Agency

Question 1

Definition of agency

Answer 1

Where one person acts on behalf of another; and
has the power to effect the principal’s legal positions;
with regard to a third party

Question 2

Agency is created either by actual authority or apparent authority

Answer 2

Freeman and Lockyer v Buckhurst Park Properties

Question 3

Actual authority

Answer 3

Legal relationship between principal and agent created by express appointment

Question 4

Apparent Authority

Answer 4

Representation made by principal to third party that agent had authority;
Representation is relied upon by third party believing agent had authority; and
Third party altered their position

Question 5

Ratification (third method of agency not mentioned in Freeman)

Answer 5

If certain conditions are satisfied, principal can give retrospective authority to agent

Question 6

Conditions for ratification

Answer 6

• third party must know they are dealing with agent
• principal was competent at time of contract
• contract itself was not void
• ratification must occur within reasonable time and with awareness of all facts

Question 7

Effect where agent has authority (whether actual or apparent)

Answer 7

Valid contract between the principal and third party.

Agent ‘drops out’

Question 8

Effect where agent has no authority

Answer 8

Principal cannot sue or be sued by the third party

Only a contract between agent and third party

Question 9

Third party may sue agent in…

Answer 9

1. tort of deceit (if agent knew they had no authority)

2. breach of implied warranty of authority

Question 10

If agent exceeds authority…

Answer 10

…there is no authority