Law of Agency

What is the legal definition of Agency?

Agency is a legal relationship where one person (the agent) is appointed/entitled to represent another (the principal) in dealings/transactions with a third party.

What are the 5 primary ways an agency relationship can be created?

1. Express Agreement (oral or written). Implied Agreement (inferred from conduct/circumstances). Agency by Estoppel / Holding Out 4. Agency by Necessity\n5. Agency by Ratification

What are the 4 essential conditions required for Agency by Necessity to arise?

1. A real emergency/necessity exists to protect the principal's property/interests.\n2. It is impossible/impractical to communicate with the principal for instructions.\n3. The agent acts in good faith (bona fide) in the principal's best interest.\n4. An existing contractual relationship already exists (e.g., bailment/carrier of goods).

What is Agency by Ratification and what is its legal effect?

It occurs when a principal subsequently adopts and accepts an unauthorized act performed by an agent. Legal effect: It creates the agency relationship retrospectively (as if authorized from the start).

What are the key essentials for a valid Ratification of agency?

1. Agent must purport to act for a named principal.\n2. Principal must exist and be competent to contract at the time of the act.\n3. Principal must have full knowledge of material facts.\n4. Must ratify the whole transaction within a reasonable time without injuring third parties.

Distinguish between a General Agent, a Special Agent, and a Universal Agent.

• General Agent: Authorized to conduct all acts connected with a particular business or trade.\n• Special Agent: Authorized for a specific single act or transaction; authority ends upon completion.\n• Universal Agent: Unlimited authority to do all acts the principal can lawfully delegate.

What is a Del Credere Agent and why do they receive an extra commission?

A del credere agent guarantees payment to the principal by the third party. They receive an extra commission ("del credere commission") to compensate for taking on the risk of third-party default.

Distinguish between a Broker and a Factor.

• Broker: Negotiates contracts without having physical possession or control of the goods.\n• Factor: Has physical possession and control of goods, sells in their own name, receives payment, and can grant credit or pledge goods.

Distinguish between Actual Express, Actual Implied, and Ostensible (Apparent) Authority.

• Express Actual: Directly given orally or in writing by the principal.\n• Implied Actual: Inferred from the position, nature of activities, or trade custom.\n• Ostensible/Apparent: Authority represented to third parties by the principal's words or conduct (holding out).

What general rule governs an agent delegating their authority, and what is the exception?

Rule: Delegatus non potest delegare (an agent cannot delegate authority).\nExceptions: Express/implied permission, trade custom, unavoidable emergency, or purely ministerial/clerical duties.

Name 6 fiduciary duties owed by an Agent to the Principal.

1. Duty of loyalty and good faith.\n2. Duty to avoid conflicts of interest.\n3. Duty not to make secret profits or kickbacks.\n4. Duty of full disclosure of material facts.\n5. Duty of confidentiality.\n6. Duty to account for all funds/property.

Name 4 key duties owed by a Principal to an Agent.

1. Remunerate/pay the agent for agreed services.\n2. Indemnify the agent against consequences of lawful/good-faith acts.\n3. Compensate the agent for injuries caused by principal's negligence.\n4. Reimburse reasonable expenses incurred by the agent.

What are the rights of an Agent regarding unpaid remuneration or expenses?

1. Right of Retainer: Right to retain/deduct moneys owed out of principal's funds in hand.\n2. Right of Lien: Right to retain possession of principal's goods/documents until claims are settled.\n3. Right to be indemnified.

Under what circumstances is an Agent personally liable to Third Parties on contracts made?

1. Where the agent expressly agrees to personal liability.\n2. Where the agent acts for a foreign principal or an undisclosed principal.\n3. Where the agent exceeds their authority.\n4. Where the principal cannot be sued or does not legally exist.\n5. Custom or usage of trade implies personal liability.

How can an agency relationship be terminated by Operation of Law?

1. Death of either party.\n2. Insanity or mental incapacity of either party.\n3. Bankruptcy/insolvency of either party.\n4. Completion of the business/purpose.\n5. Expiry of time (lapse of time).\n6. Destruction of the subject matter or frustration.

When is an agency relationship legally irrevocable by the Principal?

1. When the agency is "coupled with an interest" (e.g., agent has a financial/security interest in the subject matter).\n2. Where the agent has already incurred personal legal liability.\n3. Where authority has already been partially exercised.