law of agency

Topics: Contract, Agency law / Pages: 17 (4187 words) / Published: Jan 7th, 2014
LAW OF AGENCY
The law relating to agency in Kenya is contained in the Factors Act 1889 and the common law as modified by the doctrines of equity.
Agency may be defined as a legal relationship that exists between a person called the agent is considered by law to represent another known as the principal in such a way as to affect the principal’s legal position in relation to 3rd parties.
It has also been defined as a relationship where a party expressly or implied consents that the other should represent him and the other consents to do so.
Although consent is essential in ascertainingwhether agency subsists or not, the relationship may and does exist without consent of the parties. The basis of agency is authority which is the power of the agent to affect the principal’s legal position in relation to 3rd parties.

Characteristics of Agency
1. The agent performs a service for the principal
2. The agent represents the principal
3. Acts of the agent affects the legal position of the principal
The agency relationship differs from trusts and bailment.

TRUST
This is an equitable relationship whereby a party known as trustee expressly, impliedly or constructively holds property on behalf of another as beneficiary.
It is similar to agency in that:
1. Some of the duties of the trustee are similar to those of the agent e.g Must act in good faith and avoid conflict of interest.
2. Some of the remedies available to the beneficiary against the trustee are available to the principal against the agent eg account
However, they differ in that;
1. Whereas most agencies are contractual, trusts are not
2. Whereas the principal’s action against the agent for fraud is limited by the Statute of Limitation, an action by the beneficiary against the trustee has no time limitation.

BAILMENT
This is a contract whereby a party known as bailor delivers goods to another known as bailee with specific instructions that the goods be dealt with in a particular manner or be

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