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56 Cards in this Set

  • Front
  • Back
Sources of Agency Law
~General Contract Law

~Governed by the terms of their contract


~Particular Principles of Common Law

What is Agency?



Bowstead and Reynolds

Fiduciary relationship which exists between 2 persons, one of whom expressly or impliedly manifests assent that other should act on his behalf so as to affect his relations with TP & the other of whom similarly manifests assent so to act or so acts pursuant to the manifestation
Purpose of agency
Can do something which principle has no skill or resources to do
Creation of Agency
No formality required can be oral, in writing or by deed (power of attorney.
Heard v Pilley [1869]
No formality even for land
Ball v Dunsterville [1791]
Unless agent executes deed in presence of the principal.
Actual Authority

Definition

Created by consensual agreement to which P and A are alone parties to. Authority will be under the terms of the agreement.
Actual Authority

Express

~Documents not under seal or in deed can be construed liberally w/ regard to the purpose of the agency and to usages of trades or business

~If words are unqualified, the agents authority will only be restricted by any incapacity of his principal.

Actual Authority

Implied

Heyl-Hutchinson v Brayhead [1968]- inferred from conduct of parties and the circumstances of the case such as when the board of directors appoints one of their number to be managing director. Impliedly authorising him to do all things that fall within the usual scope of that office.
Types of Implied Actual Authority

Incidental Authority

An agent has implied authority to do everything necessary for, or incidental to, the effective execution of his express authority in the usual way
Types of Implied Actual Authority

Usual Authority

An agent has implied actual authority to do what is usual in his trade profession , or business for the purpose of carving out his authority
Types of Implied Actual Authorities

Customary Authority

Implied actual authority to act in accordance with usages and customs to the particular place, market or business in which he is employed, so long as those usages or customs are reasonable and lawful.

~~unreasonable if contradictory w/ principles instructions.

OSTENSIBLE (Apparent) AUTHORITY
ING RE(UK )Ltd :When representation acted upon by the contractor by entering into a contract with the agent operates as an estoppel, preventing, the principle from asserting that he is not bound by a contract.
Can operate to:
~Create authority where there was none before

~To enlarge an agents actual authority


~To clothe an agent w/ authority where he would usually have actual authority but for the existence of a restriction unknown to the third party.


~To extend an agents authority beyond termination of the agency relationship.

Requirements
~Representation of the fact that A has authority to act

~Relied upon by TP


~Alteration of position


~Also affected by subsequent conduct of principal

Representation

Form of representation

Solomon v Solomon

orally

in writing


or implied from a course of dealing.

Representation of A's authority
A-G for Ceylone v Silva [1953]- Must be made by principle not agent himself.

The Rafaella, obiter- made by an intermediate agent w/ actual authority to make such a representation. In principle, an agent can have apparent authority to make representation as to his own authority.


Suncorp Insurance and Finance [1993] such cases are rare.







Requirements of Representation
~Must be made to 3rd party who deals w/ the agent or to the public at large.\

~Must be of fact, not of law- Chaplea v Brunswick [1881]


~Must be that agent is authorised to act as agent and not principal.


~must be made intentionally & possibly negligently.`

Relied upon by TP


~Causal connection must exist between the representation & the TP's dealing w/ agent.


Swan v North British Co Ltd.
~In cases of representation by negligence, the principal breach of duty of care owed to the third party must be proximate cause of his damage
TP will not be able to say he relied if..
~He knew or ought to have know of restriction on agents authority.



~Nourse Lj in Heinl v Lyske Bank [1999]- Or agents action is contrary to commercial interests of principle.



Alteration of Position
Rama Corpn v Proved Tin- TP must alter position to his detriment.


The Tatra [1990]
more recent precedent. Gatehouse J- held that 'the only detriment that has to be shown ... is the entering into the contract.
Subsequent Conduct of the Principal


A is under a duty to B to disclose the non-existence of the supposed obligation- Buckley LJ (at 1011) Spiro v Lintern [1973]
Situations Covered
~A not appointed: no actual authority. Freeman and LockyerLtd [1964]

~A has limited actual authority


~A continues to act after termination: Drew v Nunn [1879]

Evaluation

Sealey and Hooley

English courts view apparent authority as a form of estoppel so not real authority. Rather it is for policy reasons, that the law recognises as giving the agent power to affect the legal relations of the principle-
Consequently
Apparent authority can only make principle liable under any contract made by agent. Does not give principle cause of action unless he ratifies his agents unauthorised contract.
USUAL AUTHORITY
Can be species of actual authority ( and a have agreed that an agent appointed to a position has the authority which goes with that position generally.
Watteau v Fenwick [1983]

facts

Manage or pub is forbidden from buying tobacco on credit. Manager contravening rules bought tobacco on credit. Sales man though the agent was owner of pub. Manager held to have usual authority and principal was bound.

~concerned: liability of undisclosed principal for unauthorised contracts entered into P's agent.

Watteau v Fenwick [1983]

Rationale

~A did not have actual authority because salesman had not received any representation from principal of whom he was unaware

~No appaz authority cus salesman received no representation from principal of whom he was unaware.

GHL Friedman

'The demise of Wateau v Fenwick: Sign O Lite Ltd v Met Life Insurance




PROBLEM W/ FENWICK No. 1

Assumes" anyone who employs an agent and does not disclose that he is an agent, inferentially accepts liability for any and every transaction into which the undisclosed agent enters as long as such transaction has a connection w/ the activity entrusted to the undisclosed agent."
GHL Friedman

Consequences of this problem

1. Expose principal to a potentially very wide, almost limitless liability for what the agent does

2.

PROBLEM W/ FENWICK NO. 2
If limitation placed on A's authority by undisclosed principal, this will blind TP dealing w/ the agent, even though TP was unaware that he was dealing w/ the agent, and therefore, was necessarily ignorant of any such limitations.
Wood JA

Sign-O-Lite Plastics Ltd v Met life Insurance

Canadian case

Wood JA declared reports he had researched 'bereft of any hint that Watteau v Fenwick should be considered good law.'




Sealey and Hooley view law as defunct following this.


Yet to be overulled

Alternative explanation of Fenwick

A. Tettenborn [1998]

"What Fenwick represented by leaving Humble in charge was not that Humble was Fenwick's agent but rather that Humble and the owner of the Victoria Hotel (whoever that might be) were one and the same person." In this case it is estoppel by conduct.
Alternative explanation of Fenwick

Policy Reasons

~Unfair for undisclosed principal to be bound when A exceeds actual authority.

~He becomes liable but cannot have right of action even though he never meant to be bound by such a contract. He can still make counterclaims and adduce defences- undecided issue.

Limits of Fenwick
~Needs to be existing agency relationship

~Agents character must make usual powers identifiable-RTH Stone [1993]


~Does not apply where A acts for himself and not for principal (Kinahan & Co ltd v Parry[1910]- Overruled on appeal for this reason.

OPERATION OF LAW
-Imposed by law

~Agency of necessity

Criteria
~it is impossible or impracticable for agent to communicate w/ the principal- Springer v Great Western Rly Co [1921]

* Improved methods of communication means this requirement is rarely met.





Action is necessary for the benefit of the principal
Prager v Blatspiel [1924]
The agents acts bona fide in the interest of the principal
Prager v Blatspiel
Action taken by the agent is reasonable and prudent
F v West Berkshire Health Authority [1989]
The principal has no given the agent express instruction to the contrary
Bowstead and Reynolds

Follows from the fact that necessity does not operate where the principal can be consulted.

Rights and Liabilities
~A has power to affect legal relations of his principal

~Agent may dispose of his principals property


~My contract w/ TP


~A has defence if sued by his principal


~May be able to claim reimbursement from the principal for expenses incurred.

STATUTORY AGENCY
~Mental Capacity Act 2005, ss 5-8 - agency of necessity for mentally incapacitated persons.
RATIFICATION
Where someone purports to act as agent, but does not have actual or apparent authority for his acts, P will not be bound by the acts in question unless the principal subsequently ratifies them.
conditions
~Agent must have purported to act as an agent
Keighley and Co v Durant [1901]
Ratification will therefore not be possible where the agent has acted as if for himself, that is, w/o disclosing that he was acting for someone else.
Kelner v Baxter [1866]
The principal must have been in existence at the time the contract was made.
Wilson v Swann [1862]
The principle must have been named or ascertainable when the contract was made
Criticism
Policies of Marine insurance may be taken out 'for and on behalf of an person Interested' - so a party who could be ascertained to be a member of that class at time policy was effected can ratify and sue.

- Freedom of contract if P and TP okay with having such a contract no reason whiu law should refuse it- Munday

Brook v Hook
An act which is void ab initio( on grounds of illegality(Bedford Insurance[!958]) or because it is a nullity)
What constitutes ratification
Canbe express, implied, and may be words orconduct
Implied Ratification
~Is acquiescence or inactivity sufficient?

Suncorp Insurance & Finanze v Milano Assicurazoni SpA- Waller LJ-Thinks it should be sufficient, when it is the only reasonable inference to draw in all the circumstances i

Effect of Ratification

Bolton Partners v Lambert [1889]

Rule: Ratification done by an assumed agent is thrown back to the date of the act done and the agent is put in the same position as if he had the authority to do the act at the time the act was done by him
LIMITATION
Ratification must take place within a reasonable time after acceptance of the offer by the unauthorised person: Manager of Met Asylum Board v Kingham & Sons [1890]