LAW OF AGENCY

Definition & Legal Basis

  • Relationship where an AGENT is authorized to act/represent a PRINCIPAL toward third parties.
  • Governed by Contracts Act 19501950 (Part X)
    • Agent: S. 135135 – "person employed to do any act or represent another."
    • Principal: person for whom such act is done.
  • Dual contractual links:
    • Principal ↔ Agent (agency contract)
    • Principal ↔ Third party (resulting contract)

Formation of Agency

  • Express appointment → oral / written (S. 140140).
  • Implied appointment (S. 140140):
    • From conduct/circumstances.
    • Husband–wife (necessaries).
    • Partnership: every partner is agent of firm (Partnership Act 19611961, S. 77).
  • Ratification (S. 149149–153153): principal later approves unauthorised act.
    • Must meet 99 conditions incl. existing principal, full knowledge, whole-contract ratification, reasonable time, no injury to 3rd party, etc.
    • Effect: binds principal retrospectively (Bolton & Partners v. Lambert).
  • Agency by Necessity (S. 142142): emergency acts to preserve principal’s property; conditions: real emergency, entrusted property, impossible to obtain instructions, good faith (Great Northern Rly v. Swaffield).
  • Agency by Estoppel (S. 190190): principal’s words/conduct induce 3rd party to rely on supposed authority; principal then precluded from denying (Freeman & Lockyer v. Buckhurst Park Properties).

Classification of Agents

  • By authority scope:
    • Universal – unlimited power.
    • General – ordinary course of business.