Law of Agency PDF

THE LAW OF AGENCY 11.4 - DUTIES OF THE AGENT, DUTIES OF THE PRINCIPAL, OTHER LIABILITY SITUATIONS & ENDING AN AGENCY RELATIONSHIP  DUTIES OF THE AGENT The agent is required to carry out the instructions given by the principal: Bertram, Armstrong & Co v Godfray (1830) 12 ER...

THE LAW OF AGENCY 11.4 - DUTIES OF THE AGENT, DUTIES OF THE PRINCIPAL, OTHER LIABILITY SITUATIONS & ENDING AN AGENCY RELATIONSHIP  DUTIES OF THE AGENT The agent is required to carry out the instructions given by the principal: Bertram, Armstrong & Co v Godfray (1830) 12 ER 364 The agent must carry out their tasks with due care and skill The agent must act in accordance with good faith, i.e. honestly and openly. The agent may not make any secret profit, or have a conflict of interest: Lintrose Nominees Pty Ltd v King 1 VR 574 An agent can appoint a sub-agent to carry out particular tasks unless the tasks require personal discretion, or have been entrusted to the agent to carry out personally. An agent must keep proper accounts. The agent should not normally mix the principal’s monies with their own: Australia & New Zealand Bank Ltd v Ateliers de Construction Electriques de Charleroi 1 NSWR 19; 1 AC 86  WHAT HAPPENS WHEN AN AGENT ACTS OUTSIDE OF THEIR AUTHORITY? The principal may still be bound: this is because the third party may be able to prove that the agent has ostensible authority to act in the way that they did. However, the principal can then pursue the agent for breaching the agent’s duties. Alternatively, the principal may actively choose to be bound by the agent’s unauthorised acts regardless, although if they decide to do this (ie. ‘forgive’ the agent), they have to decide quickly and notify the third party: Bolton Partners v Lambert (1889) 41 ChD 295  DUTIES OF THE PRINCIPAL The principal must pay the agent the agreed fee, or the customary fee, for the agent’s services, either when the tasks have been properly performed, or when agreed. It is possible, but unusual, for an agent to agree to render services without payment. A principal must reimburse the agent for properly incurred expenses, and indemnify them against any losses or liabilities properly incurred. If an agent possesses any property belonging to the principal, they have a lien over that property to secure payment of what is due.  OTHER LIABILITY SITUATIONS An agent who misrepresents to a third party that they have authority to represent a principal may be liable for that misrepresentation, or for misleading conduct. A principal and agent may both be liable under s 18 of the Australian Consumer Law for misleading and deceptive conduct engaged in by the agent Yorke v Lucas (Note that the agent in this case may have been able to avoid liability by disclaiming responsibility for the accuracy of the information provided)  ENDING AN AGENCY RELATIONSHIP An agent may be appointed for a specified term, or to do a specified task, in which case the agency comes to an end when the term expires or when the task is done. An agent might be appointed on an ongoing basis, in which case the agency continues until terminated. This can happen in various ways – for instance: The principal notifies the agent that their authority is being withdrawn. The agent notifies the principal that they will not carry out the mandate any longer. Unless granted in the form of an ‘enduring power of attorney’, an agent’s authority is revoked if the principal becomes mentally incapacitated. The death of the principal terminates the agent’s authority.