Agency 2 Flashcards
What does Authority mean?
Agent must have authority before he can form a binding contract between principal and third party. The authority must have the official permission to act, usually on behalf of another.
What are the different types of Authority - what is the authority and how does it work?
○ Implied Actual Authority
○ Express Actual Authority
○ Apparent Authority
Ratification
What is Actual authority, and what types does it cover?
○ Actual authority is when the agent has express permission to make deals/sales.
Actual authority is a legal relationship created by consensual agreement
Give the definition of Actual Authority?
“An actual authority is a legal relationship between the principal and agent created by a consensual agreement o which they alone are the parties.”
What is the Actual Implied Authority and what are the few ways it can happen?
○ Agent has authority, but is implied.
○ It may not be clear but has been implied through circumstance/action
○ Authority is necessary to carry out the object of the agency agreement
○ Authority is incidental to the agency agreement
It is customary in the trade in question from the post of the agent.
What are the examples of IA?
○ Authority is necessary t carry out the object of the agency agreement
○ Authority is incidental to the agency agreement
It is customary in the trade question from the post the agent holds.
Simple terms of Apparent/Ostensible Authority?
Where an agent acts without authority, the third party may suffer a loss. Because of the agents lack of authority, there is no contract.
What is the 4 point test that is used in Freeman & Lockyer v Buckhurst Park Properties Ltd (1964)?
○ A representation must have been made that the agent has the authority to act.
○ Rep must have been made by someone who has the authority to act
Third party must have relied on this rep in being introduced into dealing and it must have been reasonable to rely on this rep.
What is the case of First Energy (UK) v Hungarian International Bank (1993)?
○ A company was keen to negotiate a loan with a bank employee.
○ He didn’t have authority to grant the loan
Loan was agreed, and the CoA held that the bank was bound by the loan agreement, leading the TP to believe that the employee has the authority to grant the loan.
What are the 3 reasons for Principal/agent liability to third parties?
- Authority, actual express, actual implied and apparent
- If an agent acts within their authority they are creating contract (only principal and TP are liable)
If agent acts outside their authority - breaches warranty of authority and they can become liable unless the principal or TP can claim against.
- If an agent acts within their authority they are creating contract (only principal and TP are liable)
What are the acts for a named and disclosed principal?
- Agent discloses what they are and the identity of the principal
- Rule here will be that of a contract is entered into between the principal and TP (AGENT HAS NO LIABILITY)
- When disclosed, it is the principal’s unless, the agent contracts outside the scope of actual authority, agent agrees to be liable, agent contracts in their own name, or where the agent has not made it sufficiently clear they are contracting on behalf of the principal.
What are the rules and effects in written contracts?
- There is a rebuttable presumption that the party who signs the contract inteds to accept personal liability
- Agent has the onus to rebut the presumption but it is difficult
When agent signs own name, they may be liable even of the TP was aware that they were acting as the agent.
- Agent has the onus to rebut the presumption but it is difficult
Can agent sign a contract in their own name?
Yes, but they are potentially liable, so It would be a bad idea.
What is the case of Stewart v Shannessy (1900)?
- Sales manager sent a letter on company notepaper confirming the appointment of a subagent.
- Signed using personal signature
Held liable.
- Signed using personal signature
How does it work dealing with an unnamed, undisclosed principal?
- TP is unaware of the 3rd party
- Liability is dependant on whether the agent has made clear to the third party that he will not be personally liable
Traditionally there has been the option where the. TP can pursue the principal or agent.
- Liability is dependant on whether the agent has made clear to the third party that he will not be personally liable
