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Creation of Agency or Law Agency - Coggle Diagram
Creation of Agency or Law Agency
Definition
Definition of Law Agency
Based on Section 13 Contracts Act 1950, Agency is the relationship of two parties, between the principal and the agent who has been authorized with an act for both in dealing with others.
Definition of Principal
A party who employs another person to act his or her behalf
Definition of Agency
A party who agrees to act on behalf of another
Involves
The Principal and The Agent
The Principal and The Third Party through The Medium of The Agent
Arises in 5 ways
Ratification by the principal (Agency of Ratification)
Created when
A person is misrepresents himself as an agent or acting outside the scope of his authority
Authorized by the principal
The effect
The agent is free from any liability and the principal is bound by the contract
Related case
Keighley Maxted & Co V. Durant
Explanation
An agent, Roberts, was authorized by the appellants to buy wheat at a certain price. The agent exceeded his authority and bought at a higher price in his own name but intending it for Keighly.
Held
Keighly was not liable to Durant since Roberts at the time of the contract did not profess to act as an agent
Can be done in several situation
The contract and act must be unauthorized by the principal
The authorized act must be one which is recognized by law
The agent must at the time of the contract expressly act as an agent for the principal
The agent must have principal who is in actual existence or capable of being ascertained when the contract is made
The principal must have contractual capacity at the time when the contract is made and at the time ratification
The principal must at the time of ratification have full knowledge of all material facts
The principal must ratify the whole act or contract
The ratification must made within a reasonable time
The ratification must not injure a third party.
Implied appointment by the principal (Implied Agency)
The principal doesnt expressly appoint a person as his agent
The agency is implied from the conduct of the parties, custom and usage of trade or and act incidental to carrying out the agent's duties
Agency of Necessity
Definition
A person become the agent of another under circumstance without being appointed or in a special situation
Related case
Great Northern Railway Co v Swaffield
Explanation
X sent some horses to Y through a railway company but y did not take the delivery of the horses at the destination with the result the railway company had to feed the horses
Held
the railway company was an agent of necessity & could recover the amount spent on feeding the horses
Express appointment by the principal (Express Agency)
A principal and an agent expressly agree to enter into an agency agreement
The principal and the third party are bound by the contract
The authorization can be in writing or oral
Agency by Estoppel
Definition
Where a person permit another to act on his behalf. Principal is estopped from denying his agent’s authority
3 Important points
A principal creates the appearance of an agency that in actuality does not exist
The other party to contract believe that the agent has authority to contract
The principal is estopped from denying the agency relationship and is bound by the contract