Chapter 4 Flashcards
What is the law of Agency
An area of commercial law dealing with relationships that involve a person (the agent) who is authorised to act on behalf of another (the principle).
Agents are intermediaries/middlemen
What are the three ways that agency can be created?
1- By agreement (or consent - express or implied )
2- By ratification (retrospective)
3- By Necessity (Emergency makes it necessary to do something to preserve them)
What conditions need to be in place in order to be agency by ratification?
1- The agent must purport to do it on the principles behalf not their own
2- Principle must have been in the Agents mind the whole time
3- At the time of ratification the principle must have full knowledge
4- The principle must have capacity to contract
5- Ratification must take place in reasonable time
6- void or illegal acts cannot be ratified
7- The whole contract must be ratified
When can an insurance broker act on behalf of both the proposer/insured and the insurer?
1- Giving General Advice
2- Granting Cover
3- Collecting Premiums
4- Completion of the Proposal form (negligence on this can have consequences, if the insurer refuses to cover, this could be in suing)
Which act outlines when an agent is acting for an insurer or consumer?
The consumer insurance act 2012
What are the duties of an Agent?
- To obey the principals instructions (must obey provided lawful and reasonable)
- To exercise proper care and skill
- To perform duties personally
- To act in good faith towards the principal
- To account for monies received on behalf of the principal
Under what circumstances can Agent delegate?
- principal expressly authorises
- where the authority to delegate can be implied (clerical/admin)
- In accordance with trade customs
- in cases of necessity
What duty is an Agents relationship with their principal based on?
Good Faith - which requires full disclosure
In which insurance line is a broker personally liable for the payment of a premium?
Marine insurance under the Marine Insurance Act 1906
What are the remedies for breach of duty.
- sue the agent for damages
- sue the agent in tort
- dismiss the agent without notice or compensation
- sue the agent to recover a bribe
- if fraudulent, rescind any contract made and refuse commission
- sue for an account if failure to disclose full financial details
What are the two rights of an agent?
- the right to remuneration
- The right to indemnity
What is a Lien?
A lien is the right to retain the goods of another as security for payment if a debt.
Actual vs Apparent Authority?
Actual: The agents authority is real (through express or implied)
Apparent: no real authority, but in the eyes of a third party it appears that they have the authority
What is a disclosed principal?
One which is know to the third party at the time the contract is made.
What are the ways in which an agency may come to an end?
Agreement
Performance
Lapse of time
withdrawal of authority
renunciation by the agent
Death or principle or agent
Bankruptcy
Insanity
Frustration
