Commercial Law: Agency (Ratification, Types of Authority, Basics)

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What is agency?
A relationship where an agent is allowed to act on behalf of a principle
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Why is agency commercially important?
It can help businesses because agents have local knowledge, time saving, cost efficient, essential for businesses with a large work load to function
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Why is the principle being disclosed problematic?
This can be problematic if the A defaults or P wants to enforce the contract
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What are the problems of principals using agency?
Who would be responsible if something went wrong? And the principal could lose control, they put themselves into the hand of the agent which is risky
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What statute law governs agency?
Contractual relationships (principal and agents) orthodox contract law will apply, but where the agent is self-employed the Commercial Agents Regulations 1993 will apply
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What are the different types of agents?
General agents (they have the authority to act in general) and special agents (a one-off transaction)
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What is the definition of a commercial agent?
A self employed intermediary who has continuing authority to negotiate a sale or purchase of goods on behalf of another person/to negotiate and conclude sale/purchase of goods on behalf/in name of the principal
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What are the requirements to be a commercial agent?
1) A must be self-employed (not an employee of P). 2) Has continuing authority; 3) To negotiate the sale/purchase of goods on behalf of P; 4) To negotiate&conclude sale/purchase of goods on behalf&in name of P
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How are agency relationships created?
Generally, by contract. It can be express, implied, oral or written. - Express written agreements are the most common
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What can the court do in terms of creating agency relationships?
They can imply terms to make an agency agreement work: Wells v Devani 2019
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What are the 3 types of agents' authority?
1. Actual authority. 2. Apparent authority. 3. Usual authority
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What is actual authority?
When P TOLD A to do something, most common type
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Case example of actual authority?
Freeman & Lockyer v Buckhurst Properties 1964: expresses the definition of actual authority
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What are the types of authority within actual authority?
1. Express actual authority. 2. Implied actual authority
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What is express actual authority?
Arises by express agreement written/orally, can be formal (deed/contract) or informal (oral), the most straight forward type authority
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Case example of express actual authority?
Johnston v Kershaw 1866
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What is implied actual authority?
Arises from parties/relationships&dealings, where the principal has not expressly said to do something, but the nature of the relationship/circumstances gives implication that it can
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What is implied actual authority usually concerned with?
The scope of the agents' authority, rather than was there any authority in the first place
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Case example of implied actual authority?
Hely-Hutchinson v Brayhead 1968
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What is apparent authority?
Arises where there is no actual authority, and concerns how the authority might appear to the third-party, the authority of an agent as it appears to others
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What is apparent authority concerned with?
How the authority looks to the third-principle, overlap between apparent/implied
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What are some of the issues within this authority?
Tensions within protecting the principle and also wanting to protect the third party
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What is this type of authority?
A type of estoppel by misrepresentation
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What are the conditions required for apparent authority to raise an estoppel?
A) A representation, NOT PROMISE by P. B) Some reliance or change of position by T. C) P Must have the capacity to make the contract
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What are the factors within the requirement of A) a representation, not promise by P
It is a situation where the P has created the impression that A has authority to act on P's behalf. The court should look at the whole conduct in light of the circumstances, agent cannot make the representation itself
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What are the two possibilities for authority to arise through a representation?
1. Where P has represented A has authority to conclude a particular transaction. 2. One where P has represented that A has authority to communicate that the transaction is approved by P
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What are some case examples through a representation to raise an estoppel?
1. Gurtner v Beaton 1993 (court should look at the whole of the conduct.) 2. First Energy v Hungarian Bank 1993 (authority to inform). 3. Kelly v Fraser 2012 (two possibilities). 4. Summers v Soloman 1857 (agent go rogue: principle still responsible)
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What are the facts on the requirement B) some reliance or change of position by T?
T must have relied on the representation; demonstrated by change of position or act. Reliance/COP must be detrimental (generally satisfied by the loss of an opportunity to pursue another route) T cant claim it relied on rep if knew A lacked authority
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What are the facts on the requirement C) P must have the capacity to make the contract?
A cannot create contractual obligations that bind the principle where they do not have the power to enter into such obligations, e.g. P does not own the goods in question
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What is usual authority?
Sits somewhere between actual&apparent, an odd category created by a case
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What case created this category?
Watteau v Fenwick 1893
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What judicial commentary was given in Watteau v Fenwick?
The correctness of this category is 'most doubtful' and controversial
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What is agency of necessity?
Rare category, used when agent says it did something due to having to act quicky
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What is the concept of ratification?
A situation where A has done something without authority of P, says it is on behalf of P, P is identified, T knows who P is, but A has no authority to do what it has done
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What if the requirements are met for ratification?
The P has discretion to ratify the contract/what the agent has done: he can approve it and authorise his actions
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What is the test for ratification?
1) A enters into a contract with T. 2) A states it is entering into contract on behalf of P. 3) P can be identified. 4) P exists at time of contract. 5) A does not have authority from P to enter into contract. 6) Contract can be ratified by P.
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What are the limits of ratification?
P cannot ratify a contract if A made it in its own name (Keighley & Co v Durant 1901) P cannot ratify a contract made by A if it was on behalf of a different P (Jones v Hope 1880) P cannot ratify a contract if entered into at time P did not exist
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Card 2

Front

Why is agency commercially important?

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It can help businesses because agents have local knowledge, time saving, cost efficient, essential for businesses with a large work load to function

Card 3

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Why is the principle being disclosed problematic?

Back

Preview of the front of card 3

Card 4

Front

What are the problems of principals using agency?

Back

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Card 5

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What statute law governs agency?

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