JOMO KENYATTA UNIVERSITY KAREN CAMPUS

MERCY WANJIRU WAMBUGU

JKC/B11/0684/2013
LAW OF AGENCY
MAKE-UP C.A.T
QUESTION ONE
A princ

QUESTION TWO
Under Kenyan law an agents authority can be classified as actual authority or apparent
authority actual authority given by the principal orally or written or implied from the express
authority given from the circumstances of the case, custom or usage or trade and the conduct
of parties.
The requirements that must be fulfilled before a principal can be bound by agents
apparent authority;
An agent must have informed the third party about the existence of the principal the principal
must have a signed contract the principal deliberately advises express and implied powers to
the agent to act for him or her agent exercises actual authority hence binding the principal to
agents acts. The principal may be present during the act of the agent and doesnt dissuade the
third party from believing that the agent has authority to bind the principal
The conditions that must be met before a principal can ratify an agents actions
For a principal to ratify an agents action the principal must be competent, this means the
principle must have contractual capacity ex a minor, a person of unsound mind, a bankrupt
person cannot ratify the contract.
Another condition a principal must meet is he must be fully aware of all the material facts for
example If an agent bought goods for a principal at a price greater than the market value in the
name of the principal and the principal ratified the transaction without knowing about the high
price then the ratification becomes invalid.
The principal must make the ratification in reasonable time
Ratification must be communicated by the principal
Act to be ratified need to be legal and must not be void

The distinction between a disclosed and undisclosed agency the difference between the
two is disclosed agency an agent enters into a contract on behalf of a principal who is named
an the agent has authority to enter the contract hence the principal is liable for its performance
while in undisclosed agency the agent acts on behalf of unknown principal the law recognizes
that the third party thinks its dealing with a person acting on its own behalf if the third party
learns of the existence of a principal the third party may sue the principal as long as the agent
acted within the scope of its actual authority.
The ways in which an agency relationship may be terminated are by the act of parties or
termination by operation of law this is by; agreement of both the agent and principal their mutual
consent can end their agency relationship. Also an agent can renounce his/her position by
giving reasonable notice before he resigns. And where an agency is for a fixed time period and
the time expires the agency relationship comes to an end unless the contract is renewed. If the
subject matter gets destroyed for examples goods or house gets destroyed the agency
relationship is terminated. A principal can revoke authority of an agent any time before authority
has been exercised as to bind the principal. Also if the principal or agent dies their agency
relationship immediately gets terminated. And the last but not least by performance of the
contract of agency. After the agent completes performing his duties of the contract the agency
relationships is concluded.

C.A.T.1
QUESTION 1
Duties of an agent require them to discharge his/her duties with honesty and diligence and
shouldnt acquire material benefit from a third party in connection with the transaction
conducted restat 3d of agency in this case Aaron, the agent, was bribed by Solomon with a weeks
holiday in Europe which means if it wasnt for his personal gain he could have sold it for a
higher price than 10000000 and acquire more profit for Paul hence the agent becomes liable in
tort for harm depriving his principal of his profit he also led Paul into believing that he couldnt
find a buyer for his car so s to gain personal profit using the principals car this act caused the
principal his profits which make Aaron liable and in breach of his position as an agent. An agent
should not make secret profits by utilizing reputation of the principal if agent doesnt behave in
his capacity as agent and runs transactions in his own way personal liability arises agent should
act reasonably and refrain from conduct that may damage principals enterprise.
A person who enters into a transaction with an agent acting within the scope of their power to
bind the principal and causes agent to violate their duties to the principal is liable for depriving
the principal from his profit and is in breach of confidence perpetrated for profit or to gain some
unfair advantage. In this case Solomon caused Aaron to violate his duty to the principal by
persuading him with a weeks trip to Europe so as to get the car for only 10,000.000 which
would have probably fetched a higher price which makes him liable for depriving the principal
from his profits.

QUESTION 2
An agent can enter into a contract without authority of the principal but the principal can ratify
his agents unauthorised acts if certain requirements are met, this requirements include
ratification occurring before the third party withdraws from the contract if the An agent must

have acted for an identified principal who subsequently ratifies the action case of Keighley v
Durant also a principal must have knowledge of all material facts and should ratify it voluntarily,
the principal must also affirm the transaction and its entirety. The principal must have the legal
capacity to authorize the transaction at the time of ratification and at the time of original contract
case of kenler v Baxter. The contract must not be void or illegal to be ratified case of Ashbury
carriage co. Richie. Ratification should be done within a reasonable period.