Agency Relationship in Business Law

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Questions and Answers

Who stated that a person who signs a contract as an agent without a principal is bound by the contract?

Wiles, J.

Folashade

Erle, C.J. (correct)

Kelner

What is a necessary condition for a successful establishment of an act of ratification?

The principal must be aware of the agent's actions.

The contract must be signed by the agent.

The alleged principal must execute the act of ratification. (correct)

The agent must be informed about the material facts.

What is required for a principal to legally approve an action or sequence of actions carried out by an agent?

The agent must be aware of the principal's intentions.

The principal must sign the contract.

The contract must be in writing.

The principal must be informed about the material facts. (correct)

What is the consequence of a person signing a contract as an agent without a principal?

The person is bound by the contract. Signup and view all the answers

Who expressed the view that for a principal to legally approve an action, there must be clear proof that the principal was informed about the significant details?

Wiles, J. Signup and view all the answers

What is required to establish an agency relationship implied through actions?

Clear and affirmative behavior indicating its existence Signup and view all the answers

What is the requirement for a valid act of ratification?

The alleged principal must execute the act of ratification. Signup and view all the answers

What is the legal stance on agency by estoppel?

The principal is precluded from refuting the presence of an agency connection Signup and view all the answers

What happens if a principal makes it seem like someone is their agent and a third party deals with that person based on that assumption?

The court may prevent the principal from later disputing the agency relationship Signup and view all the answers

What is the consequence for the principal if they lead a third party to believe someone is their representative?

The principal is liable for the actions of the assumed agent Signup and view all the answers

What does the court consider when determining agency by estoppel?

The circumstances leading to the assumption of an agency relationship Signup and view all the answers

What is the result of agency by estoppel on the principal's liability?

The principal's liability is increased Signup and view all the answers

What is the effect of ratification on an act that has been done?

It puts the act in the same position as if it had been antecedently authorized Signup and view all the answers

In which scenario does an individual act on behalf of someone else without prior formal arrangement?

Agency by necessity in moral obligations Signup and view all the answers

What is the exception to the principle of relation back?

When an innocent third party has acquired a right or benefit Signup and view all the answers

What is implied authorization based on?

Urgent conditions necessitating decision-making Signup and view all the answers

What is the significance of trust in agency relationships?

It is invested in the agent by the principal Signup and view all the answers

What is the primary purpose of the principle of agency by estoppel?

To ensure fairness and predictability in business transactions Signup and view all the answers

What reflects societal values and ethical behavior in agency by necessity?

Moral obligations absent any formal arrangement Signup and view all the answers

In the Lukan v. Ogunnusi (1972) case, the Supreme Court of Nigeria affirmed that:

The principal is estopped from denying the fact of the agent's agency if they have led the third party to believe the agent has authority Signup and view all the answers

What is the basis of ostensible authority?

The doctrine of 'holding out' by the principal to the third person Signup and view all the answers

In what case did the court emphasize the element of estoppel in agency by estoppel?

Didigun v. R.T.Briscoe Ltd (1978) Signup and view all the answers

How may the principal 'hold out' the agent as having authority?

By allowing the agent to hold themselves out as having authority Signup and view all the answers

What is not a relevant factor in determining agency by estoppel?

The time of day the transaction was made Signup and view all the answers

What is a necessary condition for a wife to pledge credit in the absence of her husband?

The husband had deserted the wife. Signup and view all the answers

What is the primary consideration for determining whether an action taken by a claimed agent is reasonably necessary?

The circumstances of the case. Signup and view all the answers

What is the consequence of a claimed agent failing to prove the existence of all the necessary conditions for agency?

The claimed agent is denied reliefs in respect of expenses or damages. Signup and view all the answers

What is the primary purpose of the conditions for necessity of agency?

To ensure that the claimed agent acted in the best interests of the presumed principal. Signup and view all the answers

What is a requisite for a wife to pledge credit in the absence of her husband?

The expenditure was suitable for her style or situation in life. Signup and view all the answers

How many conditions must a claimed agent prove to establish the existence of an agency of authority?

All of the conditions listed Signup and view all the answers

Study Notes

Ratification

Ratification makes an act done by an agent equivalent to an antecedently authorized act.
The only exception is when ratification would prejudice an innocent third party who acquired a right or benefit under the transaction.

Agency by Necessity

Agency by necessity occurs when urgent conditions require one person to act on behalf of another, creating an implied authorization.
There are two possible contexts: existing agency relationships and moral obligations without formal arrangements.
In existing agency relationships, an appointed agent assumes responsibility in an emergency when the principal cannot provide explicit instructions.
In moral obligations, an individual may feel ethically bound to intervene in pressing situations, reflecting societal values and ethical behavior.
This principle protects parties who rely on apparent authority in good faith, ensuring fairness and predictability in business transactions.

Agency by Estoppel

Agency by estoppel is based on the principle of "holding out" by the principal to the third person or the apparent authority of the agent.
The principal is estopped from denying the fact of the agent's agency if they led the third party to believe the agent had authority.
Ostensible authority is based on the doctrine of "holding out," which can be by acts of the principal, such as allowing the agent to hold themselves out as having authority.

Conditions for Agency by Estoppel

The act must be on behalf of the principal.
The principal must be aware of the material facts before deciding to confirm the action and be held responsible.

Conditions for Necessity of Agency

There must be an emergency necessitating instantaneous action.
The claimed agent couldn't communicate with the presumed principal at the material time.
The action taken was reasonably necessary regarding the circumstances.
The claimed agent acted bona fide and in the interest of the presumed principal.
All these conditions must be cumulatively proven by the claimed agent to sustain reliefs sought.

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Description

Test your understanding of agency relationships, including implied agency and agency by estoppel, in the context of business law. Learn how to identify specific behaviors that indicate an agency relationship exists between two parties.