Agency.pptx

Law of Agency  Nature of Agency Termination Agent and of agency principal Right and duties bet. Creation of Principal and...

Law of Agency  Nature of Agency Termination Agent and of agency principal Right and duties bet. Creation of Principal and agency agent Categories Classification of principal of agency Classification of agent’s authority  Relationship arising when a Principal appoint an Agent to ACT on his or her behalf in dealing with 3rd party Nature of Agent has the authority to transact With 3rd party to form a contract bet. The Agency Principle n 3rd party. Basically there a 2 type of contract involve under The agency relationship: Contract bet.agent n the principal Contract bet.the principal n The 3rd party (agent obtain authority 2 act on the arrange by the agent appointed Principal’s behalf.  Who is Agent and principal?? AGENT- sec 135,137 of CA  Person employed by the principal to do an act PRINCIPAL or specific task or to  person who represent the other in employed the agent dealing with 3rd or the person who party(s.137) authorized the agent Eg: lawyer, to act on is behalf broker,travel agent Capacity-anyone can (s.135) be an agent(if he is not The principal must capable, principal will be of the age of liable towards the act majority and sound done by him) mind(s.136) CHAN YIN TEE V WILLIAM JACK  CHAN YIN TEE V WILLIAM JACK + = partners in a business n Yong was a m Chan Yong Chan told WJ that Yong is his partner n has authority to act on b Of Chan. WJ supplied goods to Yong but no payment was made. WJ brought an action against Chan as the partner of Yong HELD: Chan is liable for the act done by his agent bcoz Yong is William jack (WJ)  Formalities of Agency No formalities required May be appoint in writing or orally Or by deed known as power of attorney Sec 138-no consideration is necessary to create an agency  Creation of Agency A Contract of agency can be expressed or implied from the circumstances and the conduct of the parties. KGN Jaya Sdn Bhd v Pan Reliance Sdn Bhd & EMS Bowe(M) Sdn Bhd v KFC Holding HELD : Agency agreement need not to be in writing. The court can meet the intentions of the parties from the facts and circumstances of a case and from the conduct of the parties. Agency may arise in 5 ways.  EXPRESS APPOINTME NT NECESSI IMPLIED CREATI APPOINTME TY ON OF NT AGENC Y ESTOP RATIFICATI ON PEL  Expressed Appointment Sec.139 & 140(CA 1950) This happens when the principal expressly appoint a person to be his agent This can be done in two ways i.e: a) Oral b) Writing Eg: Rani says: Yanie, I want you to be my agent  Implied Appointment (exist in 3 situation) 1. When a person by his words or 3. Relationship conduct holds out bet.partners another person as 2. Relationship bet. Husband sec.7 of Partnership having authority and wife. Act to act for him General Rule/Presumption 1961 Case: Chan Yin Tee wife has authority to pledge Partners are each v William JAck her Husband's credit for a other’s HOUSEHOLD NECESSARY agents when must be suitable to their contracting in living style n his H is liable The course of the to pay the debt. partnrshp Business.  Whether the presumption can be rebutted by the Husband?? H forbid W to pledge his credit H warned the salesman not to supply his wife with goods on credit The goods- whether it has been supplied sufficiently Sufficient allowance given to wife for buying the goods  Ratification Certification/acceptance/ confirmation by the principal for an act done without authority or exceeding the authority given. Agency by ratification arises in 2 situations: An agent who was duly A person who has no appointed has exceeded authority to act for the his authority principal has acted as if he has the authority  when any one of the abovementiones situation arise, the principal can either reject the contract or accept the contract so made. (s.149 When the principal accepts or confirms such contract, the acceptance is called ratification. It can be made expressed or implied. (S. 150 CA) The effect To render of ratification : the contract as binding on the principal as if the agent had been properly authorized before. Ratification is retrospective. i.e: the contract is effective from the date when it was made, not form the date it Was ratified by the principal.  Ratification-must not injure or affect the The act/ contract must be interest of 3rd party unauthorized (s.153) Must be made within a The unauthorized act reasonable time. must be recognized by METROPOLITAN ASYLUM law. V KINGHAM & SONS BROOK V HOOK GROVER & GROVER V The agent must MATTHEWS a expressly act as agent The principal contract for the principal as the must ratify the time of the contract. whole act or can only KEIGHLEY, MAXTED contract. (S.152) The principal be & CO V DURANT must, at the time ratified if: of ratification The agent must have a have full principal who is actual knowledge of all The principal must have existence or capable of material facts at contractual capacity at being ascertained when the time of the time when the the contract is made. ratification.(name contract is being made KELNER V BAXTER of the and at the time of COSMIC INSURANCE parties,s/m,terms ratification V KHO CHENG POHS n condition ) 1. The act/ contract must be unauthorized 2. The unauthorized act must be recognized by law.  BROOK V HOOK - the principal may not ratify a contract in which his signature had been forged by unauthorized agent. 3. The agent must expressly act as agent for the principal as the time of the contract.  KEIGHLEY, MAXTED & CO V DURANT - agent was authorized to buy wheat at a certain price from 3 rd party by the principal. Agent bought it at a higher price without disclosing he was acting as an A for P. Held: A lacked the authority to enter into the contract for P and could not later ratify the contract because he was undisclosed to 3rd parties. 4. The principal must be in actual existence when the agent makes the contract.  KELNER V. BAXTER - Court held that the company (principal) could not ratify the contract to buy goods (cigar) on his behalf since it did not exist at the time. The agent in this case made a contract before the company was formed. It had no contractual capacity to make the contract and the agent was liable for the contract.  In Malaysia, if there is a contract which has been entered into by a company, or its agent prior to its formation, the contract may be ratified by the company after its formation. Section 35 of the Companies Act 1965- “ A contract entered into by a company or its agent prior to formation may be ratified by the company after its formation.  Section 35 of Companies Act can be invoked, 3 things must be proved:- 1. There must be a contract or transaction purported to have been entered by a person on behalf of the company prior to its formation. 2. The contract may be ratified by the company after is ratification. 3. That upon ratification, the contract is ante dated to the date it was made 5. The principal must have contractual capacity at the time when the contract is being made and at the time of ratification 6. The principal must, at the time of ratification have full knowledge of all material facts at the time of ratification.(name of the parties, subject matter,terms n condition )  Sec.151: no valid ratification can be made by a person whose knowledge of the facts of the case is materially defective.  MAR SH V JOSEPH - a principal had ratified a contract without full knowledge of all material facts. The court held that the principal was not bound by such act. 7. The principal must ratify the whole act or contract. (S.152) 8. Must be made within a reasonable time.  METROPOLITAN ASYLUM V KINGHAM & SONS\ - the agent contracted to buy eggs without authority. The principal tried to ratify the 1 week after it was made. Held: the ratification was too late.  GROVER & GROVER V MATTHEWS - a contract of insurance policy which had been ratified by the principal after the occurrence of the insured event was not effective. 9. Ratification-must not injure or affect the interest of 3rd party (s.153) - illustration: A holds lease from B terminable on three months notice. C, an unauthorized person gives notice termination to A. The notice cannot be ratified by B, so as to be binding A.  Agency by estoppel (Agensi secara Estoppel)  A person cannot be bound by a contract made on his behalf without his authority. However, if he by his words and conduct allows a third party to believe that that particular person is his agent even when he is not, and the 3rd party relies on it to the loss of the 3rd party, he will be estopped or precluded from denying the existence of that person’s authority to act on his behalf.  Section 190- This agency arises where the principal holds out a person as his agent to a third party and the third party relies on that act.  Example: A) First situation Mr. Ali dealt with a third party and it is within principal’s knowledge. However, the principal did not/failed to inform the third party that Mr. Ali is not Another example : B) Second Situation Mr.Ali who dealt with a third party as principal’s authorised agent, on which later was being terminated. Nonetheless, the third party is unaware of it. Therefore, in both situation, the principal is estopped from denying the fact that Mr.Ali is not his agent and not having the authority. This can be seen from the conduct of the principal.  EHSAN (Principal) (UPIN) 3rd party Hai Upin, I’m MAIL (agent) Ehsan’s agent. Mail told Upin in the presence of Ehsan that he is Ehsan’s agent. Ehsan later cannot deny/refuse to accept Mail as an agent if Upin sell goods to Mail and believe that Mail is an agent and later claim the price from Ehsan.  Agency by Necessity /Emergency Recognized in law in urgent situations which requires prompt action to preserve life or property. Generally, masters of ships who deal with perishable goods in the cargo to preserve or sell them are the original agents by necessity with the owners of the cargo as principal. Sec.142 CA The following requirements need to be satisfied for an agency by necessity to arise: 1) It is impossible for the A to get timely instructions from the P 2) It is in emergency circumstances where the A had to do all such acts for the purpose of protecting the P from the loss. 3) A acted in good faith  Two situation: 1. When a wife is deserted or is justified in leaving her husband and has no means of support, pledge husband’s credit for necessities provide the husband has not provided sufficient allowances 2. when a person is entrusted with another’s property and becomes necessary for him due to emergency to do something in order to preserve and to protect the property although he has no authority to do so (commercial agency)  CASE: 1. Great Northern Railway V Swaffield 2. Springer v Great Western Railway Company. 3. Sach v micklos  Great Northern Railway V Swaffield The railway company (P) had been entrusted to deliver a horse of the D to a destination. However when it reached the destination, nobody came to take the horse. The P had to look after the horse and took several actions in ord To preserve the safety of the horse. en claimed from the D the extra expenses in order to serve the safety of the ground that P was not authorized to do so D: the P was an agent by necessity and therefore entitled to claim.  he D agreed to carry P’s tomatoes from jersey to Covent Garden. Owing to bad weather, the ship arrived late at Weymouth. Meanwhile, the D’s Workers were on strike efore the tomatoes were found to be bad. The D decided to sell the tomatoes at mouth bcoz the D felt that the tomatoes could not arrived at Covent Garden mar aleable condition. However, the D did not communicate this to the P. P claimed fo mages. LD: the P was entitled to damages bcoz the D were not agents necessity bcoz they have failed to communicate with the P en they could have done so. Springer v. Great Western Railway Co  Sach v. Miklos M agreed to store furniture, which belonged to S. After certain period of time, M needed the storage space. M tried to reach S to get the furniture removed nonetheless, he cannot locate S. M later sold the furniture and M pleaded agency by necessity in making the sale. Court held there was no agency by necessity as no emergency arisen. This is because the sale made by M was for his convenience. If M’s house had been destroyed by fire and the furniture left in open M would then have been justified in selling it. Effect of agency by necessity The agent will be protected by any claim from P The agent will be entitled to additional payment for his effort to protect and to preserve the safety and interest of the P A contract existed between the P and the 3rd party. According to the extent of authority CLASSIFICATI ON OF AGENCY According To function According to the extent of authority Universal Agent – General agent with extensive power General Agent – Agent who is employed on behalf of his principal generally in transactions relating to trade or business. Special Agent – An agent appointed to do a specific act for a specific purpose – authority is quite limited/specific  Classification according to 1. functions Del credere agent- Agent who is in consideration of extra commission, undertakes that 3rd party with whom he enters into a contract on his principal’s behalf, will perform his obligations. ( basically types of broker, mediator, middleman, between vendor and vendee. The agent take a fee from the principle for ensuring that the goods is sold & paid in full. If the buyer default in payment, the agent will pay the amount which the buyer failed to pay. 2. Factors – A commercial agent, who is in the ordinary course of business is entrusted with the goods of his principal for sale. Usually sells the goods in his own name and without disclosing his principal 3. Auctioneers – An agent who is employed to sell goods by auction. He has discretion as to the price of the goods should be sold unless the seller has fixed minimum/preserve the price. 4. Brokers- A commercial agent who is employed to make contracts between principal and third parties for a commission called a brokerage 5. Bankers – Two roles of bankers -agents for customer -agents for the banks THE AUTHORITY OF AGENT An agent’s act is binding on the principal if it is done within his authority. An agent’s act is not binding on the principal if it is done in excess of his authority. LIABILITY IF THERE IS FRAUD OR MISREPRESENTATION?? In this instances the principal is liable of the agent was acting within his actual or apparent authority even if such misrepresentation or fraud was committed for the benefit of the principal or the agent himself. Sect.191- Agent personally liable for misrepresentation or fraud. Classification Of Agent’s Authority Actual authority Apparen t/ Ostensi ble authorit y 1.Actual Authority  This is expressly given to Agent by the principal it can be either orally or given in writing ( Section 140-141)  Sec.141: i ) an agent having authority to do and act has authority to do every lawful thing which is necessary in order to do an act ii) an agent having authority to carry on a business has authority to do every lawful thing necessary for the purpose or usually done in the course of the business. E.g.: P appoint C as an agent to sell his car for not less than RM 20,000. if A acted in accordance with this express authority, P is bound by the act.  This can also be implied from the following:- a. All such powers are proper or necessary to execute the express authority b. The circumstances of the case c. The custom or trade usage d. The situation and conduct of the parties  Refer case: CHAN YIN TEE V WILLIAM JACKS  Certain authority is implied if it is the type that someone dealing with the agent may expect him to have it. It is the agent’s usual authority which can be implied by the 3rd party. Normally, the title/position/designation of the agent may give a measure of implied usual authority.  Illustration (b) to sec.141 : A constitutes B his agent to carry on business of a shipbuilder. B may purchase timber and other  Case: PANORAMA DEV (GUILFORD) LTD. V FIDELIS FURNISHING FABRICS A company secretary exceeded his usual authority in hiring motor vehicle from the P for the company. The issue was whether the D company could be taken to have authorized the transaction. Held : the D was liable bcoz in appointing a company secretary the D was representing that the secretary had authority to enter into those transaction which company secretaries were usually concerned. 2) Apparent/ Ostensible Authority – Section 190 It can arise in 2 situations:- a) Where the Principal by his words or conducts, leads a 3rd party to believe that A has authority to make contracts for him (Section 190). The representation of the [principal makes it apparent to the 3rd party that the agent has authority. - the condition is that it must be the principal himself who makes the representation to the 3 rd party and not by the agent. Effects from the situation – ESTOPPEL Principal is precluded from denying that the agent has authority Nonetheless, if a 3rd party knew or ought to have known that the agent did not have the apparent authority, he cannot rely on the authority in question.  Graphic Lines Pte. Ltd v. Cahl Chee Mein & Ors e G.M who was a partner of the nightclub had represented the P that advertisement should be done through the sistant manager. The issue was whether the defendant who were partners of the nightclub bound By the acts of their A.M. who had placed advertisement for the nightclub with the plaintiff. Held: since the G.M had actual authority to delegate the authority to the A.M, therefore the D were bound by the acts of the A.M who had apparent authority thru the Representation of the G.M to the P. b) Where the Agent previously has authority to act, but that authority was terminated by principal without notice to 3rd parties  E.G. the principal gave the authority to his agent to purchase stationary goods for the company annually from a 3rd party supplier. However to cut down the budget of the company for that particular year the P instructed the agent not to purchase any stationary goods but this was not conveyed to the 3rd party who continued to supply the stationary goods at the request of the agent. The principal is bound to pay the 3rd party for the good supplied.  3rd party cannot rely on apparent authority if he knew or ought to have known that the agent did not have authority in question.  THE AUTHORITY OF AGENT AND LIABILITY FOR UNAUTHORISED ACTS What if breach of warranty of authority occur? Breach of warranty of authority occur/ arises when:- a) An agent acts outside/ beyond his authority OR b) A person without authority claims to act as agent for another EFFECTS: The agent is personally liable, if he has misled the 3rd party.  YONGE v. TOYNBEE The solicitors not being aware of this fact, proceeded to T, the principal, deliver a instructed the defence before solicitors to learning of their defend an client’s insanity. action for libel The plaintiffs applied brought for the defence to be against him but struck out and before trial for solicitors to pay started, the cost. defendant HELD: became insane. by acting for the defendant, were held liable The solicitors, for damages even though they had acted in good faith in the mistaken belief that they had authority. This is because they had impliedly that they had authority to do so. **If the 3rd party knows about the agent’s lack of authority? The agent will not be liable for the contract CATEGORIES OF PRINCIPAL A named principal Section 183, Section 174 A disclosed principal Section 183 Undisclosed principal Section 184- 186  Hai, saya UPIN..ini 1) A named principal – Principal saya IPIN Section 183, Section 174 The agent has disclosed the principal’s name or identity to the 3rd party Exceptions: Where the agent agrees to accept personal liability or contracts in such a way as to make himself personally liable If the agent signs i.e cheque in his own name without making it clear that he is signing only as an agent 2) A disclosed principal – Section 183 Principal’s existence is disclosed to the 3rd party by the agent but his identity is unknown Under sect.183, if the agent does not disclose his principal’s name, the agent is presumed to be personally liable. This would remain unless the agent is released by the 3rd party or even after the discovery of the principal. In the case the principal cannot be sued, the agent will be personally liable. Ex: principal is not having sound mind. Section 186- if the agent’s personally liable, 3rd party may take action against the agent or the principal or both. 3) Undisclosed principal- Section 184- 186 Principal’s existence and identity is unknown to the 3rd party at the time of the contract 3rd party has the right to sue the agent/ principal or both of them- Liabilities are joint and several (Section 186). Principal on the other hand has the rights to insists performance of the contract (Section 185) Rights of agent in such cases is that he can sue the contract because the contract is his. Section 189- if a person falsely contract with another as agent, when in reality he is acting on is own account, he is not entitled to enforce the contract. RIGHTS AND DUTIES BETWEEN PRINCIPAL AND AGENT DUTIES OF PRINCIPAL TO HIS AGENT To indemnify and To pay the commission or remuneration to the reimburse the agent agent unless the for acts done in the relationship is exercise of his duties gratuitous Not to willfully prevent or hinder the agent from earning his commission  a) To pay the commission or remuneration to the agent unless the relationship is gratuitous  Amount payable depends on the terms of the contract, if not on quantum merits basis  Payable upon completion of all that an agent is contracted to perform  If the agent is guilty of misconduct in the business of the agency, he loses his right to remuneration (Section 173)  If the agency is for fixed period, the agent is entitled for damages should the  b) Not to willfully prevent or hinder the agent from earning his commission Principal should not employ another agent (2nd agent) in the midst of negotiations to deprive the original agent of his commission. Except for estate agents who is appointed for the sale of real property where there is no express terms in the agreement that principal will not sell the property himself. c) To indemnify and reimburse the agent for acts done in the exercise of his duties Situations where agent can be indemnified and reimbursed:- I ) where the agent has incurred losses or liabilities in performance of the contract of agency ii) where the agent suffers injury to 3rd persons in execution of the authority of agency iii) where the agent causes injury during the cause of his duty due to the principal’s neglect or want of skill However, the agent will loose his right to indemnify when he acts beyond his duty or performs his duty in a negligent manner CASE: SOLLOWAY AND ANOR. v. McLAUGHLIN (1938) - It was held that the agents, who engaged in a fraudulent scheme to defraud their principals would forfeit their right to an indemnity in respect of transactions, which formed part of the fraud  To obey principa Not to l’s instructi To use or disclose exercise on – confidential reasonable Section information 164 care, skill or documents and entrusted to diligence – him by his Section 165 To payprincipal to To render his proper principal all accounts sums when it is received on DUTIE required by his behalf S OF the principal (Sect.171 ) (Section 166) AGENT To pay the Not to make principal all secret profit sums out of the received on performance his behalf of his duty Not to let To (Section his own 171) communic interest ate with conflict with his the duty- principal – Section Section  1)To obey principal’s instruction Section The agent is bound 164 to follow P’s instruction provided it is a lawful instruction. Agent is liable for any loss suffered by the principal if he fails to do so. In the absence of instruction, the agent is required to act according to the custom of the particular trade or transaction  2) To use or exercise reasonable care, skill and diligence – Section 165 Agent must act with reasonable diligence and use the skill he has  He must act or perform according to his best knowledge/ skills  CASE: KEPPEL v. WHEELER (1927) - D (agent) was employed to sell the P’s house. An offer was received and accepted by the P subject to the contract. A few days later, a higher offer for the same house was made by X, but the D did not communicate this offer to the P. then, a written contract bet. The P and the 1st offer was signed. - HELD: the D was liable to the P for the difference bet. The 2 offers. ANDREW V RAMSAY - P instructed the D to sell property and agreed to pay him £50 commission. The D received £100 from the purchaser as deposit for the property. The D paid £50 to P and kept the balance in payment of his commission with the P’s consent. P learn later that the D had also received £20 as commission from the purchaser. He sued to recover the £20 and also the £50 paid D. - HELD: P entitled to recover both sums as the D breached his duty as agent. 3) To render proper accounts when it is required by the principal (Section 166) Agent must produce account for all money and property if requested by the principal. This is to include money received by him from illegal and void transactions provided the agency contract itself is not illegal 4) To pay the principal all sums received on his behalf (Section Nonetheless, agent may retain or deduct the sum of money he received on behalf of his principal for the following reasons:(Section 170) a) advances made or expenses incurred by him in performing his duties b) his commission c) other remuneration payable to him for acting as agent  Section 174- agent has the right to retain principal’s property in his possession until his remuneration is paid but has no right to sell the goods without consent of the principal 5) To communicate with the principal– Section 167 In case of emergency/difficulty, the agent must use his reasonable diligence to communicate with and seeking instructions from principal However, Sect.142 allows the agent to use his discretion to safeguard principal’s interests especially if it is impossible to reach principal, communication is impracticable or any delay that may cause loss to principal  6) Not to let his own interest conflict with his duty- Section 168  The agent must act for the benefit of his principal and he must not allow his own interest to conflict with his duties. What is mean as acting in good faith is that: i. The agent cannot become a party to the transaction with the principal ii. The agent cannot act on behalf of both parties to a transaction at one time without their consent. iii. The agent must disclose everything that he knows to the principal to all material facts of the contract Example:- An agent who is employed to buy land, cannot sell his own land to the principal without the principal prior knowledge and consent OR acting for both parties -without consent, the principal can repudiate the transaction even if the agent sell the land according to market price. CASE: WONG MUN WAI v. WONG THAM FATT AND ANOR. (1987) In this case, the court held that the 1 st defendant failed in his duty as agent of the plaintiff on two reasons:- i) He sold the plaintiff’s half share of the land below the market price/value ii) He failed to inform the plaintiff that he had sold it t the 2nd defendant who was his wife Thus, 1st defendant was held to breach his duty to act in good faith and protecting the principal’s interests. He could not use his position as agent to make profit on the account of principal FULWOOD V HURLEY  the agent had acted on behalf of the parties, the plaintiff and the 3rd party, by claiming commission from both parties without their knowledge and consent. Held: the agent has breached his duty toward the principal or not acting in good faith Principal has the right to recover from the agent any benefit which he may have obtained from the conduct even though there is no loss on the part of the principal. 7) Not to make secret profit out of the performance of his duty Secret profit means bribe/ any payment of a secret commission received by the agent over and Above the commission or other remuneration agreed by the principal and the agent However, if the principal knows of the profit gained by the agent, and the principal consent to it, it is no longer “secret”.  The remedies available for the principal who did not consent to the secret profit: i. Repudiate the contract esp. in the case of disadvantageous ii. Principal may recover the amount of the bribe from the agent – Section 169 CA 1950 CASE : TAN KIONG HWA V. ANDREW S.H. CHONG (1974) laintiff authorized the defendant as his agent to sell the flat for RM45,00 fendant sold it for RM54,000 and the difference of RM9,000 was credited mpany. Court held that the plaintiff was entitled to recover RM9,000 from defendant as the defendant had breached his duty as an agent.  iii. The principal may refuse to pay the agent his commission or other remuneration CASE: ANDREWS V. RAMSAY AND CO (1903) In this case, the plaintiff (i.e the principal could recover both sums that is the commission paid to the agent and the secret commission received by the defend from the third party. IV. The principal may dismiss/ TERMINATE the agent for breach of duty v. The principal may sue the agent and the 3rdparty giving the bribe for damages for any loss he may have sustained through entering into the contract.GOVT. OFFICERS CO-OPERATIVE CASE : MAHESAN V. MALAYSIAN HOUSING SOCIETY LTD The appellant (agent) had bought a piece of land for RM944,000 from the vendor for the respondent and the vendor previously received pay of RM456,000 for the land. vi. Principal may also bring Court held that respondent could recover criminal eitherfor charges thebribery bribe orunder the amount of actual loss suffered by it as a consequence the of entering Prevention of into Act Corruption the contract.  8) To pay to his principal all sums received on his behalf (Sect.171 CA 1950)  Agent must pay his principal all sums received on the principal’s behalf  However, agent may retain or deduct out of sum money received on behalf of the principal in the following matters: Advances made or expenses incurred by him in carrying out his duty His commission Other remuneration payable to him for acting as agent 9) Not to disclose confidential information or documents entrusted to him by his principal Agent may not disclose any information obtained during is employment as an agent to outsiders/third party  10)Not to delegate his authority MAXIM :Delegatus non potest delegare (a delegate cannot delegate) i.e an agent cannot employ another person to do his duty. He must perform the duty by himself. GENERAL RULE: An agent cannot simply shift/delegate his authority as agent by employing others to act to a 3rdparty IS THERE ANY EXCEPTION TO THIS  i. Where the Case: DE BUSSCHE V ALT The P appointed an agent in China to sell a principal approves ship at a certain price. The agent was unab the delegation of to sell the ship. Therefore The agent sough authority the principal’s Approval to appoint sub-ag to sell the Ship in Japan. HELD: there was no breach of the agent’s duty in appointing The sub-agent because there was express Consent from the principal to the delegatio ii. Where it is presumed from the conduct of the parties that the agent would have power to delegate his authority. iii. It is the customs iv. It is necessary or trade usage to complete the permits such business delegation v. In the case of emergency or necessity. For example, the agent is sick or ill.  vi. When the act CASE : ALLAM & CO. V. was done it is EUROPA POSTAL SERVICES purely ministerial LTD (1968) or clerical and does not involve Court held that there was no exercise of unauthorized delegation of discretion. duty to the solicitors as it was purely ministerial and not IN CONTRAST WITH involving confidence or CASE : JOHN McCAMM & Co. discretion. V. POW Court held that the sub- delegated the sale of the principal’s house to sub-agent was not a purely ministerial act. It requires personal abilities to obtain the best possible price. TERMINATION OF AGENCY HOW AGENCY RELATIONSHI P CAN BE TERMINATED? ?  TERMINATION OF AGENCY (Sect.154 – Sect.165 CA 1950) AN AGENCY MAY BE TERMINATED IN TWO WAYS BY BY ACT OF OPERATION THE OF LAW PARTIES  BY OPERATION OF LAW a)By the performance of the contract of agency (Section 154) b) By the expiration of the period fixed or implied in the contract of agency c)By death of either principal or the agent  This is due to the personal and confidential relationship between agent and principal  But if the agent has interest in the property which forms the subject matter of the agency, agent’s or principal’s death will not terminate the contract. This is because the personal representatives of the deceased will exercise the authority.  Under Sect.161, the termination of agency based on the death of the principal is only  If the agent not known, then he may claim against the personal representatives of the principal  Section 162 also mentioning that the agent must on behalf of the personal representatives of the deceased principal take all reasonable steps to protect and preserve the interest entrusted to him. d) Insanity of the agent or principal (Sect.151) e) Bankruptcy or insolvency of the principal(Sect.154) f) By the happening of an event which renders the agency unlawful (Doctrine of frustration)  Section 163 mentioning on termination of an agent’s authority also ends the authority of all sub-agents appointed by the agents  BY ACT OF THE PARTIES By mutual consent of the agent and the principal By unilateral revocation by the principal/ unilateral renunciation by the agent at any time by giving notice (Sect.154)  Reasonable notice should be given or else the liability for breach is on party in default (Sect.159) The revocation must be expressed or implied in the conduct of the parties (Sect.160) CASE : SOHRABJI v. ORIENTAL SECURITY ASSURANCE CO (1946) The court held that the 3 1/2 months was inadequate to terminate the agency relationship which has lasted nearly 50 years. Thus, an agency However in the CASE : SYARIKAT JAYA v. STAR PUBLICATION (M) BHD (1990)  Court held that the 6 month notice was reasonable in terminating a sole agency relationship.  Damages for termination without notice shall be measured by looking at the amount of what the agent might have earned under the contract where it includes agent’s commission or remuneration and/or expenses and liabilities incurred by him in the course of his duty. Nonetheless, the power of the principal to revoke agent’s authority is limited in several circumstances:  In the case of absence of an express contract, the agency cannot be terminated where the agent himself has an interest in the property which forms the subject matter of the contract (Sect.155) CASE : SMART v. SANDERS (1848)  The fact that the factor was sent goods to sell on behalf of the principal and he made advances to the principal on the security of these goods, the agency relationship was irrevocable. The principal also cannot revoke the agent’s authority after the agent has already incurred personal liability as a result of carrying out the principal’s instructions so as to avoid indemnifying the agent (Sect.157) CASE : READ v. ANDERSON (1884)  The court held that the defendant must indemnify the plaintiff for the amount which the latter had paid to the person with whom he made the bet. CASE : FICHAPPA CHITTY v. HAJI JAH (1897) The court held that the plaintiff who had advanced the money to an agent appointed by the Power of Attorney but whose authority has been revoked without his knowledge was entitled to recover against the principal. Knowledge of revocation can be from the principal or other sources but only effective when it comes to the knowledge of the agent or third party. If the revocation of an agency contract for a period of fixed period without lawful justification then the principal must make compensation to the agent. (Sect.158) AGENT’S RENUNCIATION (rejection)  If in the case the agent renunciation, then the agency for an indefinite duration, the agent must give reasonable notice or else agent will be liable for damages suffered by the principal resulting from the renunciation (Sect.159)  Where in the case of agency for a fixed period, then the agent is liable to compensate the principal for the premature renunciation without sufficient cause (Sect.158)  THANK YOU FOR YOUR ATTENTION Success in life can never be an accident. It is the result of right decisions at the right time. Champions are not the people who never fail, but the people who never