bfa141pptweek 10_agency

1、1Other relationshipsEmployer-Employee: An employee is subject to the control and direction of the employer and an agency relationship will only arise where the employee is acting within the scope of their employment.Employer-Independent Contractor: An independent contractor controls the manner, meth

2、od and materials for the task and in dealing with third parties, the contractor is generally the principal.6AgencyAn Agency involves three parties: The Principal (P) who passes authority to The Agent (A) to effect the legal relations between the principal; and A Third Party (TP).3AgencyAgency relati

3、onship5Topic objectivesOn completion of this Topic, you should be able to: explain the purpose of an agency explain how an agency relationship is created explain the authority of an agent explain the agents duty to the principal explain the agents rights against the principal describe how an agency

4、can be terminated2AgencyTwo important points about agency in relation to the law of contract: There is an agreement (implied or express) between P and A which creates the authority of A; and Exercise of authority by A leads to creation of PRIVITY between P and TP.4TASMANIAN SCHOOL OF BUSINESS AND EC

5、ONOMICSBFA141 Commercial TransactionsWeek 10 AgencyTextbook Chapter 262Agency Example 3 Insurance Broker12Classification of agents9Agency Example 2 - Accounting11Other relationshipsEmployer/independent contractor relationship8Agency Example 1 Real Estate10Other relationshipsEmployer/employee relatio

6、nship73Appointment of agentsRatificationWhere A has acted without Ps authority, P may subsequently ratify the transaction.Ratification is retrospective, and dates back to the time the contract was made:Bolton Partners v Lambert (1889)18Appointment of agents15Appointment of agentsOperation of Law Coh

7、abitation - a presumption that a spouse orde facto has authority to pledge credit for necessaries suitable for their lifestyle. Necessity or emergency - there must be a genuine emergency where A is entrusted with Ps property and acting in their best interests as they cannot get in touch with them.17

8、Agency Example 5 Sales Manager14Appointment of agentsExpressly Agency created by agreement orally, in writing or by deed.Implied or by conduct A reasonable person examining the conduct and actions of the parties would conclude that there was an agency in existence for example, partnership.16Agency E

9、xample 4 Stock and Station Agent134Liability of A and P to TPAs a general rule, A cannot sue or be sued on a contract between P and TP where :A discloses the agency relationship, whether or not P is named.If A does not disclose that the agency relationship exists, A will be personally liable to the

10、TP on the contract.24Authority of agentAuthority may be:1. Actual (Express) Authority conferred by P either expressly or by action;2. Implied actual An agent has authority to do anything that is incidental to or necessary for the carrying out of the actual authority. Apparent or ostensible Where the

11、 words or conduct of P lead a TP to reasonably believe that A has authority. In reality A does not have authority.21AGENCY Liability IssuesAuthority express, implied, or ostensibleAgent/Principal A liable to P for losses if P is bound to honour a contract made with ostensible authorityPABreach ofWar

12、ranty ofContract P/3PAuthority A has actual authority3P may sue A A has implied authoritywhere no actual, A has apparent authorityimplied or P ratifies the agency (if disclosedostensibleand A acts within authority)authority3PAppointment of agentsFor ratification to be effective: The agent must purpo

13、rt to act as an agent; The agent must have a definite principal in mind; The principal must be in existence at the time of the formation of the contract; The principal must have contractual capacity; The principal must have full knowledge of all the facts at the time of ratification; Ratification, w

14、here no time is specified, must take place within a reasonable time; Ratification may be express or implied; Ratification must be in full; and Ratification can only be retrospective.20Apparent Authority of the agentAuthority may also be:Apparent or ostensibleWhere the words or conduct of P lead a TP

15、 to reasonably believe that A has authority.In reality A does not have authority.Tooth & Co v Laws (1888) purchaser used vendors name to order liquorPanorama Developments (Guildford) Ltd v Fidelis Furnishings Fabrics (1971) company secretary hiring carsPrincipal will be bound by the acts of the agen

16、t if they are within the type or class that agents of that sort usually have22Appointment of agentsRatificationThe effects of ratification are: To produce the rights and liabilities of P and A with regard to the act ratified; It relieves A of liability; and A TP can sue P on the contract, and vice v

17、ersa.195Rights of agentRight to payment A is only entitled to remuneration if this is expressly or impliedly agreed to in the contract.Indemnity and reimbursement Generally, A is entitled to be indemnified against any liabilities and reimbursed for any expenses incurred in the course of carrying out

18、 Ps instructions.30Liability of P and A in tortA must ensure that they act within the scope of their actual or apparent authority if they are to avoid liability: For breach of warranty of authority; or Any torts they commit:Lloyd v Grace, Smith & Co 191227Duties of agentDuties of an Agent include: A

19、cting in good faith; a breach allows P to rescind the transaction:Hewson v Sydney Stock Exchange (1967) Maintaining confidentiality of information gained from the agency relationship; Keeping proper accounts; Not making a secret profit;Lunghi v Sinclair 1966 and Not accepting secret commissions.29Br

20、each of Warranty of AuthorityWhere there is no actual, implied or ostensible authority given by P, but A claims to be acting as agent, TP (and only a TP) may sue A for breach of warranty of authority.26Duties of agentDuties of an Agent include: Following Ps instructions; Acting personally;John McCan

21、n & Co v Pow 1975 Exercising due care and skill, although the standard will vary according to whether the agency is gratuitous or for reward;Mitor Investments Pty Ltd v General Accident Fire & Life Assurance Corp 198428Undisclosed principalWhere the agency is undisclosed, P may disclose the agency a

22、greement and enforce the contract with TP if A was acting within the agreement:P cannot ratify an agency where the agency is not disclosed and the agent acted outside the scope of authority:Keighley, Maxstead & Co v Durant 1901256Types of agencySpecific types of Agency include: Del Credere Agents A

23、guarantees both sale and payment to P. Partners Partners are agents of their co-partners. Real Estate Agents Not strictly agents as the relationshipis not strictly P and A as the only power A has is to bring the parties together, so they are better described as stakeholders.36Termination of agencyTe

24、rmination by Operation of Law Performance of the agency agreement; Lapse of time where A has been appointed for a specific time; Death of P, although acts done after Ps death but before notice has reached A, are valid and A will not be held liable; Insanity; Bankruptcy; and Frustration.33Types of agencySpecific types of Agency include: Auctioneers Are an agent of vendor until the fall of the hammer when they become an agent for the purchaser. Mercantile (or factor) agents Have control or possession of goods on behalf of a P and can sell them in