Agency Law Notes

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Agency
(1) AGENCY RELATIONSHIP?
(2) AUTHORITY?
Agency is an agreement, express or implied, by which the principal entrusts to the agent, the management of the business; to be transacted in his name, or on his account, and by which the agent assumes to do the business and to render an account of it. Agency involves:

Principal, who passes authority to
Agent to effect the legal relations between the principal
Third party, acted with principal through the agent
Section 135 CA (Definition of Agent)
An “agent” is a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the “principal”. Effects of agent:

The agent derives his authority to act for and on behalf of the principal Made between the principal and the third party through the work of the agent Creation of Agency
1. Express Appointment
Involved in actual consent of the principal and the agent.
Written or oral form
In commercial transactions it is usual (but not essential) to appoint an agent in writing, so that the terms and extent of the relationship are set down to avoid misunderstanding. Case: Garnac Grain Co Inc v HMF Faure & Fairclough Ltd

Relationship of P and A can only be established by the consent of the principal and the agent. Consent must have been given by each of them, either expressly or by implication from their words and conduct. Section 138

No consideration is necessary to create an agency.
2. Implied appointment (suggest, but not expressed)
Is by way of the implied consent of the principal and the agent Derived from words and conduct of the parties in the way they have acted in connection to one another Case: Chan Yin Yee v William Jacks & Co (Malaysia) Ltd

Any person, irrespective of his competency to contract, may become an agent, for whose acts the principal may be liable to third parties. Where any person, by words or conduct, represents or permits it to be represented that another person has authority to act on his behalf, he is bound by the acts of such other person with respect to any one dealing with him as an agent on the faith of such representation, to the same extent as if such person had the authority which he was so represented to have. Hely-Hutchinson v Brayhead Ltd

Equiticorp Finance Ltd v Bank of New Zealand
Brick & Pipe Industries Ltd v Occidental Life Nominees Pty Ltd Section 140
An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, may be accounted circumstances of the case. 3. By Ratification

Convert an unauthorized act into an act clothed with authority Occurs when an agent does an act without the authority of the principal, but because of the subsequent conduct of the principal, the unauthorized act effectively becomes ratified as the principal’s own act as if the principal had previously authorized it. Ratification is retrospective, and dates back to the time the contract was made. Only validates past acts of the purported agent. It gives no authority for the future. Section 149

Where acts are done by one person on behalf of another but without his knowledge or authority, he may elect to ratify or to disown the acts. It he ratifies them, the same effects will follow as if they had been performed by his authority.

Section 150
Ratification may be expressed or may be implied in the conduct of the person on whose behalf the acts are done. Section 151
No valid ratification can be made by a person whose knowledge of the facts of the case is materially defective (faulty). Section 152
A person ratifying any unauthorized act done on his behalf ratifies the whole of the transaction of which the act formed a part. Section 153
An act done by one person on behalf of another, without that other person’s...
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