LAW OF AGENCY

Why? Convenience

What is agency? …When one person, with the necessary authority to do so, conducts a juristic act for and on behalf of another in such a manner that he obtains rights and obligations for the other person without him acquiring any rights or becoming accountable Fouché (2007) pg 244

What is agency Agency is a contract whereby one person (the agent) is given permission (authority) and usually asked by another (the principal) to contract or to negotiate a contract on behalf of the principal with a third person. Business Law Study Guide, MANCOSA (2015) pg 94

What is agency then? One person acts on behalf of another The act is a juristic act The act is authorised The action results in a legal tie between two people, one of which was not involved in the original action

The parties The principal – gives the instruction The agent – carries out the instruction The duties (or instruction) is called a mandate

How does agency arise? By agreement (express authority) Oral agreement GPA Special power of attorney By operation of law Negotiorum Gestio By ratification Negotiorum gestio – implied authority to act on behalf of 3rd party – eg: I call vet to attend to cattle of neighbouring farmer who is away – see pg 97 Ratification – approval after the fact

Authority by Agreement By agreement Principal gives Agent authority to act on his behalf No formalities required Can be by way of written Power of Attorney

Authority by Operation of Law Where one party in absence of agreement has authority by law to represent another Eg: Guardian representing a minor Curator acting for mentally insane Partner representing a partnership or other partners

Authority through Estoppel Where a person creates the false impression that another person may act on his behalf and a third party acts on the strength of that (mis)representation, the “principal” can be bound by the false impression he created.

Authority by Ratification Where the “principal” gives his consent or authority after the representation has taken place

The Effects of Representation The legal bond will exist between the principal and the third party. The agent does not acquire any rights or duties

Duties of the Principal To pay the agreed remuneration To reimburse the agent for all expenses necessarily incurred by him To indemnify the agent for all losses or liabilities incurred in performing the authorised act

Duties of the agent To execute the Principal’s instructions To account to the Principal To keep his property separate from that of the Principal To act honestly and in good faith – fiduciary relationship exists To avoid conflicts of interest Not to delegate his authority To act with care, skill and diligence

The duty of good faith Put the Principals interests above your own May not make a hidden secret profit May not sell his own goods to the Principal without disclosing the fact Not to disclose confidential or private information of the Principal

Agents Liability Generally, agent not liable to 3rd parties, but certain exceptions: If principal does not exist (agent lies) – agent is liable If principal does not have legal capacity If agent acts beyond scope of authority If agent fails to disclose he is an agent (see next slide)

The Doctrine of the Undisclosed Principal Where the agent acts on behalf of a principal without disclosing the fact. Requirements Agent must be authorised to act for principal Agent must have intended to contract on behalf of principal Agent must fail to disclose agency at all Third party can sue principal or agent but not both

Termination of agency Completion of the mandate Effluxion of time Death, insanity or insolvency of the Agent or the Principal Revocation of mandate by the Principal Renunciation of the mandate by the Agent Mutual consent

Specific types of Agents Factors Auctioneers Del Credere Agents Brokers Estate Agents Insurance Agents Page 101