Termination of Sub-agency and Substituted Agency Termination of Agency by Act of the Parties An agency can be terminated by the act of the parties in any one of the following ways.
Concepts[ edit ] The reciprocal rights and liabilities between a principal and an agent reflect commercial and legal realities. A business owner often relies on an employee or another person to conduct a business. In the case of a corporation, since a corporation can only act through Natural person agents.
The principal is bound by the contract entered into by the agent, so long as the agent performs within the scope of the agency.
A third party may rely in good faith on the representation by a person who identifies himself as an agent for another. It is not always cost effective to check whether someone who is represented as having the authority to act for another actually has such authority.
If it is subsequently found that the alleged agent was acting without necessary authority, the agent will generally be held liable.
Brief statement of legal principles[ edit ] There are three broad classes of agent: General agents hold a more limited authority to conduct a series of transactions over a continuous period of time; and Special agents are authorized to conduct either only a single transaction or a specified series of transactions over a limited period of time.
Authority[ edit ] An agent who acts within the scope of authority conferred by his or her principal binds the principal in the obligations he or she creates against third parties. There are essentially three kinds of authority recognized in the law: Actual authority Actual authority can be of two kinds.
Either the principal may have expressly conferred authority on the agent, or authority may be implied. Authority arises by consensual agreement, and whether it exists is a question of fact. An agent, as a general rule, is only entitled to indemnity from the principal if he or she has acted within the scope of her actual authority, and may be in breach of contract, and liable to a third party for breach of the implied warranty of authority.
In tort, a claimant may not recover from the principal unless the agent is acting within the scope of employment. Express actual authority[ edit ] Express actual authority means an agent has been expressly told he or she may act on behalf of a principal.
Implied actual authority[ edit ] Implied actual authority, also called "usual authority", is authority an agent has by virtue of being reasonably necessary to carry out his express authority.
As such, it can be inferred by virtue of a position held by an agent. For example, partners have authority to bind the other partners in the firm, their liability being joint and several, and in a corporation, all executives and senior employees with decision-making authority by virtue of their position have authority to bind the corporation.
Other forms of implied actual authority include customary authority. This is where customs of a trade imply the agent to have certain powers.
In wool buying industries it is customary for traders to purchase in their own names. This must be no more than necessary  Main articles: Apparent authority and Estoppel Apparent authority also called "ostensible authority" exists where the principal's words or conduct would lead a reasonable person in the third party's position to believe that the agent was authorized to act, even if the principal and the purported agent had never discussed such a relationship.
For example, where one person appoints a person to a position which carries with it agency-like powers, those who know of the appointment are entitled to assume that there is apparent authority to do the things ordinarily entrusted to one occupying such a position.
If a principal creates the impression that an agent is authorized but there is no actual authority, third parties are protected so long as they have acted reasonably. This is sometimes termed "agency by estoppel " or the "doctrine of holding out", where the principal will be estopped from denying the grant of authority if third parties have changed their positions to their detriment in reliance on the representations made.
Wills J held that "the principal is liable for all the acts of the agent which are within the authority usually confided to an agent of that character, notwithstanding limitations, as between the principal and the agent, put upon that authority.
It is sometimes referred to as "usual authority" though not in the sense used by Lord Denning MR in Hely-Hutchinson, where it is synonymous with "implied actual authority".
It has been explained as a form of apparent authority, or "inherent agency power".
Authority by virtue of a position held to deter fraud and other harms that may befall individuals dealing with agents, there is a concept of Inherent Agency power, which is power derived solely by virtue of the agency relation.
Even if the agent does act without authority, the principal may ratify the transaction and accept liability on the transactions as negotiated. This may be express or implied from the principal's behavior, e.
Liability[ edit ] Liability of agent to third party[ edit ] If the agent has actual or apparent authority, the agent will not be liable for acts performed within the scope of such authority, as long as the relationship of the agency and the identity of the principal have been disclosed.
When the agency is undisclosed or partially disclosed, however, both the agent and the principal are liable. Where the principal is not bound because the agent has no actual or apparent authority, the purported agent is liable to the third party for breach of the implied warranty of.
Liability of agent to principal[ edit ] If the agent has acted without actual authority, but the principal is nevertheless bound because the agent had apparent authority, the agent is liable to indemnify the principal for any resulting loss or damage.
Liability of principal to agent[ edit ] If the agent has acted within the scope of the actual authority given, the principal must indemnify the agent for payments made during the course of the relationship whether the expenditure was expressly authorized or merely necessary in promoting the principal's business.
An agent owes the principal a number of duties.Ch 4 Contract & Agency Law. STUDY. PLAY. If not adjudged insane, the contract can stand if they understand the consequences, if they don't it is voidable. What is the difference in a contract that is for an illegal purpose and when a contract just has an illegal part to the otherwise, valid contract?
What makes a contract illegal? About the legislation. This section contains information on the Workplace Gender Equality Act , including reporting requirements, complying with the Act, notification and access requirements and guidelines around submitting comments.
Contract of Agency is a contract which takes place between agent and principal,where agent is to perform his/her task according to the instruction of the barnweddingvt.comcts of agency are based on two important principles, namely.
Since agency is a contract, all usual requirements of a valid contract are applicable to agency contract also except to the extent excluded in the act.
One important distinction is that as per sec. , no consideration is necessary to create an agency. Termination of Agency by Operation of Law.
An agency can be terminated by operation of law in any of the following cases: 1. Performance of the Contract: When the agency is for a particular object, the agency terminates when the object is fulfilled..
2. Agency by operation of law: At times contract of agency comes into operation by virtue of law. For example: According to partnership act, every partner is agent .