Freeman v Lockyer: Agency Law Duties of an Agent Quiz and Flashcards

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Questions and Answers

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?

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?

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?

The agent is liable for breach of contract Signup and view all the answers

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?

The agent is liable for the difference in cost with interest Signup and view all the answers

How does the court handle ambiguous instructions from the principal?

The court looks to see whether the agent has acted reasonably Signup and view all the answers

What is the standard of care that an agent is expected to exercise in their duties?

The same degree of care and skill as required in their own affairs Signup and view all the answers

In what circumstances can an agent delegate their duties?

With express or implied authority, in cases of necessity, and in respect of delegation of purely ministerial tasks Signup and view all the answers

What is the consequence of an agent delegating their duties to a sub-agent?

The sub-agent becomes accountable to the agent, who will in turn be accountable to the principal Signup and view all the answers

In the case of Chaudhry v Prabhakar, what was the individual held liable for?

Giving negligent advice to a friend in choosing a second-hand car Signup and view all the answers

Why does the law require personal performance in agency relationships?

Because of the personal nature of agency relationships Signup and view all the answers

What was the outcome of the case of Prentis Donegan v Leeds?

The plaintiffs applied for summary judgement against the defendants to be paid for the insurance premiums Signup and view all the answers

What is the primary factor that determines the external relationship between the principal and the third party?

Scope of the agent's power to act on the principal's behalf Signup and view all the answers

Which of the following is NOT a way the law recognizes an agent's power to bind the principal?

Express Refusal of the principal Signup and view all the answers

What is the primary characteristic of Express Actual Authority?

It is expressed through verbal or written agreement Signup and view all the answers

What happens if an agent exceeds their Express Actual Authority?

The agent is personally liable to the third party Signup and view all the answers

How many main types of authority can an agent have in the exercise of their duties?

3 Signup and view all the answers

What is the purpose of a formal contract in an agency relationship?

To provide a basis for renumeration Signup and view all the answers

What is the principle established in the United Bank of Kuwait v Ali Soubhi case?

Undertakings issued by a solicitor or clerk are enforceable Signup and view all the answers

What is the type of authority that looks at what is reasonably incidental to the usage of trades?

Customary authority Signup and view all the answers

In the case of Dingle v Hare, what was the custom in the trade of manure?

It was to be sold with a warranty Signup and view all the answers

What is the result of a solicitor or clerk signing forms of guarantee and undertaking without actual authority?

The firm is liable Signup and view all the answers

What is the requirement for a custom to be considered valid?

It must be certain, known by all, and reasonable Signup and view all the answers

Why can the defence of lack of knowledge of a custom not be used by the principal?

Because the principal is liable for the agent's actions Signup and view all the answers

What is the basis of the court's decision in the case of Robinson v Mollet?

Unreasonable custom Signup and view all the answers

What type of authority arises when a third party reasonably infers from the principal's conduct that the principal granted power to the agent?

Apparent authority Signup and view all the answers

In the case of Freeman v Lockyer, what did the managing director have the express actual authority to do?

Sell land Signup and view all the answers

Why did the court hold the principal liable in the case of Freeman v Lockyer?

The principal had represented to the third party that the agent had the requisite authority Signup and view all the answers

What is the difference between apparent authority and actual authority according to Lord Diplock?

Apparent authority is what the agent seems to have, while actual authority is what the agent has Signup and view all the answers

What is the result when a principal represents to a third party that the agent has the requisite authority?

The third party need not enquire whether the agent was properly appointed Signup and view all the answers

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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Description

Test your understanding of the duties of an agent, including obedience, reasonable care, personal performance, and fiduciary duties. This quiz covers the key responsibilities of an agent and their liabilities for breach of contract.

Agency Law: Duties of an Agent

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