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THE LAW OF

AGENCY
Nurdayana Nordin
Fatimah Hanim Mohammad
Hanis Azman
Hazirah Che Hassim
Nor Azlynna Ismail
Law of Agency
Law of Agency
Formation of
Agency
Express
Words
spoken/written
Implied
Circumstances
Spoken/written
Ordinary course
of dealing
Ratification
Exceed of
authority
Acted as if he
has authority to
act as agent
Necessity
Emergency
Estoppel
Hold out
Law of Agency
Actual
Express
Implied
Ostensible
Make 3
rd

party
believes
Authority
of An
Agent
Law of Agency
Duties of Agent to Principal
Duties of Principal to Agent
A Named Principal
An Undisclosed Principal
Termination of Agency
Issue: Whether Sudhu is an agent of Kari
Tawar Sdn Bhd
1. Principle:
Contract Acts, 1950
S(137) any person can become an agent as long as he is not a
minority and unsound mind, as to be responsible for principal.
S(140) An authority is implied when it is to inferred from
circumstances and things spoken/written or ordinary course of
dealing.
S(190) Liability of principal inducing belief that agents
unauthorized acts were authorized.
2. Application
Sudhu is not directly appointed to be an agent, instead he was
appointed to be Managing Director of KTSB.
Ordinary course of dealing.
Ostensible authority (TJSB believes that Sudhu has the authority
to make contracts for the principal.


Freeman & Lockyer v. Burckhurst Park
Properties (Mangal) Ltd Anor [1964]
A managing director of company employed an
architecture firm but the company refused to pay fees for
the firm because the duty is fell outside the Directors
authority.
Court Held:
The company was liable for the architects fee because
there was ostensible authority.
Issue: Should Sudhu enters a contract of
RM500,000 with TJSB
Application:
When sudhu entered into a contract with TJSB, he is not aware of contract
limit of RM300,000.
Ordinary course dealing
Implied actual authority ( sudhu had given proper authority from KTSB to enter
into contract with TJSB)

Panorama Development (Guilford) Ltd v. Fidelis Furnishing Fabrics Ltd
(1971)
Fidelis company secretary, Mr Bayne, hired cars from Panorama Development's
business, Belgravia Executive Car Rental. Bayne used the Fidelis' paper and
represented that he wished to hire a number of Rolls-Royce's and Jaguars for the
business while his managing director was away. He was lying and he used them
himself. Bayne was prosecuted and imprisoned, but Belgravia had outstanding
570 12s 6d for the hired cars. Fidelis claimed that it was not bound to the hire
contracts, because Bayne never had the authority to enter them.



Panorama Development (Guilford) Ltd v. Fidelis
Furnishing Fabrics Ltd (1971)

Court Held:

Defendants company was liable for the contract of hiring of motor
vehicles made by the company secretary. Although the company
secretary exceeded his actual authority in hiring the motor vehicles
from the plaintiffs, the act was within the usual authority of a company
secretary, and it was considered as part of the company
administration.

Issue: Should Sudhu accept secret profit from
Garphu?
Legal:
Section 168 of the Contracts Act, 1950
Right of principal when agent deals, on his own account, in business of agency without
principals consent.

Section 169 of the Contracts Act, 1950
Principals right to benefit gained by agent dealing on his own account in business of
agency.
Application:

In this case, Sudhu has taken RM50k secret profit from Garphu. It contradicts
with S168 where an agent may take the given profit with consent from the
principal.


Mahesan v Malaysian Government Officers Co Operative Housing
Society Ltd [1978] 1 MLJ 149


The appellant who was a director and secretary of the respondent co operative
society bought land at the price of RM 944,000 on behalf of the respondent.
The appellant knew that the vendor had earlier paid RM 456,000 for it but did
not inform the respondent accordingly. It turned out that the appellant had
received RM 122,000 as a bribe or secret profit from the vendor.

held: The respondent could recover either the bribe or the amount of the actual
loss suffered by it as a result of entering into the contract.


Arab Monetary Fund v Hashim (1993)
Refuse to pay the agent his commission or other
remuneration

If the contract was induced by a bribe, as alleged
then the principal certainly be entitled to recover
the amount of the bribe. Whether or not damages
would be awarded depended on the circumstances.
If the principal were not able to prove that the bribe
was paid out of advance payments to the contractor
by the principal. The agent was not liable to make
restitution for the amount of the bribe.
Issue: Whether Sudhu can enter into a contract
exceeding the value of RM300,000
Agency by Ratification:
a) When an agent exceeded his authority
b) When a person is not an agent but acted like an agent with
authority
1.Principle:
Contract Acts, 1950
S(149)-The principal can reject the contract since has not
authorized it, or accept the contract made.
S(150)-The ratification can be expressed or implied by the
principal.

2.Application
Sudhu as an agent has exceeded the limit amount of RM300k
without the principals authority. It shows that Sudhu has
exceeded his authority by entering to that contract.
Muthuchellapa Chettiar v. Indian Overseas
Bank Ltd (1952)
An agent has made an overdraft payment without the principals
authority. It was an implied ratification as the principal accepts
the contract.

Therefore, the ratification renders the principal liable to the
contract.

Issue: Whether Sudhu can be terminated after
receiving incentive payment
1. Principle:
Contracts Act, 1950
S(154) Termination of agency
S(159) The notice must be given for revocation or
otherwise the damage may affect the principal or the
agent
2. Application
Sudhu can be terminated by the principal since he
already breach the law of agent and also had be
given the 24 hours notice by the principal.

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