An agent is one who acts on behalf of another called the principal, with the express or implied authority of that person.
Hence an agent incurs neither rights nor liabilities on contracts made on behalf of the principal. Also an agent need not be of full contractual capacity meaning that even a minor could be appointed as such, even though he principal has to be of full contractual capacity.
TYPES OF AGENTS
appointed to handle the entire principal’s affairs
acts in all businesses of a certain kind, e.g. a partner in a partnership
appointed to effect a particular transaction not part of their normal business activities
A mercantile agent who buys and sells goods on behalf of the principal for a commission
A mercantile agent who is essentially a middle man between buyer and seller
Agent in a foreign jurisdiction who introduces customers and indemnifies the principal against non-payment/default.
CREATION OF AN AGENCY
Express appointment is the actual authority given to an agent to act on behalf of the principal, given verbally or in writing or implied. The banker-customer relationship gives the bank implied authority to collect cheques on behalf of the customer.
The Agency by ratification occurs when the principle adopts a contract entered into by the agent. E.g. A bank’s actions may be ratified in the following circumstances:
Pays a company cheque on an unauthorised signature where the company can ratify the cheque.
Ratification will only be possible where:-
The principal is fully aware of the material facts
The principal ratifies he entire contract
The agents identifies the principal
Ratification takes place within a reasonable time v)
The principle had legal existence and contractual capacity when the contract was made. An incorporated company cannot ratify a contract made before its incorporation vi)
The act is capable of ratification. i.e. it must not be void ab initio for illegality of mistake
Estoppel results not from any agreement but from the principal’s words or actions. This is where he principal allows a person to appear as heir agent to third parties, e.g. company Directors when dealing with a bank.
Greenwood v Martins Bank Limited (1933)
The customer became aware of their signature being forged on cheques but did not inform their bank.
He was estopped from denying the genuineness of the signature and his implied consent.
BY OPERATION OF LAW
There are two types
Agency of necessity arises where an agent acts beyond his authority and in an emergency so as to save the principal’s property.
The agent must show that:
It was impossible to contact the principal
Springer v Great Western Railway (1921)
there was a real commercial necessity, e.g. perishable goods were endangered
Prayer v Blat spiel Stamp & Hencock Limited (1924)
acted in good faith and in principal’s interest
Agency from Co-habitation
At common law, a wife (or mistress) living with her husband is presumed to have authority to pledge her husband’s credit for necessities (food, clothing, household needs, etc) that fall within a domestic responsibility in the relationship and to their way of life.
PRINCIPAL AND AGENT RELATIONSHIP
Duties of the Agent
Obedience – An agent must obey the principal’s lawful instruction ii)
Care and skill – A paid agent is expected to exercise professional competence iii)
Personal performance an agent must personally perform the task and not delegate
To act in good faith – to avoid the conflict of interest. In this regard, a bank must not disclose or misuse the...
Hedley Byrne v Heller & Partners Limited (1963) HL
London Association for Protection of Trade v Greenlands Limited (1916) 2 AC 15
A bank has a duty to maintain accurate records of its customers’ transactions on their account. However, as noted in the case of Tai Hing (1985), the customer does not need to check the statements or their accuracy.
Lloyds Bank Limited v Brooks (1951)
Yourell v Hibernian Bank Limited (1918) AC 372
Please join StudyMode to read the full document