of such authority, as long as the relationship of the agency and the identity of the principal have been disclosed.
When the agency is undisclosed or partially disclosed, however, both the agent and the principal are liable. Where the principal is not bound because the agent has no actual or apparent authority, the purported agent is liable to the third party for breach of the implied warranty of. Liability of agent to principal[ edit ] If the agent has acted without actual authority, but the principal is nevertheless bound because the agent had apparent authority, the agent is liable to indemnify the principal for any resulting loss or damage.
Liability of principal to agent[ edit ] If the agent has acted within the scope of the actual authority given, the principal must indemnify the agent for payments made during the course of the relationship whether the expenditure was expressly authorized or merely necessary in promoting the principal's business.
An agent owes the principal a number of duties. An agent can represent the interests of more than one principal, conflicting or potentially conflicting, only after full disclosure and consent of the principal. An agent must not usurp an opportunity from the principal by taking it for himself or passing it on to a third party.
In return, the principal must make a full disclosure of all information relevant to the transactions that the agent is authorized to negotiate. Termination[ edit ] Mutual agreement also through the principal responding his authority.
Through renouncing when agent hm self stop being an agent. The internal agency relationship may be dissolved by agreement.
- Express Agency Law and Legal Definition
- Agency law
Under sections to of the Indian Contract Actan agency may come to an end in a variety of ways: