Business Law

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  • Topic: Contract, Contractual term, Legal person
  • Pages : 7 (2416 words )
  • Download(s) : 451
  • Published : May 2, 2013
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Question 1
Explain in which way an agency may be terminated by operation of law.
(3marks)
Answer:
An agency is created by express appointment when the principal appoints the agent by express agreement with agent. This express agreement may be an oral or written agreement between the principal and the agent. There are four factors can cause the termination by operation of law. i. Agency is terminated by frustration

In Marshall v Glanvill, Glanvill who is a firm of drapers appoints Marshall as a agent under an agreement terminable by six months. After six months, the agreement between them were terminated and he enlisted to Royal Flying Corps Marshall sued Glavill for the commission for six month. Judge held that the agency was frustrated and no need to pay commission. ii. Agency is terminated by death of the principal or agent In Campanari v Woodburu, an agent, Campanari, an agent who wants to sell a picture on behalf of Woodburu and get £100 after the painting was sold. Before Campanari sell the picture, Woodburu died. Woodburn’s administratrix’s don’t want to pay £100 after the picture was sold. The court held that Campanari can get back the entitled expenses but he cannot get back the £100 commission fee since the agency was terminated due to Woodburn’s death.

iii. Agency is terminated by the insanity of either party In Drew v Nunn, a husband was insane and his wife ordered goods from a tradesman who was unaware of the husband’s mental incapacity. The husband subsequently recovered his reason and refused to pay for the goods. After that he refuse to pay, the case bring to court. The court held that the insanity had terminated the agency between husband and wife, but the husband was stopped from denying that his representation was true and must pay for the goods.

iv. Agency is terminated by the bankruptcy of the principal In Pacific and General Insurance Co Ltd v Hazell, Moore-Brick, Judge held that the appointed to act on behalf of the company by or under the authority of its directors. The ruling reflects the well-established proposition that an agent’s authority ceases when his principal becomes incapable of acting on his own behalf. The court held that from time it is suggested that the range of situations where an agency is automatically terminated ought to be extended.

Question 2
On the 1st of September, 2010, Nana wrote to Cheng that Ben was his agent and would be acting on his behalf in purchasing some goods on the 1st of December, 2010 for RM 200,000. However, on 25th of November, Cheng was informed that Nana had passed away the week before. On the 30th of November, Ali offered Cheng RM 250,000 for the goods. Can Cheng sell to Ali or is Cheng bound to sell to Ben? Advise Cheng on the legal implications.

(7marks)
Answer
An agency is formed between two parties when one party (the agent) agrees to represent another party who is the principal. An agency is created by express appointment when the principal appoints the agent by express agreement with agent. This express agreement may be an oral or written agreement between the principal and the agent. The first issue is Nana wrote to Cheng that Ben was his agent and would be acting on his behalf in purchasing some goods on the 1st of December 2010 for RM 200,000.

Agency by estoppel arises when the principal makes the representation to a third party by words or conducts that A is an agent. Principal will not be permitted to delay the existence of the agency if to do so would cause damage to the third party. In Pickering v Busk, a broker was hired by a merchant to buy hemp. The broker retained the hemp at his wharf after he had completed the purchase, at the request of the merchant. After that he sold the goods. The purchaser was held to have obtained a good title to the goods because the broker was apparently an agent to sell, and the merchant was stopped by his behaviour and action from...
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