The Law of Agency

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  1. Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd
    • agency; grant of authority; actual authority; apparent authority
    • Facts: managing director could be appointed but wasn't; Kapoor carried out managerial acts; employed people; F&L claimed payment.
    • Issue: Did Kapoor have actual authority to bind the company
    • in a contract with Freeman & Lockyer?
    • Decision: no actual authority to bind company.
    • Reason: No evidence company specifically authorised transaction.
    • No evidence giving Kapoor any general power to enter such transactions.
    • Issue: Did Kapoor have apparent authority?
    • Decision: Board knew he was acting as managing director, company not allowed to deny liability, dealt in good faith.
  2. Australia & New Zealand Bank Ltd v Ateliers de
    Constructions Electriques de Charleroi
    • agency; grant of authority; implied authority; duties of agent; duty to keep principal's funds separate
    • Facts: express powers to sell equipment, ACEC no bank account in Australia; paid cheque to own account, forwarded payment - ACEC no objection. Helios liquidation.
    • Issue: Did Helios have authority to pay ACEC cheques into Helio's bank account? If not, bank liable to refund amounts not yet forwarded?
    • Decision: no express authority, implied from necessity to make contract commercially workable.
    • Reason: practical plan from business POV, total amount of cheques exceeded sum permitted to be exported, Helios retained part of sum to pay for local expenses.
  3. Keighley, Maxted & Co v Durant
    • agency; unauthorised acts by agent; ratification; undisclosed principal
    • Facts: buy wheat at certain price, agent purchased higher price in own name, principal assented, 3rd party sued principal.
    • Issue: Had principal effectively ratified and become liable?
    • Decision: Could not validly ratify.
    • Reason: undisclosed principal stranger to contract, cannot become party by subsequent ratification
    • different if time of agreement, unauthorised agent tells 3rd party acting for principal - contract entered into expectation that disclosed principal is party to contract.
  4. Bertram, Armstrong & Co v Godfray
    • agency;duties of agent; duty to follow instructions
    • Facts: sell stock when market price reached 85 percent above price, didn't and price dropped, sued to recover consequent loss.
    • Decision: instruction specif, agent had no discretion to wait for higher price. -> liable.
  5. Lintrose Nominees Pty Ltd and Others v King
    • agency; duties of agent; good faith; conflict of interest
    • Facts: without disclosing it was also acting for another principal, advised person to buy the property.
    • Issue: Was King entitled to avoid contract?
    • Reason: Yes - agent had breached duty to avoid an undisclosed conflict of interest.
    • - if agent sells his own property to principal without disclosure, conflict of interest.
    • - agent selling property of one principal to another - agent cannot conscientiously serve two principals - temptation for agent to favour one at the expense of the other.
  6. Special circumstances requiring written authority
    • 1. agent appoint for period exceeding one year. OR
    • 2. act will not be completed within a year.
    • - Generally - buy/sell land, interest in land/business.
    • Power of attorney - written document appointing, empowering agent to represent principal.
    • Common law - contracted in deed binds only signatories.
    • Statute - agent appointed by power of attorney in deed can execute contract by deed on behalf of principal.
  7. Implied authority arises when:
    - agent already granted express authority

    • 1. necessarily/normally incidental to expressly authorised acts.
    • 2. agents employed in particular capacity - e.g. managers of business.
    • 3. customarily granted to agents employed in particular market/type of business.
  8. Apparent authority established when:
    • 1. representation made to 3rd party that agent had authority
    • 2. representation made by person with actual authority to manage relevant aspects of company's business.
    • 3. 3rd party induced to enter by representation, relied on it.
    • 4. company had power to enter into type of transaction in question.
  9. Agent's duties to principal:
    • duty to perform tasks in accordance with instructions
    • duty to exercise discretion appropriately
    • duty to seek clarification of ambiguous instructions
    • duty to act personally
    • duty to exercise care and skill
    • duty to act in accordance with good faith
    • duty to keep accounts
    • duty to keep money separate
  10. Principal's duties to agent:
    • duty to reimburse agent for expenses
    • duty to pay agreed fees
    • duty to indemnify agent for losses and liabilities
  11. Agent's contractual liabilities to 3rd parties
    • agent not normally liable when principal is disclosed
    • agent not liable with agent and 3rd party do not know, when contracting, that principal does not exist
    • principal not disclosed, 3rd party can choose to enforce contract against agent or principal - if principal, lose right to sue agent.
    • **right for undisclosed principal to enforce transaction: 1. agent acted within actual authority 2. agent intended to act on behalf of principal. e.g. insurance.
    • agent's warranty of authority
    • agent's liability for Negligence or deceit
    • agent's liability for misleading conduct - s18 ACL
    • agent's authority to perform principal's obligations - does not have authority to represent principal in performance and discharge of contract.
  12. Acquisitions/Dispositions of property by agent
    • without authority - principal may be able to recover.
    • BUT not: apparent authority, 3rd party relied on and given value in exchange.

    Mercantile agent: generally authorised to buy/sell goods on behalf of principal/raise loans using principal's goods as collateral.

    • 3rd party to obtain ownership:
    • 1. agent in open market disposal
    • 2. acquired in good faith (open and honestly)
    • 3. without notice of agent's lack of authority.
  13. Principal's liability for harm caused by agent
    • liability of agent in tort law - agent personally liable
    • liability of principal for acts of agent - 1. degree of control over agent's work 2. agent caused harm doing something authorised to do or incidental.
    • liability of principal and agent for misleading conduct - s18 ACL
  14. Agency of necessity, situations of emergency - requirements:
    • 1. principal and agent have some recognised relationship
    • 2. principal will suffer harm unless action taken
    • 3. principal is absent, cannot act for themselves, cannot contact
    • 4. agent acts for benefit, in best interest of principal

    • agent entitled to be reimbursed
    • principal bound to 3rd parties
  15. Termination of agency
    • completion of mandate
    • expiry of fixed term - can be implied
    • revocation of authority (principal)
    • renunciation of authority (by agent)
    • irrevocable agency power - grant of authority to agent made for purpose of securing some itnerest of agent, e.g. debt owed
    • mental incapacity - "enduring power of attorney" - remains valid
    • death
Card Set:
The Law of Agency
2013-06-06 06:13:58
agency law pbl

Chapter 11
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