Principal

Agent Third party Employee Stockbroker Possible that agent for one party or many parties at the

same time e.g. estate agent

 Normally relationship of agency is commercial

Sometime friends or relatives agree to handle affairs

of another

 Contract is between--- Principal and 3rd party No personal liability for agent Except when agent Acts negligently Exceeds his authority

 Normally disclosed that I am an agent on behalf of

principal xyz
Cases where principal identity is concealed

 3rd paty believes A to be principal but he is not

He can sue the agent but not A

As no agency bond exists

Creation of Agency
Express agreement
Implied agreement Necessity Subsequent ratification Estoppel

Express agreement
Actual authority---- one transaction or more
Can be oral In certain cases agency deed is required Deed--- written and attested by two witnesses E.g. where agent to sign a deed on behalf of principal Buying and selling of immovable property

 Gratuitous agent :
Non- binding

Held liable: if act negligently or short of the skills

claimed

Implied agreement
Arises out of relationship
Employer---employee

Necessity
In possession of Principal's goods and emergency

arises Legal requirements :

In control of property Genuine emergency Impossible to get Principals instructions Acts in good faith and best interest of Principal

 Case 1: Railway co. horse to be fed and stabled. Name

and address of the owner

Case 2: railway company sells tomatoes

 Case 1: there was emergency

Case 2: should have contacted the owner who was

known and could be contacted

 Case 3:
agreed to keep furniture without charge

Lost touch with the owner

Letters bounced back Wanted space so sold the furniture Held: was not entitled to sell

Estoppel
Estoppel is created when principal by words or action

gives impression that he ha consented to a person acting as his agent. P is prevented from denying it in future . Legal requirement :
Representation by conduct of Principal 3rd party relied on it

Agent has no Actual Authority but gets Apparent Authority

 Case:
Four directors of a company. A was one of them A was never appointed as managing director

Used to make all contracts on behalf of the company

Company wanted out of one of such contracts Held: no real but has actual authority (dejure vs

defacto) doctrine of Holding out

 Legal requirements:
Parson making the contract professes to act as an

agent Identity of principal known to 3rd party Ratification within reasonable time Full ratification not partial Principal must exist and has legal capacity when contract made and when he ratifies.

 Case: bought wheat at higher rate than authorized and

did no show himself as an agent Case: problem with companies

Subsequent ratification
At the time of agreement --- no agency bond -- Agents acts without authority or exceed his limit

But Principal later approves it out of choice--- gets

bound by it
Ratification can be expressed or by conduct

 Legal requirements
3rd party should have notice of the principal. Should

not be considering that he is actually contracting with the agent Ratification within reasonable time. Ratification in full not partial Principal exist and has legal capacity at the time of formation of contract

 Ratification authorizes contract retrospectively

Case 1 :

D wrote to S (managing director of Company abc

offering to purchase. C accepted and contracted but actually he was not authorized to make contracts of purchase. A few days later D wrote to S that he withdraws the offer.. Meanwhile company had already ratified the offer

 Ratification made S acceptance valid so contract had

already become valid from acceptance.

 Void contracts can never be validated

Duties of the Agent

To perform Agreed task and follow instructions
Case: sell the stock when reached 85$ per unit

 Duty to perform personally

Exceptions: Necessity Little skill Delegation allowed Delegation implied as customary

 Care and skill:

Case: failure to communicate higher offer

Duty to account
Full info
All benefits

Avoid conflict of interest

Selling his own share/property to principal
Needs to inform

Case: acted as if bought from open market: sale set

aside

Not to make secret profit

Not to take bribe

Case: bribe for doing business to particular supplier

confidentiality

Rights of agent
remuneration:
Case: commission on sale

Lien over principals property

Lien means security for debt

Over property in agents possestion

Right to claim indemnity

Expense /losses incurred by agent
Case: London solicitor employs barrister

Termination of agency
By law: death /bankruptcy
Mental incapacity frustration