LAW of Agency

LAW of Agency. BUSINESS LAW (SBSU 3043) BB08 6A. LOGO_KUIS-removebg-preview (2).

T he definition of agency law deals with agent-principal relationships; that is a relationship where one party has the legal authority to act in place of another. Relationships that are commonly associated with agency la w is employe r - employee . A principal is someone who appoints another person to work or commit some tasks for him. A principal has the power to instruct an agent to perform a duty or duties. Those involve in buying or selling goods for the principal. An agent is representing the principal for work to be completed. Normally he will receive some amount of commission or any monetary benefits. A third party is involved where his relathionship with an agent is based on the contract between them..

The Creation of an Agency. No. Section Explanation 1. 135 The section explains on who is the agent and principal. A principal is a person who instructs an agent to do some act for him. An agent is employed for the act or represent the principal. 2. 136 A principal must be the age of majority (18 years) and of sound mind. 3. 137 A person of who has not reached the age of majority or of sound mind cannot be an agent, therefore cannot be liable to his principal..

Types of the authority of the Agency. No. Types of the authority of the Agency Explanation 1. Express Authority In this situation, the principal expressly authorizes the agent to act for him. For example, it can be created by way of verbal or written contract between the principal and the agent. Section 140, Contracts Act, 1950. 2. Implied Authority This is when authority is implied from the situation of the case. Section 140, Contracts Act, 1950..

Types of the authority of the Agency. No. Types of the authority of the Agency Explanation 3. Agency by necessity This type of agency exists without mutual consent. For example, in emergency situations. It is covered under Section 142 of the Contracts Act, 1950. Example case Great Northern Railway Co. v Swafield (1874) LR 9 Ex 132 4. Agency by ratification The agency by ratification can exist in two situation : 1. An agent acts without his principal’s authority. 2. The agent act beyond the scope of his given authority..

Types of the authority of the Agency. No. Types of the authority of the Agency Explanation The principal has two options, either to accept or reject the agent’s act. There are some conditions for ratification: i. Whatever act done by the agent must be without the authority of the principal or beyond the scope of his given authority. ii. The unauthorized act must be lawful. iii. The agent must act for the principal..

Types of the authority of the Agency. No. Types of the authority of the Agency Explanation 5. Agency by estoppel This happens in a situation where the principal by his words or conduct, allows someone or third party to belive that the agent has authority to act for him. The third party belives this and the principals is estopped from denying the agent is acting on his behalf..

Effect of The C ontract. 1. If the agent contracts as the agent of the named principal. In such circumstances the agent will not bear any liability not will he acquire any rights. As for the above general principles there are several exceptions established by s 183 Contract Act. a) When a contract is made by an agent for the sale or purchase of goods for a merchant resident abroad. b) When the agent does not name his principal. c) When the principal, even if named, shall not be charged againts him..

Effect of The C ontract. 2. When the agent notifies the existence of the principal but does not name the principal. Here the agent informs the third party that he is dealing on behalf of the principal, that is, the existence of the principal are not presented. In such a situation the agent will not be personally liable. In Malaysia in the case of M.A.A Holdings Sdn. Bhd. Other Vs Ng Siew Wah & Others, the issue to be decided by the court is whether a tidal named principal can enforce a contract made on his behalf and for him..

Effect of The C ontract. 3. When the agent contracts on behalf of the principal who is not notified of his existence. In such circumstances the agent does not submit the name of the principal nor the existence of his principal. The agent contracts as if he were the principal. a) The principal who is not notified of its excistence has the right to intervene and sue againts a third party directly, that is, without going through the agent. If the principal enforces the right, then he is also exposed to every claim that may be made by a third party. In other words, if he excercises his right, he will also have to bear obligations or dependents. b) A third party, upon learning of the existence of a principal, may choose wheter to sue againts the principal of the agent..

The Termination of Agency. Section 154 to Section 163 of the Contract Act 1950, provide for the termination of an agency. Section 154 : i) Act/Option of the parties. ii) Operation of law (by way of legal process..

M utual consent. This a situation where both parties mutually agree to bring their contractual relathionship to an end..

If a principal or agent dies, an agency ceases to exist due to the personal nature of the relationship..

By the bankruptcy or insolvency of the principal.

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