Chapter 4: Law of Agency Under the Tourism and Hospitality Industry

Learning outcomes:

Principal Vs Agent 4 ways of forming an agency Duties of principal and agent Authority of agent Termination of agency

Who is Principal?

The main person in a business or an employer who hired another person to represent him Requirements:

Section 136:

You must be 18 years old or above; and National to be able to become a principal (sound mind)

Who is an Agent?

A person who is authorized to act for another (the agents principal) through employment, by contract or apparent authority Requirements:

Section 137

An agent need not be a major or of sound mind. However, if he is a minor or unsound mind, he would not be liable towards his principal for acts done as agent No consideration is needed to create an agency

Section 138

By Express Appointment by the Principal

Express or implied appointment May be in written or oral form Section 140

Even a letter written or words spoken may be effective in appointing an agent

By Implied Appointment by the Principal

The law may infer the creation of an agency by implication when a person by his words or conduct, holds out another person as having authority to act for him Section 140 Creation of agency through suggestion is valid Even though, that particular person only involves another party to act on his behalf indirectly E.g. Case: Chan Yin Tee v. William Jacks & Co.

By Ratification by the Principal

ratify Approve or sanction formality To have the formal approval and sanction on this matter Two ways: An agent who has duly appointed has exceeded his authority, or A person who has no authority to act for the principal has acted as if he has the authority Section 149 can reject or accept the contract so made When the principal accepts and confirm such a contract ratification Section 150 ratification may be expressed or implied Ratification is retrospective it dates back to the time when the original contract was made by the agent and not from the date of the principals ratification SEVEN conditions for the creation of Ratification (page 111)

By Necessity

Three conditions:

It is impossible for the agent to get the principals instruction under section 142 The agents action is necessary in the circumstances, in order to prevent loss to the principal with respect to the interest committed to his charge, e.g. when an agent sells perishable goods belonging to his principal to prevent them from rotting The agent of necessity must have acted in good faith

By Estoppel or Holding Out

As a bar or impediment (obstruction) which precludes a person from asserting a fact or a right or prevents one from denying a fact A person cannot be bound by a contract made on his behalf without his authority If he by his words or conduct allows third party to believe that particular person is his agent even when he is not, and the third party relies on it to the detriment of third party, he will estopped from denying the existence of that persons authority to act on his behalf

Duties of a Principal to his Agent

Section 175 to 178:

Agent to be indemnified against the consequences of lawful acts Agent to be indemnified against the consequences of acts done in good faith Non-liability of employer of an agent to do a criminal act Compensation to agent for injury caused by principals neglect

Duties of an Agent to his Principal

Section 164 174

Page 115

Authority of an Agent

Actual

Authority expressly given by the principal (orally or in writing) or implied from the express authority given, from the circumstances of the case, custom and conduct of the parties
Authority that is not expressly given by the principal but which the law regards the agent as processing although the principal has not consented to his exercising such authority

Apparent/ostensible

Termination of Agency
notice Acts of parties Termination Of agency

Upon expiry date

Operation of law

Performance
Expiry date

Death/Insanity
Unlawful event

Thank You

Q&A???