Agency Learning Objectives: Understand the different types of agency arrangements and be able to distinguish agency from other relationships; Explain how an agency relationship is created and the nature of the agent’s authority; Understand the relationships that arise in the context of agency, namely: principal and agent; agent and third party and principal and third party; Describe the rights, duties and obligations of agent and principal; Explain how an agency relationship is terminated.
Agency cont... Who is an Agent? Definition of an Agent Authorised to act on behalf of a principal. Creates legal relations between the principal and the third party. Authorisation can be express or implied. Contractual & Fiduciary relationship.
Agency cont... Agent’s Duties & Obligations Duty to follow instructions; Duty to act with due skill and diligence; Duty to avoid conflicts of interest; Duty to account for monies received on behalf of the principal.
Agency cont… Principal’s Duties & Obligations Duty to remunerate; Duty to reimburse and indemnify.
Authority of agents An agents authority to act on behalf of the principal can be either : Actual or ostensible ( apparent) Express or implied
Agency cont... There are various types of agency arrangements recognized by the law. These include : Universal Agents; General Agents; Special Agents; Factor or Mercantile Agents; Del credere agents.
Agency cont... Agency relationships should be contrasted with other forms of contractual relationships including:- Employer-employee; Independent contractors.
Agency cont... Third Party Liability An agent may be liable to a third party in the following ways:- Third party believes that they are contracting directly with the agent and the agent has failed to disclose the existence of the principal (undisclosed principal); The agent has exceeded the scope of his/her authority (breach of authority); The agent commits a tort (tortious liability).
Agency cont... Termination of Agency ( p 368) Operation of Law (time, death, bankruptcy); Mutual agreement between the agent and the principal; Renunciation of the agent’s authority; Dismissal of the agent by the principal.