LAW 240 - Law of Agency

 

CREATION OF AGENCY 1. B y E stopp stoppel el (Holding Out) (3 rd Party) • • • • •

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DUTIES OF AGENT TO HIS PRINCIP PRINCIPAL AL 1. S S164 164 Obey Obey principal’s instruction

PRINCIPAL If principal by his words Causes 3rd party to believe That A is his agent (when A is not) And 3rd party rely on it A 3 PARTY So principal is prohibited to deny existence of A’s authority Requirement: i. Representation by principal to 3rd party ii. Reliance by 3rd party of representation iii. Loss suffered by 3rd party RD

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Agent must act according to the direction given by  principal If no direction, follow custom order Agent must only obey lawful instruction of principal In Bostock v Jardine, the court held that th thee agent was liable as agent bought more than as directed by  principal.

 2. S165 E xe xercise rcise care care and dilige ilig ence and use skill •

Agent must act with reasonable diligence and use skill he has

DUTIES OF PRINCIPAL TO TO HIS AGENT 1. Pay agent commissi commission on Pay remuneration to his agent for services rendered within the authority •

2. I ndemnif ndemnifyy agent for act actss done Against the consequence of all lawful acts done in good faith Situation:  Agent incurred losses in performance of contract  Agent cause injury to 3rd party in execution of his authority  Agent suffer injury during cause of his duty •

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 2. By Rat Ratifi ifi catio cation n (Exceeded) (No Authority) •

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Ratification can rise: An agent who has duly appointed has exceeded his authority OR  Person who has no authority but acted as he has authority Requirement: i. Act/contract must be unauthorized ii. Unauthorized act must be recognized by law iii. Agent must at the time of contract iv. Ratification must be made within reasonable time v. Ratification must not injure 3 rd party

 3. By Ne Nece cess ssity ity (Emergency)

 3. Not to dele legat gate e his autho uthori ri ty  •

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 principal approved the delegation Agent cannot delegate his duty to other EXCEPT In case of unforeseen emergency Custom of trade permit delegation delegation Act involve is clerical and ministerial

4. S166 Render proper account where required  5. Pay to his pri ncipa ncipall all sum sumss rece received  ived  6. Communicate with principal 7. Not to disclose confidential information 8. N ot to ma make ke any secr secret et pr pr ofit ofi t out o off hi hiss duty 

4. I mplied appointment appointment b byy pri  pri ncip ncipa al  5. E xpresse xpressed d appointme intment by pri ncipa ncipal

9. Not to let his own interest conflict with his duty 

SECRET PROFIT •

Any advantages received by agent from 3 rd  party out his performance towards his principal

REMEDIES TO PRINCIPAL IF AGENT MAKE SECRET PROFIT • • • • • •

neglect 

 Delegatus Non Potest Delegare Delegare”” : agent CANNOT employ another party to do his duty UNLESS when

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Agent has to authority Purposes: protect in hisemergency principal from loss Requirement: i. Get Get principal’s instruction ii. Real & actual emergency iii. Agent acted in good faith iv. Prevent loss to principal with respect to goods

3. Compensate agent for injury due to principal

Repudiate contract Recover amount of bribe from agent Refuse to pay agent his commission May dismiss agent for breach of duty May sue agent May bring the case under criminal law

TERMINATION OF AGENCY 1. By Ope Operat ration ion Of Of Law  •

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Upon death of principal/agent Effective when agent notice of principal death Agent must take all reasonable steps When principal/agent become insane Unsoundness of mind person is not capable to enter into valid contract When principal/agent become bankrupt Completion of agency Expiry of fixed period Agency unlawful/illegal

 2. By Co Cond nduc uctt of Partie Partiess (Mutual Consent) •

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Principal may revoke authority before authority  been exercised Cannot revoked without goods reason Renunciation by agent: Give reasonable notice Only with goods reason