Chapter 4 - Agency

Question 1

How is consent expressed?

Answer 1

Expressed/implied orally or in writing

Question 2

What is ratification?

Answer 2

Ratification validates past acts of the agent to create an agency relationship retrospectively, as if the agent were authorised to act from the beginning.

Only validates past acts

Provides no future authority

Question 3

What are the conditions that allow a principal to ratify acts of the agent?

Answer 3

Principal was in existence at the time of the agent’s act

Principal had the legal capacity to make the contract himself, both at the time the act was
carried out and at the time of the purported ratification

Agent at the time either names or sufficiently identifies the principal on whose behalf he is making the contract

Ratifications occurs within a reasonable time

Question 4

How must a principal communicate ratification?

Answer 4

Must communicate a sufficiently clear intention of ratifying by express words or conduct

Mere passive inactivity won’t amount to ratification

Question 5

What does ratification of part of the contract operate as?

Answer 5

Ratification of the entire contract.

Question 6

What are the rights of an agent?

Answer 6

Indemnity - entitled to be repaid expenses and to be indemnified by principal against losses and liabilities, provided acts are done properly

Remuneration

Lien - agent has right to exercise a lien over property owned by principal

Question 7

What are the 3 sources of agent authority?

Answer 7

Actual express of authority

Actual implied authority

Ostensible authority

Question 8

When an Agent had authority and
was known to be an agent, what are the liabilities of parties involved?

Answer 8

Third party - may sue and be sued by the principal

Principal - may sue or be sued

Agent - usually none unless intended otherwise

Question 9

When an agent Agent had authority but
is not known to be an agent, what are the liabilities of parties involved?

Answer 9

Third party - can choose to sue either principal or agent

Principal/agent - may sue or be sued

Question 10

When an agent has no authority, what are the liabilities of parties involved?

Answer 10

Third party - No rights against principal but may have claim against the agent

Principal - can’t sue/be sued

Agent - Potential liability under the tort of deceit/breach of warranty of authority

Question 11

What is agency?

Answer 11

Agent establishes privity of contract between principal and 3rd party

Contract enforceable both by and against principal and 3rd party

Agent drops out of the picture

As if principal made contract themselves

Question 12

Where may issues arise with agency?

Answer 12

Whether someone has acted as an agent/ independent contractor in their own right

Ambiguity over which party is the principal

Question 13

Does an agent need to have full contractual capacity?

Answer 13

Not necessarily

Principal must

Question 14

What are the 3 types of agency?

Answer 14

Agency by consent

Agency by estoppel (holding out)

Agency by necessity

Question 15

What is agency by consent?

Answer 15

Consent expressed

Exception - agent is to execute a deed, agency itself must also be created to execute a deed

Question 16

In commercial transactions, how is an agent appointed?

Answer 16

Usually in writing to avoid misunderstanding

Question 17

What is agency by estoppel?

Answer 17

Words/conduct of the principal give 3rd party the impression the person is the agent of the principal

Question 18

What is agency by necessity?

Answer 18

Arises where a person is dealing with an emergency in which property/interests of another person are in imminent jeopardy

Probably only applies where there is already a contractual relationship between parties

Question 19

What must an agent acting by necessity show?

Answer 19

Must show the agent had no practical way of contracting the principal their actions arose from pressing need

Modern telecom may prevent this from arising

Question 20

What duties does the law imply into any contract of agency?

Answer 20

Accountability - agent must provide full info to the principal and account for all monies arising from them

Accepting commission/reward as an inducement is a bribe and contract is fraudulent

No conflict of interest between own interest and principal’s

Any agent may refuse to perform an illegal act

Question 21

If an agent agrees to perform services for their principal for reward, is there a contract?

Answer 21

Yes, even if agent undertakes duties without reward, they have obligations

Question 22

What are the duties of an agent?

Answer 22

Obedience - agent must act strictly in accordance with instructions as long as they’re lawful and reasonable

Skill - agent undertakes to maintain standard of skill and care to be expected of a professional

Personal performance - agent usually selected for personal qualities and owes duty to perform tasks themselves and not delegate

Confidence - must keep knowledge of principal’s affair confident, even after cessation of agency relationship

Question 23

What is actual authority?

Answer 23

Explicitly given by the principal in respect of a particular contract

Question 24

What is actual implied authority?

Answer 24

Implied from nature of agent’s activities/usual circumstances

Agent has actual implied authority to do all things incidental and all things usual by virtue of agent’s office

3rd parties entitled to assume agent has implied authority unless otherwise

Question 25

What is ostensible/apparent authority?

Answer 25

Authority which the agent’s principal represents to other persons that the principal has given to the agent

Not restricted to what is usual and incidental

Question 26

What will the agent be considered when principal isn’t named?

Answer 26

Contracting party

Question 27

When may an agent incur personal liability?

Answer 27

Under rules of trade usage

Where name is added as party to negotiable instrument

Contract made under seal

Question 28

If an agent receives commission on behalf of a principal and decides to keep it who is liable?

Answer 28

Party that paid the commission

Question 29

Is remuneration always payable to an agent?

Answer 29

Yes, in the absence of any excess provision

Question 30

When can an agent be liable?

Answer 30

If they expressly describe themselves as an agent when entering into a contract

Question 31

Can ratification create a valid agency relationship?

Answer 31

Yes

Question 32

Are an agents duties limited to what’s in the contract?

Answer 32

No, duties can be implied by statute and common law

Question 33

What are incidental and usual authority part of?

Answer 33

actual authority