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Questions and Answers
What is the consequence of an agent breaching the duty of obedience?
What is the consequence of an agent breaching the duty of obedience?
- The agent can terminate the contract
- The agent is not liable for any breach of contract
- The agent is liable for breach of contract (correct)
- The agent is liable for negligence
What happens to the right to a lien when the goods pass out of the agent's possession?
What happens to the right to a lien when the goods pass out of the agent's possession?
- The right to a lien is lost (correct)
- The right to a lien is suspended
- The right to a lien is transferred
- The right to a lien is maintained
What is the duty of personal performance?
What is the duty of personal performance?
- The duty to fulfill fiduciary duties
- The duty to personally perform the tasks (correct)
- The duty to exercise reasonable care
- The duty to obey instructions
What is the consequence of an agent failing to follow instructions, as illustrated in the case of Turpin v Bilton?
What is the consequence of an agent failing to follow instructions, as illustrated in the case of Turpin v Bilton?
What is the consequence of an agent failing to sell stocks at the instructed price, as illustrated in the case of Armstrong & Co v Godfrey?
What is the consequence of an agent failing to sell stocks at the instructed price, as illustrated in the case of Armstrong & Co v Godfrey?
How does the court handle ambiguous instructions from the principal?
How does the court handle ambiguous instructions from the principal?
What is the standard of care that an agent is expected to exercise in their duties?
What is the standard of care that an agent is expected to exercise in their duties?
In what circumstances can an agent delegate their duties?
In what circumstances can an agent delegate their duties?
What is the consequence of an agent delegating their duties to a sub-agent?
What is the consequence of an agent delegating their duties to a sub-agent?
In the case of Chaudhry v Prabhakar, what was the individual held liable for?
In the case of Chaudhry v Prabhakar, what was the individual held liable for?
Why does the law require personal performance in agency relationships?
Why does the law require personal performance in agency relationships?
What was the outcome of the case of Prentis Donegan v Leeds?
What was the outcome of the case of Prentis Donegan v Leeds?
What is the primary factor that determines the external relationship between the principal and the third party?
What is the primary factor that determines the external relationship between the principal and the third party?
Which of the following is NOT a way the law recognizes an agent's power to bind the principal?
Which of the following is NOT a way the law recognizes an agent's power to bind the principal?
What is the primary characteristic of Express Actual Authority?
What is the primary characteristic of Express Actual Authority?
What happens if an agent exceeds their Express Actual Authority?
What happens if an agent exceeds their Express Actual Authority?
How many main types of authority can an agent have in the exercise of their duties?
How many main types of authority can an agent have in the exercise of their duties?
What is the purpose of a formal contract in an agency relationship?
What is the purpose of a formal contract in an agency relationship?
What is the principle established in the United Bank of Kuwait v Ali Soubhi case?
What is the principle established in the United Bank of Kuwait v Ali Soubhi case?
What is the type of authority that looks at what is reasonably incidental to the usage of trades?
What is the type of authority that looks at what is reasonably incidental to the usage of trades?
In the case of Dingle v Hare, what was the custom in the trade of manure?
In the case of Dingle v Hare, what was the custom in the trade of manure?
What is the result of a solicitor or clerk signing forms of guarantee and undertaking without actual authority?
What is the result of a solicitor or clerk signing forms of guarantee and undertaking without actual authority?
What is the requirement for a custom to be considered valid?
What is the requirement for a custom to be considered valid?
Why can the defence of lack of knowledge of a custom not be used by the principal?
Why can the defence of lack of knowledge of a custom not be used by the principal?
What is the basis of the court's decision in the case of Robinson v Mollet?
What is the basis of the court's decision in the case of Robinson v Mollet?
What type of authority arises when a third party reasonably infers from the principal's conduct that the principal granted power to the agent?
What type of authority arises when a third party reasonably infers from the principal's conduct that the principal granted power to the agent?
In the case of Freeman v Lockyer, what did the managing director have the express actual authority to do?
In the case of Freeman v Lockyer, what did the managing director have the express actual authority to do?
Why did the court hold the principal liable in the case of Freeman v Lockyer?
Why did the court hold the principal liable in the case of Freeman v Lockyer?
What is the difference between apparent authority and actual authority according to Lord Diplock?
What is the difference between apparent authority and actual authority according to Lord Diplock?
What is the result when a principal represents to a third party that the agent has the requisite authority?
What is the result when a principal represents to a third party that the agent has the requisite authority?
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Study Notes
Duties of Agents
- An agent has a duty to obey instructions, and failure to do so can result in liability for breach of contract.
- The duty of obedience is illustrated in the case of Turpin v Bilton, where an insurance broker failed to obtain insurance for a ship, resulting in its loss at sea.
- The duty of obedience is also illustrated in the case of Armstrong & Co v Godfrey, where a stockbroker failed to sell stocks at a specified price, resulting in a financial loss.
The Duty to Exercise Reasonable Care
- An agent has a duty to exercise reasonable care in the execution of their duties, whether contractual or gratuitous.
- The duty of care and skill is of the same degree as that required in the exercise of their own affairs.
- This principle was established in the case of Chaudhry v Prabhakar, where an individual was held liable for giving negligent advice to a friend in choosing a second-hand car.
The Duty of Personal Performance
- An agent has a duty to perform their duties personally and is not allowed to delegate their duties unless permitted by the principal.
- The agent can delegate their authority only if they have express or implied authority, in cases of necessity, or in respect of delegation of purely ministerial tasks.
- The sub-agent becomes accountable to the agent, who is in turn accountable to the principal.
Fiduciary Duties
- An agent has fiduciary duties to the principal, which include the duty to act in the best interests of the principal.
- The duty of loyalty is a key aspect of fiduciary duties.
Types of Authority
- Express Actual Authority: where the agent is expressly appointed and the scope of their authority is in writing, orally, or by deed.
- Implied Actual Authority: where the agent's authority is implied from the circumstances of the agency.
- Apparent (Ostensible) Authority: where the agent has the power to act on behalf of the principal due to the principal's conduct, even if they have not been expressly or impliedly granted authority.
Apparent (Ostensible) Authority
- Apparent authority arises only if a third party reasonably infers from the principal's conduct that the principal granted the agent authority.
- The case of Freeman v Lockyer illustrates the distinction between apparent authority and actual authority.
- An agent may also have additional incidental authority to do certain tasks that are reasonably necessary to carry out their authorized tasks.
Customary Authority
- Customary authority arises from the customs of trade, which can be reasonably incidental to the usage of trades.
- The custom should be certain, known by all, and reasonable.
- The defence of lack of knowledge of a custom is often prevented from being used by the principal to absolve themselves of liability.
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