1. B Com (FM) commercial law 2A
LAW OF AGENCY
B Com (FM) commercial law 2A

2. 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

3. What is agency
Agency arises when one person (agent) concludes a juristic act for or on behalf of another (principal) with the result that a legal bond arises between the agent and 3rd party
Commercial Law Study Guide, MANCOSA (2017) pg 40

4. 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

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

6. 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

7. 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

8. 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

9. 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.

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

11. 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

12. 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

13. 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

14. 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

15. 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)

16. 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

17. 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

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