Agency I.

What is an agent Agent is an authority or capacity in one person to create legal relations between a principal and third parties. An agent is not an independent dealer International Harvester v Carrigans [1958]

II. Indicators of an agency relationship case

International Harvester

The content and operation of any relevant contracts Whether the agent keeps the profits or pays them across to the principal.

Is the agent paid a commission Does the agent have to account to the principal for sales *Notice no single indicator is conclusive, always have to look at the circumstances. Potter v Customs [1985] (dealers called independent agent

III. Functions of an agent Common feature is that an agent has authority to bring about a contractual relationship between the principal and a third party. An agent may receive money on behalf of the principal and give valid receipt (e.g. estate agent collects rent). This must based on that the agent has given the authority to receive money. Petersen v Moloney [1951] Agent may pay money on behalf of the principal

Agent may make representations on the principals behalf and principal will be liable for that. (e.g. estate agent describes the size of the house)

IV. The creation of agency An agent may be need to licensed or have qualifications. Subject to that, an agency may be created by: 1. Agency created by Express agreement Simplest way, the agreement does not have to be a binding agreement, so the principal does not have to provide any consideration. The principals instructions and requests are enough to create agency. 2. Agency created by Implied agreement Objective test: Agency may be implied from conduct if there is reasonable ground in the circumstances to infer that the parties have conducted themselves in such a way that principal-agent relationship exists. Norwich Fire v Brennans [1981]

3. Agency created by Estoppel. Four elements establish an agency by Estoppel 1)-- Representation: there has been a representation by the supposed principal that the supposed agent is the principals agent.(the principal holding out the agent as his agent) 2)-- Reliance: the third party has relied on the representation.

3) --Reasonable reliance: it was reasonable in the situation for the third party to rely on the representation.

4)--Alteration: there has been an alteration in the third partys position as a result of reliance on the representation.

Case: Pole v Leask [1861] : by failing to inform the 3rd party, the principal has represented it continued.

4. Agency created in cases of necessity When an emergency arises and the carrier is unable to contact the principal, the carrier will be the principals agent to take reasonable steps to preserve the goods. There must be a real emergency threatening the goods: Sachs v Micklos [1948] (didn't exist)

5. Agency created by cohabitation() It is presumed that wives have authority to pledge their husbands credit for the purchase of household requirements. However easily to be rebutted, since now wives have income

6. Agency created by ractification () Text 434 Lec p.7 slide 37

V. Agents authority

The principal will be bound by the actions of the agent where the agent acts: Within actual authority, whether express or implied Within apparent or ostensible authority

Actual authority 1) The agents Express actual authority Express authority is the power expressly invested in the agent by the principal. Determined by Objective test: how a reasonable person would interpret the words of the agency agreement.

2) The agents Implied actual authority The court may imply powers on the basis of: Custom or trade usage: Con-Stan v Norwich [1986] A course of past dealings: Hely-Hutchinson v Brayhead [1967] A need to make the agency agreement effective: ANZ v Ateliers [1966] (e.g. agent expressly pointed to sale a horse will be implied the power to receive money and give a valid receipt; Manager have authority to purchase goods necessary to operate the business)

Ostensible (apparent) authority

****Always consider this issue from the 3rd partys point of view, instead of fact! Ostensible authority exists where the agent appears to have authority. 3 criteria stated in Freeman and Lockyer v Buckhurst [1964] i. A representation must have been made by the Principal to the 3rd party that the agent had authority to enter into a contract of the kind which the 3rd party is seeking to enforce. ii. The representation was made by a person who had actual authority to manage the principals business either generally or in respect of the matters to which the contact relates. iii. The 3rd party must have relied on the representation to contract.

VI. Ratification 1. Happens when the agent acts outside actual and ostensible authority. The principal will not be liable unless he ratifies the agents actions. 2. Rules: Keighley v Durant [1900] The agent must act as an agent: 3rd party must aware the person is an agent, and the principal must be named. (so undisclosed rule not apply) Only principal can ratify and must do it in a reasonable time. The principal must exist and capable of being ascertained at the time of the contract. The principal must have contractual capacity at the time of contract.

The principal, when ratify, must aware of all the facts, or totally accept whatever the agents acts. The ratification must apply to the whole contract. Ratification can be inferred from the principals conduct, neednt be express Ratification is ineffective where the original contract is void. Ratification does not date back to the time of making the contract. So the contract can be revoked before ratification.

VII.Breach of warranty of authority 3rd party can sue the agent for damages when the agent has falsely promised it has authority. 3rd party need to show that: 1. The agent promised his authority: the agent will not be liable if he didnt warrant his authority. 2. The 3rd party has relied on the warranty. 3. The 3rd party would not otherwise enter the contract. 4. The 3rd party suffered loss as a result of the reliance. Collen v Wright[1843]

VIII.

Duties of the agent General duties: the agent must 1. Perform what he has undertaken to perform 2. Obey instructions 3. Exercise due care and skill in acting 4. Act personally Fiduciary duties 1. Fiduciary duty to account honestly 2. Fiduciary duty to avoid a conflict of duty and interest

3. Fiduciary duty not to make secret profits, commissions. 4. Fiduciary duty not to use principals property or info for self gain.

IX. Who can sue whom?

X. Duties of Principal Text p.442 XI. Termination of agency Text p.442