Termination of Agency by the Act of Parties

Topics: Termination of employment, Party, Revoke Pages: 2 (834 words) Published: March 2, 2013
QUESTION: Explain the ways of termination of agency by the act of the parties. Termination of Agency “By the act of the parties”

By the act of the parties, there are 2 ways of termination of agency can be done. The first is the agency contract can be terminated by mutual revocation. Once they agreed to terminate the agency, the agent has no longer any authority to act on behalf of the principal, and the principal would not be liable for any contract made by the agent after that termination. Another way is based on Section 154 of Contract Act 1950 stated that termination of agency can be done by unilateral revocation by the principal or unilateral renunciation by the agent. When revocation or renunciations of agency want to be made, principal or agent must give a reasonable notice otherwise the agent or principal is entitled to the damages which is refer to Section 159 of Contract Act 1950. Besides that, based on Section 160 of Contract Act 1950 stated that revocation or renunciation may be expressed or implied in the conduct of parties.

For the example case is Sohrabji v Oriental Security Assurance Co (1946) AIR 1946. In this case the court held that 3 and 1/2 months was insufficient to properly terminate the agency relationship, which has lasted for almost 50 years. Therefore, an agency of a long standing requires a longer period of notice of termination which is 2 years notice is reasonable notice for the cases of Sohrabji v Oriental Security Assurance Co. Other case is Syarikat Jaya v Star Publication (M) Bhd (1990) 1 MLJ 31 was held that the 6 month notice is reasonable in terminating a relationship of sole agency. Meaning, the notice given to principal shall have a reasonable period of tenure as agency. Agent’s authority may revoke at any time but before the agent has exercised his authority which is based on...
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