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Termination of agency (Agency and LLPs (Limited Liability Partnership Act…
Termination of agency
Agency and LLPs
- Limited Liability Partnership Act 2000,
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LLP not bound by unauthorised acts, where the 3rd party is either unaware of the lack of authority, or does not know the member to be a member of the LLP
6.4 - LLP - separate legal entity is liable (as is the negligent member in a personal capacity) for the wrongful act of a member
other members are not. There is no joint and several liability. The 3rd party can sue the LLP to the full extend of its assets, but the members cannot be required to contribute more. The 3rd party may also be able to sue the member involved in a personal capacity, but not the other members.
Effects of termination
- the actual authority of the agent ceases to exist
- should the agent still have ostensible authority, it is possible that the principal might be bound by contracts entered into after termination
- if termination of the agency amounts to a breach of contract, then compensation may be payable to the agent
Partners as agents
- s5 Partnership Act 1890 - every partner is a general agent of the firm when acting on the firm's business (even if no appointment is made)
Apparent powers of a partner in a non-trading partnership
- to buy or sell goods for the purpose of the business, icl the purchase of goods on normal trade terms;
- to give legally binding receipts to debtors;
- to employ and dismiss employees;
- to draw cheques on the firm's behalf, providing it is in the normal course of business for the firm.
Additional implied powers of a trading partnership
- to contract and pay debts on behalf of the firm
- to draw, issue, accept, transfer and endorse promissory notes and bills of exchange
- to borrow money on the firm's behalf
- to pledge goods and assets belonging to the firm as security for the firm's borrowing
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Death, mental incapacity or bankruptcy of the principal
- automatically cancel the agency agreement and any contracts entered into by the agent are not enforceable against the principal or their estate
- the 3rd party may be able to sue the agent for breach of warranty of authority
Habton Farms v Nimmo and another
Directors as agents
s40 and 161 of CA2006 - protection to third party dealing with directors:
the power of the board of directors to bind the company shall be deemed to be free of any limitations under the company constitution
- even though the director (as agent) may be acting outside his authority, the company (as principal) would still be bound (Panorama Developments Ltd v Fidelis Furnishing Fabrics Ltd
Intervening illegality
- where the agency becomes illegal, it is automatically terminated. This will amount to frustration of the contract
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