Theories That Seek to Define and Explain Agency

Theories That Seek To Define and Explain Agency.

1) Power Liability Theory
- Agency exist when a person acquires the power to alter the P’s legal relations with a T so that onlt the P can sue or be sued by the T
- Issue: It focuses on external rather than internal aspect of agency. Furthermore some agencies do not fall into that definition i.e. Estate Agents
2) Consent Theory
- Agency is a fiduciary rship that arises when a principal manifests assent to another person (A) that the A should act on the P’s behalf and subject to the P’s control and the A manifests assent or otherwise consents to the acts.
- Focuses on the fiduciary relationship
 ability to affect the legal rights and obligation of P
 Normally invested with a degree of discretion that shows that the P has placed trust and confidence in the A
- Keyword: Whether P consented.
- Issue: there are certain situations where agency arises without the consent of P i.e. Agency by Estoppel.
3) Qualified consent Theory

Characteristics of Agency

1) An agent acts on behalf of another so that the P is bound and can sue or be sued by the T on the contract made by the A
2) Agent is not liable on the Contract made between T and P. (subject to authority given)
3) An agency may be created:
a. By express/ implied agreement between P and A
b. By representation from P to T (agency by estoppels)
c. P adopts ratification
d. Necessity
e. By statute.
4) The P is only bound by those acts of the A that are withing the scope of that A’s authority
[Jacobs v Morris] – A representation by the A which is outside their authority does not bind the P

Actual Authority

 The scope authority is determined by the agreement between P and A. Therefore it is a matter of contract construction. o Express Actual Authority o Implied Actual Authority
 A who acts out of actual authority may be liable to the T for breach of implied warranty of authority

A) Express Actual Authority. (Authority which P expressly gives to the A)

- [Aviva Life