Law - Chapter 4

• In agency law, who acts on behalf of another?

  The agent
• What relationship does agency law describe?

  One party acts on behalf of another
• Who do company directors act as agents for?

  The company
• Who do partners act as agents for in a partnership?

  All the partners
• Why must an agent have authority to enter into a contract on the principal's behalf?

  To form contracts with third parties
• Who is not bound by the contract in an agency relationship?

  The agent
• Who must have full contractual capacity in an agency agreement?

  The principal
• How may consent be expressed in agency by consent?

  Express or implied, orally or written
• When must agency by consent be in writing?

  When executing a deed on principal's behalf
• How does agency by estoppel arise?

  By operation of law
• What conditions must be met for agency by estoppel to arise?

  • Principal's words/conduct give impression to a third party that someone is their agent.
  • Third party acts upon this impression.
• How can estoppel be created regarding authority?

  When authority is withdrawn but the third party is not told
• What is the effect of estoppel on the principal?

  They are prevented from denying agency existence
• In the scenario where Paul misleads Tina about Adam being his agent, who is bound by the contract?

  Paul is bound by the contract
• In what situation may the above scenario have arisen?

  Adam continues acting after authority termination, unbeknownst to Tina
• In what other situation may the Paul, Tina, and Adam scenario have arisen?

  Paul knew Adam acted as his agent, but didn't inform Tina
• When does agency of necessity arise?

  In an emergency to preserve property/interests
• What conditions must be met for an agent to bind a principal on grounds of agency of necessity?

  • No practical way to contact the principal.
  • Actions arose from a pressing need/emergency.
  • Acted in good faith in the principal's interest.
  • Action was reasonable and prudent.
  • Prior contractual arrangement existed.
• In Sachs v Miklos 1948, why was there no agency of necessity?

  No emergency had arisen
• According to Sachs v Miklos 1948, under what condition would selling the furniture have been justified?

  If the house had been destroyed by fire
• How does ratification affect the agency relationship?

  Validates past acts retrospectively
• What conditions must be met for a principal to ratify the acts of an agent?

  • Principal existed at the time of the act.
  • Principal had legal capacity at the time of act and ratification.
  • Agent names/identifies the principal when making the contract.
  • Ratification occurs within a reasonable time.
• What is the effect of ratifying part of a contract?

  It ratifies the entire contract
• How must the principal communicate ratification?

  By express words or conduct
• What are the key duties of an agent to their principal?

  • Accountability
  • No conflict of interest
  • Performance
  • Obedience
  • Skill
  • Personal performance
  • Confidence
• What must an agent provide to their principal regarding agency transactions?

  Full information
• What should an agent account for to the principal?

  All monies arising from transactions
• In Boston Deep Sea Fishing & Ice Co v Ansell 1888, why did the company sue the managing director?

  To recover commissions he accepted
• What duty does an agent owe their principal regarding personal interests?

  A duty not to create conflict of interest
• What type of obligation does an agent have to perform their agreed task if they are paid?

  A contractual obligation
• Is an unpaid agent bound to carry out agreed duties?

  No, unless there's other consideration
• Under what circumstances may any agent refuse to perform a duty?

  If it's an illegal act
• How must an agent act in accordance with their principal's instructions?

  Strictly in accordance
• What should an agent do if they believe disobedience is in the principal's best interest?

  They may not disobey instructions
• What standard of skill and care must an agent maintain?

  Expected of someone in their profession
• Why is personal performance a duty of an agent?

  Due to personal qualities
• When may an agent delegate their task?

  In certain circumstances
• What information must an agent keep confidential?

  Principal's affairs
• When does the duty of confidence cease?

  It does not cease
• What are the rights of an agent?

  • Indemnity
  • Remuneration
  • Lien