Agency: Contract and Agent
COMMERCIAL ORGANISATIONS
TOPIC 1: AGENCY
1. DEFINITION OF AGENCY
"Agency is the relationship that exists between two persons, when one, called the agent, is considered in law to represent the other, called the principal, in such a way as to be able to affect the principal 's legal position in respect of strangers to the relationship by the making of contracts or the [sale or purchase] of property."
So, an agent is someone who represents another, called the principal, in dealings with third persons.
Agency is therefore an exception to the general rule of contract law that only the parties to a contract are bound by it.
Examples: a director for his company, a solicitor for his client
Distinguish from other situations where one party acts on behalf of another:
(i) Employment: Employment does not always create an agency role. It depends on their job description and the authority they have been given.
(ii) Mandate: Mandate is like agency but it is gratuitous, the agent acts voluntarily and is unpaid but he must still be careful and take reasonable care as he could still be held liable. The terms mandate and mandatory are used instead of principal and agent. Otherwise mandate creates the same legal relationships as proper agency.
A mandatory still has a duty to exercise reasonable care:
Copland v Brogan: Brogan volunteered to cash cheques but lost the money from them on the way home. It was held that he didn 't exercise reasonable care and so he had to reimburse Copland with the value of the cheques.
Agency is a three sided (i.e. "triangular") relationship between the principal, the agent and the third party. The internal aspect of agency is the relationship between the principal and the agent; the external aspect is the relationship between the principal and the third party.
Example: Shop assistant = agent; Customer = 3rd party buyer, Company = Principal.
The principal can be a company, partnership or individual. The agent can be
TOPIC 1: AGENCY
1. DEFINITION OF AGENCY
"Agency is the relationship that exists between two persons, when one, called the agent, is considered in law to represent the other, called the principal, in such a way as to be able to affect the principal 's legal position in respect of strangers to the relationship by the making of contracts or the [sale or purchase] of property."
So, an agent is someone who represents another, called the principal, in dealings with third persons.
Agency is therefore an exception to the general rule of contract law that only the parties to a contract are bound by it.
Examples: a director for his company, a solicitor for his client
Distinguish from other situations where one party acts on behalf of another:
(i) Employment: Employment does not always create an agency role. It depends on their job description and the authority they have been given.
(ii) Mandate: Mandate is like agency but it is gratuitous, the agent acts voluntarily and is unpaid but he must still be careful and take reasonable care as he could still be held liable. The terms mandate and mandatory are used instead of principal and agent. Otherwise mandate creates the same legal relationships as proper agency.
A mandatory still has a duty to exercise reasonable care:
Copland v Brogan: Brogan volunteered to cash cheques but lost the money from them on the way home. It was held that he didn 't exercise reasonable care and so he had to reimburse Copland with the value of the cheques.
Agency is a three sided (i.e. "triangular") relationship between the principal, the agent and the third party. The internal aspect of agency is the relationship between the principal and the agent; the external aspect is the relationship between the principal and the third party.
Example: Shop assistant = agent; Customer = 3rd party buyer, Company = Principal.
The principal can be a company, partnership or individual. The agent can be