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Lecturer: Rowin Gurusami

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1 Lecturer: Rowin Gurusami
AGENCY LAW Sunday 8th July 2012 Lecturer: Rowin Gurusami

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AGENCY LAW Agency is a relationship which exists between two legal persons; i.e. the principal and the agent Area of commercial law dealing with a contractual or quasi-contractual tripartite, or non-contractual set of relationships when an agent is authorised to act on behalf of another (called the principal) to create a legal relationship with a Third Party Lecturer: Rowin Gurusami

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THE AGENT Contract always between principal and the third party Types of agent: Partners Company Directors Brokers Auctioneers Commercial agents Lecturer: Rowin Gurusami

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FORMATION OF AGENCY Relation created by mutual consent No requirement to be formal or written Can be through express agreement (written or oral) Or through an implied agreement, due to relationship or conduct of the parties Agent by estoppel (when principal holds out a person to be his agent & third party relies on it) Lecturer: Rowin Gurusami

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FORMATION OF AGENCY Agent by necessity happens when no contact can be made with principal there must be a pressing need for action (usually an emergency) action taken in good faith in the best interests of the principal action was reasonable and prudent in the circumstances Lecturer: Rowin Gurusami

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FORMATION OF AGENCY Principal can subsequently ratify an act of an agent retrospectively Conditions: Principal must have existed at time of contract creation Principal must have had legal capacity at the time Ratification must take place within reasonable time Must ratify contract in its entirety Communication of ratification to 3rd party sufficiently clear Once ratified, agency relationship has same effect as if expressly formed before contract made by agent Lecturer: Rowin Gurusami

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FIDUCIARY DUTY Must not allow personal interests to conflict with those of principal Always act in best interest of principal Must not make secret profit Duty to account to principal for all money & property received Remedies for breach of fiduciary duty: Repudiate contract Dismissed without notice Refuse to pay any money or recover money already paid Recover any secret profit made or any bribe Lecturer: Rowin Gurusami

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AUTHORITY OF AGENT If acting within limit of his authority, any contract agent makes is binding on both principal and 3rd party Express authority: Authority explicitly given by principal to agent to perform particular tasks, along with powers required to perform them Extent of express authority depends on construction of words use on appointment If agent contracts outside scope of express authority, he is liable to principle and 3rd party for breach of warrant of authority Lecturer: Rowin Gurusami

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AUTHORITY OF AGENT Implied Authority: Can be implied from nature of agent’s activities or from what is usual or customary in circumstances Expressed authority always override any implied one 3rd parties are to assume that agent has implied authority unless they know to contrary (Watteau v Fenwick 1893 and Hely-Hutchison v Brayhead Ltd 1968) For limitation of authority to be effective, it must be communicated to 3rd party before contract created Lecturer: Rowin Gurusami

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AUTHORITY OF AGENT Apparent/Ostensible Authority: What a principal represents to others that he has given to the agent Arises when either: principal represented agent as having authority even though he has not actually been appointed, or Principal has revoked the agent’s authority but 3rd party has not been notified of this(Willis Faber & Co Ltd v Joyce 1911) Lecturer: Rowin Gurusami

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OSTENSIBLE AUTHORITY Principal may expressly or by inference from conduct confer on agent any amount of ostensible authority Example: Partnership Companies Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd 1964 held that company bound by contracts made by director who was not officially appointed as Managing Director as company had by acquiescence led claimants to believe the director was an authorised agent and claimants relied on it and altered its position as a result Lecturer: Rowin Gurusami

Agent contracting for principal within actual and/or apparent authority generally has no liability on contract and not entitled to enforce it Will be personally liable if: Intended to undertake personal liability Usual business practice or trade custom for agent to be liable Acting on his own behalf even though he purports to act for a principal Joint liability of agent and principal if agent did not disclose he acted for a principal Lecturer: Rowin Gurusami

Agent has right : To have full disclosure of all information relating to the transactions he is entertaining on behalf of the principal To claim remuneration or commission for services performed To claim indemnity for all expenses reasonably incurred To exercise lien over principal’s property Lecturer: Rowin Gurusami

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TERMINATION OF AGENCY Agency is terminated by agreement or operation of the law Terminated when parties agree that relationship should end Terminated by operation of law if: Principal or agent dies Principal or agent becomes insane Principal goes bankrupt or agent becomes bankrupt and this interferes with his position as an agent Lecturer: Rowin Gurusami

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