Formation of Agency

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FORMATION OF AGENCY
QUESTION 2

Introduction
Agency define which subsists between principal and an agent, where the agent has been authorized to act for the principal or represent him in dealing with others or 3rd party. Agent is person who is employed by the principal to do certain act for him to represent him in dealings with 3rd party. Principal is a person who authorizes the agent to act on behalf of him. There are five formation of agency, which is by express appointment, by implied appointment, by ratification, by necessity and by the doctrine of estoppel or ‘holding out’. Firstly is formation agency by necessity. Section 142 stated that “An agent has authority, in an emergency; to do all such acts for the purpose of protecting his principal from loss as would be done by a person of ordinary prudence, in his own case, under similar circumstances.” A person, who has no authority, may become an agent due to the necessity or emergency circumstances, in order to protect the principal from loss. Agency by necessity may happen in two situations. First, is when a wife is deserted and has no means of support. A wife can pledge her husband’s credit for necessaries suited to the income and life condition of her husband. However, she cannot become an agent by necessity if her husband has provided her with sufficient allowance. Secondly, when a person is entrusted with another person property and it becomes necessary for him due to the emergency, to do something in order to preserve and to protect that property although he has no authority to do so. Illustration (b) to section 142, “A consigns provisions to B at Taiping , with directions to send them immediately to C at Parit Buntar. B may sell the provisions at Taiping, if they will not bear the journey to Parit Buntar without spoiling.” In the case of Great Northern Railway v Swaffield, the railway company ( plaintiff ) had been untrusted to deliver horse of the defendant to a destination. However, when it...
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