Idiot's Guide (Agency) (NBS AB1301)

8/17/2019 Idiot's Guide (Agency) (NBS AB1301)

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Agency

Relationships

- Agent – Principal- Principal – 3rd Party

- Agent – 3rd

Party

Miscellaneous issues:

- How to prove apparent (ostensible) authority- How can a principal rati!y a contract


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Agent

Principal 3rd party"ontract

Agency

An agent is a person who# through the authority con!erred upon hi$ by his

principal# is e$powered to establish legal relations on his principal%s behal! with

a 3rd party& (pg ')

*he principal is the person who$ the agent represents&

*he 3rd party is the person who$ the agent deals with on behal! o! the principal&

*he general rule is that an agent is not liable to his principal or 3rd party as long

as he acts within the scope o! authority given to hi$ by his principal&

*he creation o! an agency relationship $ay be due to

) An e+pressed agency contract# be it oral or written,) tatures – Partners in a partnership are dee$ed to be agents o! both the

.r$ and one another s/ Partnership Act

0pon ter$ination o! agency# actual authority ends i$$ediately# but notice $ustbe given to 3rd parties to negate the agent%s apparent authority

Relationships

Principal - Agent relationship

(uper rare# unli1ely to appear)

Agent

) *he agent $ust act according to the ter$s o! appoint$ent and !ollow the

instructions o! the principal "ase to cite: 2ertra$# Ar$strong "o v 4od!ray 5367

,) *he agent $ust carry out his duties with reasonable care and s1ill& tandard re8uired would be that which a reasonable $an would e+pect

!ro$ an agent in that .eld o! activity& "ase to cite: 9eppel v heeler 5;,


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>e 2ussche v Alt 5id the principal e+pressly# by oral or written ter$s# give the

agent actual authority ! yes# e+pressed actual authorityo as the authority to per!or$ this act i$plied ! yes# i$plied

actual authority as the act per!or$ed reasonably incidental to the

eBective e+ecution o! the agent%s duties CR as the act so$ething a person in the agent%s line o! wor1

would nor$ally be authorised to do

! point and , are !ul.lled# both the principal and 3rd party can sue and be sued

under the contract&

! only point , is !ul.lled# then when the principal is subse8uently revealed# the

3rd party can sue either the agent (ee agent - 3rd party relationship) or the

principal (CDEF CDG)

cenario , (Apparent authority)

3) >oes the agent have apparent authority ! yes# contract binding on P and

3P& ! no# no contract Principal $ust be disclosed

ee $iscellaneous issues to deter$ine i! apparent authority is present

cenario 3 (Rati.cation)


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Cnce it is established that the agent does not have the authority to act# would

the principal want to rati!y the contract ! yes# contract binding on P and 3P&

Principal $ust be disclosed

ee $iscellaneous issues to deter$ine i! rati.cation is applicable

Agent - 3rd Party relationship

*he general rule is that as long as the agent had actual or apparent authority or

the principal rati.ed the agent%s act# then the agent owes no liability to the 3rd

party (pg '3;)

G+ceptions:

) *he agent $ight be sued under a situation where he acted with actual

authority and the principal was initially undisclosed *he 3rd party was under the i$pression that he was contracting with

the agent,) >id P and 3P intend !or A to be a contracting party3) 3rd party $ay sue agent under breach o! warranty o! authority i! it is

discovered that the agent acted without authority Re$edies available are da$ages

Miscellaneous issues

How to prove apparent (ostensible) authority (pg

42)!

"ase to cite: ree$an Eoc1yer v 2uc1hurst Par1 Properties (Mangal) Etd 5;I'7(pg ',3)

) as there a representation $ade to the 3rd party indicating that the agent

had authority "an be written# oral or i$plied through conduct

Gg& appointing agent to position

,) as this representation $ade by the principal or a person with the

principal%s authority to $a1e such a representation Principal $ust be disclosed

"ase to cite: Ji1nesh >airy ar$ Pte Etd v 2ala1rishnan sKo P Mania$

5,6/73) as the 3rd party induced by the representation and relied on it to enter

into the contract') >oes the 3rd party 1now !or a !act that the agent has no actual authority !

yes# 3rd party cannot argue apparent authority "ase to cite: ?urong hipyard Pte Etd v 2DP Paribas 5,667

! points # , and 3 are !ul.lled# apparent authority present&

Cnly 3rd party can plead apparent authority

0pon ter$ination o! agency# actual authority ends i$$ediately# but notice $ust

be given to 3rd parties to negate the agent%s apparent authority

How can a principal rati"y a contract!


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Rati.cation is the process through which a principal retrospectively con.r$s or

rati.es an agent%s act# binding the principal to the 3rd party as i! the agent had

actual authority to do so in the .rst place& (pg ',I)

"onditions !or rati.cation:

) >id the agent purport to represent the principal Cnly disclosed principal can rati!y contract

"ase to cite: 9eighley# Ma+sted "o v >urant 5;67

,) s the principal in e+istence at the ti$e o! contracting G+ception !or co$panies s' "o$panies Act

3) >oes the principal have the capacity to enter and per!or$ the contract

when the contract was $ade s the principal a $inor

') as the rati.cation $ade within a reasonable a$ount o! ti$e

! yes to all ' points# the contract can be rati.ed&

How to rati!y:

) *he principal $ust $a1e a clear indication to that he aLr$s the agent%s

unauthorised act G+pressed

$plied (Must be o! positive conduct)

,) *he principal $ust rati!y the contract within a reasonable a$ount o! ti$e

! rati.cation is success!ul#

) *he 3rd party and principal will be bound to the contract as per the

$o$ent acceptance is co$$unicated

,) *he 3rd party cannot revo1e any oBers $ade a!ter the acceptance i! theprincipal rati.es

Documents

Idiot's Guide (Agency) (NBS AB1301)