MALAYSIA UNIVERSITY OF SCIENCE AND TECHNOLOGY

Master of Business Administration

MBA 3107 BUSINESS LAW AND ETHICS

Group Assignment
AGENCY LAW

Lecturer: Mr. Thanga

Students: Chareen Loh Sing Chiet (M19010003)
Sia Ee Hou (M19040003)
Kennedy Komba (M19010013)
Wilson Tan Teck Soon (M19060001)
Leong Xinxu (M19040002)
Required:
(a) What is the purpose of an agency in contract law? In what circumstances may (i) a servant and
(ii) an independent contractor be an agent.
(b) A, an estate agent, hearing that B was planning to sell his house, wrote to B offering to act as
agent to arrange the sale. B replied rejecting A`s offer of assistance. Nevertheless, A advertised
the house for sale and C replied to the advertisement and was sent by A to see B. B sold the house
to C and A now claims he is entitled to the standard rate of estate agent`s commission on the
proceeds of sale. Advise B.

Would it make any difference to your answer if B had not replied to A`s offer of agency services?
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Examine critically the impact of the situation in the context of Contract Act 1950. You are required
to furnish the answer with relevant sections in the Contract Act 1950 and decided cases.

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Introduction
Agency is a legal relationship that is created when a person acts on behalf of another through the
other’s authority for purposes of dealing with a third party. This contractual relationship between
a principal and an agent is created for specific purposes and in accordance to specific principles
that articulate the formation of the relationship, its nature, authority, duties and responsibilities.
According to Clarkson, Miller and Cross (2013), agency relationships are normally consensual –
meaning they come about by voluntary consent and agreement between the parties. Unlike
conventional contracts, no consideration is necessary to create an agency.

In addressing the Group Assignment Question in this paper, we will apply the Contracts Act
1950 (Act 136) of the laws of Malaysia, case laws and other relevant legal authorities. The paper
is divided into two major parts. The first part discusses, the purpose of an agency, and the
circumstances a servant and an independent contractor may be an agent. The second part deals
with a legal advice for the case presented relating to a sale of house by an estate agent.

PART I
1.0 The Purpose of an Agency in Contract Law
In understanding the purpose of an agency in contract law, we first refer to the definition
provided in Section 135 of the Contracts Act 1950 (supra), that defines Agency as follows-
“135. An ‘Agent’ is a person employed to do any act for another or to represent another in
dealing with third persons. The person for whom such act is done, or who is so
represented, is called the ‘principal’.” [Emphasis added].

Secondly, we note that this contractual relationship noted above, enhances efficiencies, creates
conveniences, saves resources, and taps into special skills or networks beyond what a principal
may have. In this regard, in practice, an organisation or individual, may engage third-party
representation to accomplish the needed tasks.

Thus, the purpose of this important agency contractual relationship in contract law is to ensure
that the agency contractual relations are legally enforced by providing certainty of creation of
agency, authority, accountability, necessity, ratification, and its various facets including

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termination. In summary, we provide the purposes as stipulated in Contracts Act 1950 (CA) and
from relevant case laws:
(i) Legal certainty on persons who can employ an agent and who can be an agent
According to Section 136 CA supra, the law makes it clear that any person who is of age of
majority according to Age of Majority Act 1971 and with a sound mind may employ an
agent. Thus, the law creates legal boundaries of persons who qualify to employ agents, this
ultimately enables the society to address potential legal disputes within the confines of the
law of agency.
Similarly, under section 137 CA, the law stipulates that any person can become an agent,
that is any person who is of the age of majority and of sound mind, however, if the
principal engages as an agent a minor and a person of unsound mind, the responsibilities
and liabilities will fall upon the principal. In the case of Chan Yin Tee v William Jacks &
Co (Malaya) Ltd [1964] MLJ 290, the appellant (Chan) registered himself and Yong (who
was a minor) whom he introduced to the respondent (William) as his business partner.
Upon this representation, the respondent proceeded to send goods to Yong (the minor) but
Yong defaulted in payments. In upholding the High Courts’ decision to award the full
amount claimed by respondent (William), Thomson LP, held that-
“any person, irrespective of his competency to contract, may become an agent, for
whose acts the principal may be liable to third parties” [Emphasis added].
(ii) Authority, roles and responsibilities in agency relationships
The other purpose of an agency in contract law is to describe the authority, roles and
responsibilities in the agency relationship. As is the case in any legal relationship, parties
need to understand their scope of accountability to be held responsible for their actions and
to ensure that remedies are awarded accordingly in the event of disputes.
The Contracts Act, 1950 (supra) provides that an agent’s actions are bound to the principal
if the actions are done within the authority given by the principal to the agent. According to
Watts and Reynolds (2012), an agent is said to have authority to act once the principal
assents, and this authority constitutes a power to affect the principal’s legal relations with
third parties.

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The authority given can be classified into two forms, actual authority and apparent
authority. Actual authority is upheld through an agreement and can be in terms of
expressed (S.140 CA) or implied when it is inferred from the circumstances of the case.
As for apparent (ostensible) authority, there are two possible scenarios: one would be the
principal leads the third party to believe that his agent has authority to represent him;
another would be where the agent previously had authority to act, but the authority was
terminated without the principal informing the third party (Section 190 CA).
As for breach of warranty of authority, if a third party is misinformed by the agent’s
misrepresentation of authority, the agent is personally liable no matter how innocent the
idea is. In the case of Yonge v. Toynbee [1910]1 KB 215, it was held that-
“Where an agent acts in excess of his authority, even if it was acted in good faith,
the part which is excess of authority shall be liable by the agent, and the others by
the principal”. [Emphasis added].
Similarly, in the case of G Balan a/l Govindasamy v Lee Moi Moi & Ors and another
appeal [2017] MLJU 266, it was held that-
“A person untruly representing himself to be the authorised agent of another, and
thereby inducing another person to deal with him as such agent, is liable, if his
alleged employer does not ratify his acts, to make compensation to the other in
respect of any loss or any damage which he has incurred by so dealing”. [Emphasis
added].
(iii) Effects of Ratification
The other purpose of agency in contract law is to stipulate circumstances to infer rights to
a person to acts done for him without his authority or knowledge. The person may elect to
ratify such acts or disown them (Section 149 CA). In the case of Brickwood Consolidated
Sdn. Bhd. V Kenneth Teh Ah Kiam & Anor [2000] MLJU 468, Abdul Malik Ishak J,
explains ratification as follows-
“Whatever the agent does on behalf of the principal is done at the time when the
relation of principal and agent is not in existence. The agent has no authority to do
what he does at the time he does it. Subsequently, the principal on whose behalf,
though without whose authority the agent has acted, accepts the agent's act and
adopts it just as if the agent had acted with the prior authorisation of the principal”.

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(iv) Termination of agency relationship

The other purpose of agency in contract law is to define how the relationship can be
terminated. Section 154 of the Contracts Act (supra), stipulates that an agency is
terminated by the principal revoking his authority or by the agent renouncing the business
of agency. Other circumstances of termination include, the business of agency being
completed or the principal or agent dying or becoming of unsound mind or principal being
adjudicated or declared a bankrupt or an insolvent.
(v) Duties of the parties in agency relationships
The other purpose of agency in contract law is to define the duties of principal and agent in
the agency relationship. The agent has, according to the Contracts Act (CA) (supra) nine
duties of agent towards the principal. These include among others: obeying the principal’s
instructions (Section 164 CA). In the case of Turpin v Bilton (1843)5 Man & G 455, the
agent was instructed by the principal to obtain insurance for his vessel, but the agent did
not. In the end, the vessel was lost, and the principal had to bear the loses. Since the agent
was in breach of his duty, he was held liable and instructed to compensate the principal.
Other duties of the agent towards the principal include: acting in accordance to customs in
doing similar kind of business (Section 164 CA); rendering proper accounts (Section 166
CA); communicating with the principal and getting instructions (S167); acting in good
faith and having no conflict of interest. Furthermore, the agent cannot act on behalf of two
or more principals at a time without their consent as it was decided in the case of Fullwood
v Hurley [1928] 1 KB 498, Lord Hanworth MR stated the general principle at page 502 as
follows -
“So long as the agent is the agent of one party, he cannot engage to become the
agent of another principal without the leave of the first principal with whom he has
originally established his agency." [Emphasis added]
Agents have a duty of not concealing profit in the performance of his duty (S168 CA). In
the case of Tan Kiong Hwa v Andrew S.H.Chong (1974) 2 MLJ 188, Winslow J in
explaining the duty of the agent not to conceal profit has this to say in page 191-
“a person in a fiduciary position (such as an agent or a director) is not, unless
otherwise expressly provided, entitled to make a profit without the knowledge and
assent of the person to whom the duty is owed.”

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An agent cannot delegate his/her authority to other person without consent or in emergency
cases. In the case of De Bussche v Alt (1878) 8 Ch D 286, it was held that the agent was
not in breach of his duty in appointing a sub-agent due to the fact that there was express
consent from the principal.
The Contracts Act (supra) also provided the duties of the principal to the agent, which
includes indemnifying the agent against consequences of lawful acts (Section 175 CA). In
the case of Mohamed Selan V PB Securities Sdn Bhd [1992] 1 MLJ 762, Eusoff Chin J
explains how indemnity is inferred in the Contracts Act, by stating as follows in page 771-
“In law the term 'indemnity' is used in several different senses. In its widest sense, it
means recompense for any loss or liability which one person has incurred, whether
the duty to indemnify comes from an agreement or not. Under the Contracts Act
1950, ss 175, 176, and 178”

1.1 Circumstances a Servant may become an agent

The Contracts Act (supra) does not directly define a servant or employee, for us to analyse the
circumstances a servant becomes an agent, we resorted first to the legal definition of a servant or
employee as stipulated in the Employment Act 1955 of the Laws of Malaysia, which defines in
section 1 and 2 of the First Schedule to the Act (supra) that an employee is-
“1. Any person, irrespective of his occupation, who has entered into a contract of service
with an employer under which such person’s wages do not exceed two thousand ringgit a
month”.
“2. Any person who, irrespective of the amount of wages he earns in a month, has entered
into a contract of service with an employer in pursuance of which—(i) he is engaged in
manual labour…(ii) he is engaged in the operation of a vehicle…(iii) he supervise or
oversee other employees…..(iv) he is engaged as domestic servant. [Emphasis added].
And a contract of service is defined in the Employment Act 1955 (supra) as follows:
“any agreement whether oral or in writing and whether express or implied, whereby one
person agrees to employ another as an employee and that other agrees to serve his
employer as an employee and includes an apprenticeship contract”. [Emphasis added].
Reading together the definition of employee or servant and an agent according to the Contracts
Act (Section135 supra), we are able to deduce the following, that a servant or employee is

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termed as a person who is acting under direct supervision of an employer while an agent is
contracted to bring the principal into legal relations with a third person or to represent him in
dealing with the third person. A servant does not in conventional cases create legal relationships
between his employers and third persons. Under the Restatement of the Law (Second) Agency
from the American Law Institute (2006), a servant is an employee being employed by a master to
perform affairs and the performance of the service is controlled by the master. Employee who
works under an employer under his command will fall under this agency.
There are certain circumstances where the servant may become an agent of the employers as
provided as below:
(i) In vicarious liability situations where the master-servant rule applies also referred to as the
doctrines of respondeat superior (let the master answer) or qui facit per alium, facit per se
(He who acts through another does the act himself).
Certain circumstances create liability or responsibility to the employer on the acts of his
employee as would be in the case of a principal being liable for the acts of his agent. This
was established in the case of Kooragang Investments Pty Ltd v Richardson & Wrench Ltd
[1981] 3 All ER 65 Privy Council, Lord Wilberforce said at p 68 that:
“the manner in which the common law has dealt with the liability of employers for acts of
employees (like masters for servants and principals for agents), has been progressive and
that the tendency has been toward more liberal protection of innocent third parties”.
[Emphasis added].
Similarly in the case of AXA Affin Assurance Bhd v Natural Avenue Sdn Bhd [2009] 8
MLJ 517, the court held that the defendant is required to safeguard the car, and the duty of
care is not personal to the defendant alone but extends to his employees for whom he is
vicariously responsible. Therefore, a servant holds vicarious liability from his master
(Ahmad Masum, 2014).
(ii) When the employer is liable for the torts of his employee
Like the vicarious liability situations noted above, the employer becomes liable only of the
acts of the employee arise out of and in the course of employment. This was established in
the case of Staton v National Coal Board [1957] 1 WLR 893 where Finnemore J,
considered that the employer was vicariously liable for the negligent act of the employee.
(iii) When the employee has express powers to bind the employer in dealing with third persons

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This refers to the case of directors of the company, who are considered according to the
Companies Act 2016 to be appointed by shareholder to manage to affairs of the company
and act in accordance with the delegation of powers conferred by the shareholders,
effectively making them the agents of the company. In the case of Yukilon Manufacturing
Sdn Bhd [No: 4] & Anor V Dato Wong Gek Meng & ORS [1998] MLJU 60 J in
explaining how the principal and agent relationship regulates relationships of the company
and its directors had this to say at page 67:
“In the eyes of the law, directors are agents of the company for which they act. The
general principles of the law of principal and agent regulate in most respects the
relationship of the company and its directors”. [Emphasis added].
Similarly, in the case of Ferguson v. Wilson (1866) L.R. 2 Ch. 77 Cairns L.J. pointed out
that:
“What is the position of directors of a public company? They are merely agents of a
company. The company itself cannot act in its own person, for it has no person; it
can only act through directors, and the case is, as regards those directors, merely
the ordinary case of principal and agent. Wherever an agent is liable those directors
would be liable; where the liability would attach to the principal, and the principal
only, the liability is the liability of the company."
1.2 Circumstances an Independent Contractor may become an agent.
According to the Restatement (Second) of Agency, Section 2, an independent contractor is a
person who contracts with another to do something for him but not under his control nor subject
to the other’s right to control with respect to his physical conduct in the performance of the
undertaking. As the name implies, the independent contractor is legally autonomous. Normally,
the relationship exists when a person hires someone to conduct a task or job on behalf of him,
but the execution of task is not under his control. In the case of Salsbury v Woodland and others
[1970] 1 QB 324 at pp 336–337, Lord Justice Widgery pointed out the legal position of
independent contractors as follows-
“It is trite law that an employer who employs an independent contractor is not vicariously
responsible for the negligence of that contractor. He is not able to control the way in
which the independent contractor does the work, and the vicarious obligation of a master

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for the negligence of his servant does not arise under the relationship of employer and
independent contractor”. [Emphasis added].
However, there are certain circumstances or exceptions that may make an independent contractor
become an agent. We note the following:
(i) In application of the case where the employer (principal) did not exercise care in selecting
a competent contractor:
This first exception states that when an employer is negligent in selecting a competent
contractor, he shall be liable for the acts of this independent contractor as would be in an
agent-principal relationship. In the case of Datuk Bandar Dewan Bandaraya Kuala Lumpur
v Ong Kok Peng & Anor [1993] 2 MLJ 234 the Supreme Court noted this first exception
by pointing out as follows:
“The first exception [to not holding the independent contractor liable] is where an
employer has not exercised care in selecting a competent contractor” [Emphasis
added].

(ii) In application of the principle of a non-delegable duty of care:

The second exception is when the person who hires the independent contractor cannot
delegate the duty of care to the independent contractor. In the case of Datuk Bandar Dewan
Bandaraya Kuala Lumpur v Ong Kok Peng & Anor, Supra, the Supreme Court further
pointed out regarding this matter as follows-
“The second exception is a group of cases or situations when the duty to take care is
said to be 'non-delegable'. A non-delegable duty to take care means in effect that the
employer would have to see to it that such duty of care is exercised, whether by his
contractor or not, otherwise he would be equally liable as the contractor, in
addition, in most cases, to the liability of his contractor”. [Emphasis added].
(iii) In inherently dangerous activity:
In circumstances that the independent contractor is hired to undertake inherently dangerous
activity, the person who hired him may be held liable as in the case of a principal in an
agent relationship. In the case of Rogers v Parker, 159 Mich 278; 123 NW 1109 (1909), the
court discussed in obiter dictum the common-law principles that would have applied, by
stating that-

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“If the thing to be done is in itself unlawful, or if it is per se a nuisance, or if it

cannot be done without doing damage, he who causes it to be done by another, be
the latter servant, agent, or independent contractor, is as much liable for injuries
which may happen to third persons from the act done as though he had done the act
in person. So it is the duty of every person who does in person, or causes to be done
by another, an act which from its nature is liable, unless precautions are taken, to do
injury to others, to see to it that those precautions are taken, and he cannot escape
this duty by turning the whole performance over to a contractor.” [Emphasis added]
(iv) In situation of statutory duty imposed on certain categories of persons.
Another circumstance that may make an independent contractor an agent to be liable to
third parties is when he is in breach of a statutory duty that he is required to comply with in
the course of his business or profession. This may relate to duty of care, consideration of
safety measures or conducting in specific standard.

PART II
2.0 Legal Advice to B on a Claim from A relating to Agency Law
Facts of the case:
The matter before us is to provide legal advice to B who has received a claim from A, an estate
agent, to pay him (A) a standard rate of estate agent`s 1 commission on the proceeds of sale of the
house belonging to B, that B sold to C.
The facts of this case are: A had submitted written offer to B requesting to act as agent to arrange
the sale of B’s house that B was planning to sell. B replied to A’s rejecting the offer of agent
services. Despite B express refusal of the offer of A, A advertised the house for sale and C
replied to the advertisement and was sent by A to see B.

The Law:
1
Estate agents are also known as the fiduciary to the principal. Therefore, estate agents have a fiduciary
responsibility in their legal relationship with principals. According to Finn (1977), fiduciary
responsibilities or fiduciary duties are also known as fiduciary obligation. These duties arise from the
presence of an equitable obligation of trust and confidence owed by one party in a fiduciary relationship
to the other. They have been enacted so that the law will protect principals and they will feel secured
when they reach out for an agent to help them with the complicated procedures of selling estate
properties.

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Before we proceed with the issues on this case, we regard that matter is covered under the
Contracts Act 1950 (Act 136) of the laws of Malaysia, particularly Part X that deals with
Agency, and specific Sections of this law that we shall apply on this case are: Sections 137, 139,
140, 149, 150, 151, 152, and The Evidence Act 1950 (Act ) of the laws of Malaysia, Section 115
that deals with estoppel.
The Issues:
In order to effectively apply the relevant sections of the Contracts Act 1950 (Supra), to the facts
in issue. We conveniently deduced the matter into three main questions that will facilitate
advising B on the claim received from A:
(i) Whether the acts of B in expressly rejecting A’s written offer to provide B with agent
services and subsequently selling his house to buyer C who was sent by A amounts to
creation of an agency?
(ii) Whether if B had not ostensibly rejected A`s offer to provide B with agent services and
subsequently selling his house to buyer C who was sent by A amounts to creation of an
agency?
(iii) Whether B is estopped from rejecting the claim by A?
In the proceeding sections, we will address both questions, which are testing whether there was
creation of an agency and thus may require B to consider settling the matter with A.
In doing so we apply the relevant section of the Contracts Act 1950 (Supra) and decisions from
various case laws relevant to the matter.
Application of the Law
As noted in the preceded paragraph, we will be deducing from law, whether there was creation of
an agency. We will proceed to tackle each issue separately, inferring to relevant law (Contracts
Act 1950 (supra) and decisions of case laws in Malaysian courts and other persuasive decisions
from Common Law jurisdictions.
Addressing the First Issue: Whether the acts of B in expressly rejecting A’s offer for agent
services and subsequently B sells his house to buyer C who was introduced by A amounts to
agency relationship?
Regarding the first issue, that relate two main elements- (a) B expressly rejecting A’s written
offer to provide B with agent services and (b) B subsequently selling his house to buyer C who
was sent by A.

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The first element relates to express intention to refute creation of an agency service by B. This is
provided by Sections 139 of the Contracts Act 1950 (supra), that states that-
S. 139 “The authority of an agent may be expressed or implied” [emphasis added]
The question is whether, B’s express rejection of A’s written offer is tantamount to refute the
creation of agency? In the face of it, the answer is to the affirmative, however, the facts do not
end there. B subsequently accepted to sell his house to C who was sent by A. This unfolding of
events creates another circumstance that needs to be further evaluated under the Law. To which,
we refer to Section 140 of the Contracts Act 1950 (supra), that states that-
S. 140 “An authority is said to be express when it is given by words spoken or written.
An authority is said to be implied when it is to be inferred from the circumstances of the
case; and things spoken or written, or ordinary course of dealing, may be accounted
circumstance of the case” [emphasis added].
Section 140 of the Contracts Act 1950 (supra) definition of express and implied authority
addresses the second element of issue raised in the case before us. That is, B’s accepting to sell
his house to C who was sent by A is an implied agent authority, thereby creating an agency
relationship with A.
In support of this argument, the case of Chew Hock San & Ors V Connaught Housing
Development Sdn Bhd [1985] 1 MLJ 350 where the Federal Court quotes the decision by
Diplock L.J. in Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480,
502-504 from page 502 to page 504 as follows-
“An "apparent" or "ostensible" authority, on the other hand, is a legal relationship
between the principal and the contractor created by a representation, made by the
principal to the contractor, intended to be and in fact acted upon by the contractor, that
the agent has  authority  to enter on behalf of the principal into a contract of a kind within
the scope of the "apparent" authority, so as to render the principal liable to perform any
obligations imposed upon him by such contract. To the relationship so created
the agent is a stranger. He need not be (although he generally is) aware of the existence
of the representation but he must not purport to make the agreement as principal himself.
The representation, when acted upon by the contractor by entering into a contract with
the agent, operates as an estoppel, preventing the principal from asserting that he is not

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bound by the contract. It is irrelevant whether the  agent had actual authority to enter

into the contract”. [emphasis added].
From the explanations made by Diplock L.J in Freeman & Lockyer v Buckhurst Park Properties
(Mangal) Ltd [1964] 2 QB (Supra), the agent authority is created implicitly when the principal
makes representations of accepting the agent relations. In this case B’s acceptance to sell his
house to C sent by B is a representation by a principle like the arguments raised by Diplock L.J,
supra.
Addressing the Second Issue: Whether if B had not expressly rejecting A’s offer for agent
services and subsequently B sells his house to buyer C who was introduced by A amounts to
agency relationship?
Regarding the second issue, that also relates two main elements- (a) B not rejecting A’s written
offer to provide B with agent services and (b) B subsequently selling his house to buyer C who
was sent by A.
This second issues also falls within Sections 139 and 140 of the Contracts Act 1950 (supra), that
clearly indicates that an agency relationship has been created by through the act of B not
rejecting A’s offer of agent services and B’s subsequent selling his house to buyer C who was
sent by A. This means according to Section 140 that B has implicitly given agent authority to A,
from these circumstances where B doesn’t expressly refuse, also goes ahead and accept a buyer,
C, sent by A.
In extending this argument, the actions of B subsequently selling the house to C who was
introduced by A falls within the doctrine of ratification as provided in section 149 of the
Contracts Act (supra), as Tindal CJ describes ratification in Wilson v Tumman (1843) 6 Man &
G 236 at p 242 as follows-
“That an act done, for another, by a person, not assuming to act for himself, but for such
other person, though without any precedent authority whatever, becomes the act of the
principal if subsequently ratified by him, is the known and well-established principle of
law. In that case the principal is bound by the act, whether it be for his detriment or his
advantage, and whether it be founded on a tort or a contract, to the same effect as by,
and with all the consequences which follow from the same act done by his previous
authority.” [Emphasis added].

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B thus, knowing that C was directed by A and he nonetheless went on to sell the house to C
indicates a ratification by him.
Addressing the third Issue: Whether B is estopped from rejecting the claim by A?
In assessing whether B is estopped by his actions from rejecting the claim by A, we resort to
section 115 of the Evidence Act 1950 (supra) that states as follows on the doctrine of estoppel-
“115. Estoppel
When one person has by his declaration, act or omission intentionally caused or
permitted another person to believe a thing to be true and to act upon such belief,
otherwise than but for that belief he would have acted, neither he nor his representative
in interest shall be allowed in any suit or proceeding between himself and that person or
his representative in interest to deny the truth of that thing.” [Emphasis added].
As provided in the fact of the case, B had subsequently accepted to sell his house to C who was
sent by A, creating an agency authority to A by implication. Thus, this circumstances that create
an implied agent authority are also concluded by B acting upon A’s agency acts of sending C
whereupon a sale was executed. Thus, B cannot not back out of this deal in such circumstances,
unless if, B had decided, not to sell the house to C who was sent by A (It should be noted that we
infer knowledge of B that C was sent by A as stated in the facts).
The doctrine of Estoppel was also applied in the case of Eminent Transform Sdn Bhd v Audio
Phonar Electronics Sdn Bhd and another case [2016] MLJU 548, it was held by Su Geok Yiam J,
that:
“the doctrine of estoppel is applicable to the facts and circumstances of the instant case
for the benefit of the defendant to estop the plaintiff from backing out of the concluded
deal” [emphasis added].
Conclusion:
Both issues, makes us arrive on the same decision, that an agent relationship was created by
implication following the acts of B in the circumstances of the case that B irrespective of
whether he expressly refused the offer or not, he nonetheless accepted to sell his house to a buyer
C sent by A. B is also estopped to deny the claim from A, because B acted upon agency actions
of A by selling the house to C who was sent by A.
Our legal advice to B will be, that he should accept to negotiate with A and agree on settling the
claim of the standard rate of estate agent`s commission on the proceeds of sale. This would avoid

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B incurring excessive legal costs and inconvenience if A decides to sue B, since A has a strong
case based on the Contracts Act 1950 (supra) and case laws (Supra) that we have opined in this
matter.
Findings
Agency relationship can be created either expressly or impliedly. Section 139 and 140 of the
Contracts Act 1950 (Supra) and decided case laws offer this settled authority, that a matter needs
be evaluated based on the circumstances and where there is inference of implied agent authority
in such circumstances of the case, an agent relationship will be created. In addition, where a
person has by his declaration, act or omission intentionally caused or permitted another person to
believe a thing to be true and to act upon such belief, that said person is denied to proceed in a
suit to deny that truth.

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References
American Law Institute (1979). Restatement of the Law Second, Agency. Washington, DC, USA:
The American Law Institute
AXA Affin Assurance Bhd v. Natural Avenue Sdn Bhd [2009] 8 MLJ 517
Chew Hock San & Ors V Connaught Housing Development Sdn Bhd [1985] 1 MLJ 350
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