An agency relationship
Examples: insurance agents, estate agents, employment procurement agents (e.g. modelling agencies, showbiz agents, Agents for actors, models, athletes); publishing an agent;etc. An agency relationship starts when two people agree that one of them (the agent) will act for the benefit of the other person (the principal) under the direction of the principal. Under the Law of Agency, an agency describes a relationship where a person called an agent has power to make a binding contract between two others, known as the principal and the third party.
Agency relationships are usually established by contract. Some of these relationships are established by the conduct or behaviour of the parties. In an agency relationship, consideration is not essential for the establishment of the relationship. An agency helps the principal to transact businesses in several places, do businesses that require skills or memberships that you as the principal do not have (such as appearing in court, buying shares being traded on the stock market, selling your house, or supervising the construction of your building).
An agent
An agent as a person who represents acts on behalf of another person in execution of a transaction. We need also to explain an agent called Attorney – in – Fact. This agent, though appears in most countries, is known commonly in USA. An Attorney – in – Fact is an agent who authority as an agent in writing. Such an agent is given power called powers of attorney. For example, Sam plans to spend his time during winter away from London, and be in Dubai or warm Uganda in East Africa, but wants to sell his apartment or car. He appoints Eric to sell with power of attorney these
assets. Eric will sign the necessary documents on Sam’s behalf.
Five ways Establishing the Agency relationship
- By express agreement in writing or orally: An agency may be created by formal agreement, either by
through an oral or written contract. - By implication: An agency agreement may be implied from the conduct of the parties.
- Estoppel: Estoppel is described in English law as a principal of justice and equity.
- Ratification. Ratification is done by the principal at later date after the act by an agency has already
happened. - By necessity: There are situations, such as in an emergency, where it is impossible for an agent to
obtain instructions from the principal before acting and acts.
An agency of necessity arises where three criteria are fulfilled:
- It was an emergency which required an agent to act;
- It was impossible to obtain instructions from the principal; and
- Agent acted in good faith and in the interest of all parties.
Types of Agency Authority to bind the principal
- Actual Authority: The principal is bound by a contract between the agent and the third party if the person who acted as agent had authority to act on behalf of the principal. This is where the principal’s words or conduct reasonably cause the agent to believe that they have been authorized to act. Actual authority can be: express authority or implied authority.
- Express Authority: The principal may appoint an agent by stating categorically the authority granted. The authority can be given orally. Nowadays, most agencies are created a written agency contract where authority is determined by the terms of contract.
- Implied Authority: At the commencement of the agency relationship, the principal cannot foresee every circumstance in which the agent may need to act. The agent’s authority will be determined by the surrounding circumstances.
Breach of agent’s duties & remedies to the principal
Where an agent breach any of the above duties the remedies available to the principal include:
- Deduct the loss from the remaining unpaid amount due to the agent
- Sue agent for damages for breach of contract
- Sue the agent to recover a bribe, secret profit or any other money received by the agent on behalf of the principal.
- Sue for an account if the agent fails to keep proper accounts of transactions.
- Dismiss the agent without proper compensation.
- Where the agent refuses to return the principal’s property, the principal can sue for the tort of conversion.
Termination of agency
An agency relationship can be terminated in one of the following ways:
- By agreement
- By full performance of the contract of the duties and obligations of the agreement
- By frustration
- By the principal revoking the agent’s authority
- By the agent renouncing his authority
- By lapse of time where the agency has been created for a specified period of time
- By the death of either the principal or the agent
- Where the agent becomes bankrupt and fails to carry out their duties
- Where either a principal or agent loses capacity to contract; e.g., by insanity of the
principal or the agent; or If the agency relationship had been entered into by either a
principal or agent who is an alcoholic.
Bailment
Essential elements of Bailment
There are basically three essential elements of bailment:
- The bailor has a right or title to possess the item of property.
- Possession and temporary control of the item of property must be given to the bailee
- The bailee must owe the duty to return the item of property as directed by the bailor.
Types of bailment
There are three different classes of bailment. The type of bailment may be important in determining the liability of the bailee for the loss of or damages caused to the property of the bailor.
Delivery and acceptance of possession by the bailee
