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Creation and Ending of an Agency Relationship (CREATION (By Implication…
Creation and Ending of an Agency Relationship
CREATION
By Implication
Arise from the
conduct
of or
relationship
between the agency and principal, despite the absence of an express agreement
By Estoppel
Occurs when "A", by his words or conduct, causes "B" to falsely believe that "C" is his agent
By Express Agreement
Verbally/ Writing e.g commercial transactions
By Ratification
"Z" may enter into a contract with "Y", even though Z had not been authorized by "X" to represent X. Thereafter, X may decide to adopts Z's earlier actions by ratification
TERMINATION
By operation of law
On the bankruptcy of the principal
If the subject matter or the operation of the agency agreement is frustrated or become illegal e.g. if the principal becomes an alien enemy
On death or insanity of either the principal or the agent
By completion of agency contracts
the period fixed for the agreement has expired
The purpose for which the agreement was created is accomplished
By the acts of the parties
Principal must
revoke
the agent's authority at any time, but should observe the following points:
If the agent is also the employee, then proper notice must be given in accordance with the employment contract
Principal should take reasonable steps to give the termination to third parties with whom the agent dealt with previously, to prevent the problem of an apparent agency.
If the principal fails to inform third parties of termination of the agency relationship and the agent later makes other contracts with these 3rd parties, the principal will be held legally responsible for those contracts as he may be estopped from denying the authority of the agent.
Parties at any time
mutually
agree to terminate the agency