LAW OF AGENCY

TOPIC 3:

OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 1 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 2

OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 3 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 4
Introduction
1. INTRODUCTION

Creation of agency •The law on agency is governed by Part X of the

Contracts Act 1950.
Types of authority
•Section 135 to section 191
Relationship between principal and agent
•What is an Agency?
It is a relationship which subsists between
Termination of agency the principal and the agent, who has been
authorized to act for him or represent him in
dealings with others.
OCT 2022 - FEB 2023

DR RAFIDAH@MALISSA BINTI SALLEH 5 DR RAFIDAH@MALISSA BINTI SALLEH 6

OCT 2022 - FEB 2023

Purpose
of an
agency

DR RAFIDAH@MALISSA BINTI SALLEH 7 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 8

Time constraint
• To save time and energy
Convenience
• More practical to appoint someone to
do the job, especially if it is involves
geographical factor
Special skill and knowledge
• The principal may lack the expertise
needed for the job
Emergency
• The principal is permanently or
temporarily incapacitated
• Who is an Agent?
DR RAFIDAH@MALISSA BINTI SALLEH
OCT 2022 mind- FEB 2023 .
• In an agency, there are two contracts:
1. A contract between the principal and the agent. The
agent derives his authority from the principal and
actsfor and on behalf of the principal.
2. A contract between the principal and the third party
through the work of the agent.
DR RAFIDAH@MALISSA BINTI SALLEH
Section 135 Contracts Act 1950
An agent is defined as ‘a person employed to do an act for
another or to represent another in dealings with third
persons’.
• Who is qualified to be an Agent?
Section 137 Contracts Act 1950
Anyone who is appointed by the principal, including a minor.
But if the agent is a minor, he will not be liable for any loss
caused by him to the principal.
• Who is a Principal?
Section 135 Contracts Act 1950
A principal is ‘The person for whom such act is done, or who
is so represented’.
• Who is qualified to be a Principal?
Section 136 Contracts Act 1950.
Any person who is of the age of majority and is of sound
9 DR RAFIDAH@MALISSA BINTI SALLEH 10
OCT 2022 - FEB 2023
Universal agent
• A general agent with extensive powers
• He can do all acts that a principal can
personally do
General agent
Types • An agent who is hired to act for the
of
principal in a particular business
• He may do any act usually done in that
type of business
agent Special agent
• An agent who is employed for a
particular act only
• He may only represent the principal for
that single purpose
11 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 12
 by express appointment by the
2. CREATION OF AGENCY principal

by implied appointment by the

Five principal by ratification by the
ways to principal

• Section 138 Contracts Act 1950

create
by necessity, i.e. by operation of law
No consideration is necessary to create an agency.
an in certain circumstances
agency: by the doctrine of estoppel or
‘holding out’

DR RAFIDAH@MALISSA BINTI SALLEH OCT 2022 - FEB 2023

13 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 14

i. Express Appointment ii. Implied Appointment

• Section 140 Contracts Act 1950
• Section 140 Contracts Act 1950.

• The principal expressly or specifically appoint the agent to

do a particular act or to represent him in a particular
• Where a person (principal), by his words or conduct,
transaction.
holds out another person (agent) as having the
authority to act for him.
• Both parties know and agree that the agent has the power to • The third party will believe that the agent has been lawfully appointed
represent the principal. by the principal and can represent the principal.

• It can be oral or in writing. • For instance, a grocer who regularly sends his shop
assistant to buy goods for him. The third party
• An example is Power of Attorney. would form the opinion that the assistant had the
authority to buy the goods on the grocer’s behalf

OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 15 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 16
 Yong was a minor. Appellant registered himself and Yong
ii. Implied Appointment
as partners. At a meeting, the appellant and Yong met a
representative of the respondent company in which the
appellant held himself out to be Yong’s partner. Goods were
(a) Section 140 Contracts Act 1950. supplied to Yong. Respondent sued for the price.
• Ref to Illustration.

• The law can infer the creation of an agency by

implication when a person by his words or conduct
holds out another person as having authority to act
for him.

CHAN YIN TEE v. WILLIAM JACKS &

CO. (MALAYA) LTD. [1964] M.L.J.
260.
Facts:
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 17 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 18

(b) The relationship between principal and

CHAN YIN TEE v. WILLIAM JACKS & agent may exist between husband and
CO. (MALAYA) LTD. [1964] M.L.J. 260.
wife.

Held: • A wife has implied authority to contract on behalf of her

husband
• Irrespective of whether Yong was the appellant’s
partner, the appellant had held out Yong as his agent
with authority to do things on his behalf and for whose • The third party can sue the husband for a contract made by
acts the appellant was liable. the wife

• Any person, irrespective of his competence to contract, • The husband can deny liability if:
may become an agent, for whose acts the principal may   the husband had expressly told the third party that his wife is not
be liable to third parties. authorised to act for him
  the wife had been given adequate provisions
  the wife has her own source of income
DR RAFIDAH@MALISSA BINTI SALLEH OCT 2022 - FEB 2023
  the contract was not suitable to the husband’s condition in life
19 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 20
 e.g. too expensive
(c) Partners are each other’s agents when contracting in the
iii. Agency by ratification
course of the partnership business. • Ratification means to accept or to confirm

• Section 7 of the Partnership Act 1961 (Revised 1974) • The basis of this relation is either;
a) an agent has been appointed but has exceeded his power,
OR

b) the person has never been appointed as an agent but had

acted as if he had the authority to act as an agent.

Effect of ratification
• The principal has the option to either accept or reject
the transaction or contract made by the agent

OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 21 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 22

• If he accepts, he shall be liable for it. • There are 9 conditions namely:

1) The act or contract must be unauthorised
• If he rejects, the agent shall be personally liable for the   The agent exceeded his power
contract.   The person was never appointed as an agent
• Section 149 – 153 of Contracts Act 1950 2) The agent must have acted on behalf of the
principal
• Once ratified, the principal cannot change his mind.
  The contract was made under the principal’s
• The ratification operate retrospectively i.e. backdated name
to the date the agent made the contract with the third   The agent had informed the third party that the
party. contract was for the principal
Conditions for a valid ratification Conditions for a valid ratification
3. The principal must exist or is capable of being ascertained at the
• If the conditions are not fulfilled, the ratification is not time the act was done
binding on the principal even if he had previously   If the principal is a company, the company must have been
agreed to make the ratification incorporated at the time the contract was made
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 23 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 24
   Refer to the date of the company’s registration
  Kelner v Baxter (1866) LR 2 CP 174 Conditions for a valid ratification
It was held that a contract to buy a hotel made by an agent on behalf of a company –
which was about to be formed – could not be ratified by the company. This is because
the company did not exist at that time. 5. The principal must have full knowledge of all material
facts relating to the contract
  Section 35 of the Companies Act 1965   Section 151 Contracts Act 1950
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   Relevant info such as price and quantity of goods,
by the company after its formation. Once the company ratifies it, the delivery period, identity of third party
company is bound by the contract from the date the contract was made.   Non-disclosure of material facts will render the
Before ratification by the company, the agent will be liable.
ratification invalid
4. The principal must ratify the whole act
  Partial ratification is not acceptable 6. The principal must have contractual capacity
  the principal must either accept the entire contract or reject   The principal is not a minor or unsound
it
  Section 152 Contracts Act 1950. 7. The act must not be unlawful
  If the agent had done a criminal or illegal act, the
ratification is not binding on the principal
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 25 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 26

Conditions for a valid ratification iv. Agency by necessity (Emergency)

8. The ratification must be made within a reasonable time
  There should not be unreasonable delay to ratify • Section 142 of the Contracts Act 1950
  It depends on the facts and circumstances • There is an emergency where the agent has to act without the
  Failure to accept goods in reasonable time signifies no
principal’s instructions
ratification
  Failure to return goods within reasonable time implies • The agent could not reach the principal for instruction
ratification • The agent could not wait for the principal’s
  Metropolitan Asylum Board v. Kingham and Sons [1890] 6
TLR 217. instructions
It was held that the principal’s purported ratification on the • For instance, a fire or flood where damage to property and/or
agent’s contract to buy eggs without authority one week later loss of life or injury to persons may occur
was void as it was made too late.
The rationale:
9. The ratification must not injure the rights of a third party
  For instance, the agent terminated a 6 month lease given to a
• The reasons or purpose of the agency is due to necessity or
third party before the 6 months are over emergency where the agent has to act quickly in order to
  Section 153 Contracts Act 1950 (Ref. to Illustration) protect the principal’s interests/property or to prevent the
principal from suffering losses
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 27 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 28
• He cannot wait for the principal’s instruction but must use (a) It is impossible for the agent to get instructions from the
his own initiative principal.

Three conditions to be met for the • Section 142 Contracts Act 1950.
• Ref. to Illustrations.
creation of an agency by necessity:
• Springer v. Great Western Railway Company [1921] 1
KB 257.
(a) It is impossible for the agent to get instructions
from the principal.
(b) The agent’s action is necessary, in order to prevent
loss to the principal with respect to the
interest committed to his charge.
(c) The agent of necessity must have acted in good
faith.
• cannot sue the agent even if he suffers losses
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 29 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 30

claimed for damages. not agents by necessity because

Springer v Great Western Railway Co they have failed to communicate with P when they could
have done so.
The tomatoes were found to (b) The agent’s action is necessary, in order to prevent loss
Facts: D agreed to carry the be bad and hence, D decided
to the principal with respect to the interest committed to
P’s tomatoes from Jersey to
to sell the tomatoes at his charge.
Covent Garden market.
Weymouth as D felt that the • Great Northern Railway Co v. Swaffield [1874] LR 9 Ex
Owing to bad weather, the tomatoes could not arrive at 132.
ship arrived late at
Covent Garden market in
Weymouth. Meanwhile, the saleable condition. D’s workers

were on strike.

However, D did not

Held: P was entitled to
communicate this to the P. P damages because D were
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 31 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 32
 Great Northern Railway v Swaffield • In other words, a person is estopped from denying his words or
actions.
Facts: P had been entrusted to

deliver a horse of D but when
it reached the destination, nobody
came to take the horse.
P had to look after the horse
and then claimed from D the
extra expenses incurred.
Held: P was an agent by
necessity and therefore
entitled to the claim.
v. Agency by estoppel
What is estoppel?
• Estoppel means a person is prevented from denying what he has
said or done.
OCT 2022 - FEB 2023
• The words or action can be used against him as evidence in
court.
v. Agency by estoppel
• Section 190 Contracts Act 1950
However, D refused to pay on
the ground that P was not
• When the principal by his words or conduct, allows a
authorized to do so.
third party to believe that a particular person (A) is his
agent
• Although A is not an agent, the third party believes
that A is an agent
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 34
DR RAFIDAH@MALISSA BINTI SALLEH 33

• Consequently, the third party will deal with A on the   silence

A himself claimed to be an agent and the principal did not correct the
belief that A is representing the principal
false information – this only applies if the principal knew about A’s
false representation
• The principal cannot later deny that A is his agent – estoppel applies

• The principal is thus bound by A’s action

Freeman & Lockeyer v Buckhurst
Representation by principal Park Properties Ltd (1964) 2 QB
• There must be a representation by the principal to the 480
third party Facts: The board of directors in a company allowed K to act as managing
director of the company even though he was never appointed as one. He
• The representation may be by; occupied an office on the company’s premise and the door bore the name
  words ‘Managing Director’. K instructed the plaintiffs to do certain work for the
the principal tells the third party that A is his agent company. The company denied liability to pay the plaintiffs on the
ground that K was not a director and thus was authorised to contract for
  conduct the principal allows A to act like an agent in the presence or the company.
knowledge of the third party

OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 35 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 36
Held: The court held that although K had no actual authority to employ • Consequently, an agent incurs no personal
the plaintiffs, the company is still bound by the contract as it had created
an impression that K is a director by allowing him to act as managing
liability as long as he acts within the scope of
director. Thus, the company was estopped from denying that K was a authority given to him by the principal.
director and had the authority to contract for the company.

Conclusion TOPIC 3:
• Agency is a relationship that involves three
parties – the principal, the agent and the third
party.
LAW OF AGENCY
• The agent act as a middle man to facilitate the
contract or transaction between his principal
and the third party.
TYPES OF AUTHORITY
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 37 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 38

Introduction Actual Authority

• An agent is engaged to deal with third parties on behalf of his
principal

• This authority can be given expressly by the principal or implied

from the course of the business
Apparent/Ostensible
• Consequently, the principal will be bound by the act of the agent and
Authority
be liable for any breach or non-performance of the act or contract. Types of 1. Actual Authority
• An agent’s act is binding on the principal if it is done within his
authority.
authority • Actual authority is the
authority that is given to the agent
• An agent’s act is not binding on the principal if it is done in excess by the principal through an
of his authority.
agreement.

OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 39

• Actual authority comprises of:-
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 40
 a) Authority expressly given by the principal to the
agent orally or in writing
Example: You appoints Ali as your agent to sell your house for not
less than RM300,000.00. Ali’s actual authority is to sell your house
for not less than RM300,000.00. If Ali has acted in accordance with
this authority, then you are bound by the contract Ali made on your
behalf.
b) Authority impliedly expected from an agent. May arise in
following:
i. All such powers which are proper/necessary / usual to
execute the express authority. ii. The circumstances of the
case iii. The customs/ usages of trade. iv. The situation and
conduct of the parties.
Chan Yin Tee v William Jacks
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 41
to make that kind of purchases on credit. The
plaintiff was able to rely on implied authority of the
agent to bind the principal as long as he does not
know of the prohibition.
2. Apparent/Ostensible Authority
• This type of authority arises where the principal had led a
third party to believe that an agent has authority to do a
particular act on behalf of the principal
• The principal has by words or conduct, created an
impression that the agent has authority to bind him even
though such authority had not been given
• The principal is estopped from denying his words or action
in leading the third party to contract with the agent
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 43
From the conduct of Chan telling WJ that
Yong is his partner, it shows that Yong has
the implied usual authority to act on behalf
of Chan in buying goods.
Watteau v Fenwick [1893] 1 QB 346
Facts: The defendant appointed a manager to run a
public house. The defendant prohibited the
manager from buying cigars on credit but the
manager bought some from the plaintiff who
claimed payment from the defendant.
Held: The
court decided that the defendant was liable
because it is usual for the manager of a public house
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 42
Apparent authority may arise in
two situations:
(a) Where a principal, by his words or conduct, leads a third party
to believe that his agent has authority to make contracts for him.
Section 190 Contracts Act 1950.
• The apparent authority is created by the conduct of the
principal. There is no apparent authority if a person holds
himself out to act on behalf of his principal without the
knowledge and consent of the latter.
(b) Where the agent previously had authority to act, but that
authority was terminated by the principal without notice to third
parties.
Example: The principal gave the authority to his
agent to purchase stationary goods for the
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 44
 company annually from the 3rd party. However, to
cut down the budget of the company for that
particular year, the principal 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 goods supplied.
Freeman & Lockeyer v Buckhurst Park
Properties Ltd (1964) 2 QB 480
Facts: The board of directors in a company allowed K to act
as managing director of the company even though he was
never appointed as one. K instructed the plaintiffs to do
certain work for the company. The company denied liability
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 45
• Apparent authority is based on the
representation made by a principal to
the third party irrespective of any
agreement between principal and agent.
Graphic Lines Pte Ltd v Chai Chee
Mein & Ors (1987)
Facts: The general manager, who was one of the partners of the
nightclub, had represented to the plaintiffs that advertisements
should be done through the assistant manager.
Held: Since the general manager had actual authority to
authorize the assistant manager to place advertisements on
behalf of the club, the defendants were bound by his act. Thus,
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 47
to pay the plaintiffs on the ground that K was not authorised
to contract for the company.
Held: The court held that although K had no authority to act
for the company, the company is still bound by the contract
as it was estopped from denying that K has authority to make
a contract for the company. The other directors had made a
representation by conduct and silence.
What is the difference between Implied
Authority and Apparent Authority?
• Implied authority is based on the
inferences drawn from an agreement
between principal and agent.
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 46
it was inferred that the assistant manager had apparent
authority.
What happens when an agent
commits fraud or misrepresentation?
• The principal is liable if the agent is acting within his actual or apparent
authority. It does not matter whether such fraud or misrepresentation
was committed for the principal or the agent himself.
• The agent is also personally liable for such fraud or misrepresentation.
• Section 191 Contracts Act 1950.
• As with implied authority, a third party cannot rely
on apparent authority if he knew or ought to have
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 48
 known that the agent did not have the authority in
question.
• Overbrook Estates Ltd. v. Glencombe Properties Ltd.
[1974] 3 All ER 511
Facts: The purchaser tried to set aside the contract on the
ground that:
(i) the agent, i.e. the auctioneer, had apparent authority
to make representations on the property, and
(ii) the agent had in fact misrepresented the position.
Held: It was held that the purchaser was bound by the
contract since the catalogue had made it clear that the
auctioneer had no such authority.
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 49
• Section 186 of the Contracts Act
• The agent is estopped from denying that he had acted as a
principal
Datuk Jagindar Singh v Tara Rajaratnam
[1983] 2 MLJ 196
Facts: The 1st and 2nd appellants conspired to obtain
the respondent’s property by fraud. The property
was sold to a third party and later transferred to a
development company wholly owned by the 1st
appellant.
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 51
Undisclosed principal
• Sometimes an agent might deal with a third party without informing
him that he is in fact acting for someone else
• He may pretend to be the principal
• The third party would assume that the agent is making the contract for
himself
• This is called an undisclosed principal
• The third party will be bound by the contract even if he later discovers
the existence of the real principal
• When the third party has no knowledge that the agent was
acting for an undisclosed principal, he has the right to take
legal action against both the agent and the principal
• Alternatively, he can treat the agent as the principal and
deal with him alone
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 50
Held: The court held that the whole transaction was
made for and on behalf of the 1st appellant who was
the undisclosed principal of the third party. As a
result, the 1st appellant was liable for fraud in the
contract.
Rights of the third party
• Section 184(a) of the Contracts Act states that if the
principal require performance of the contract, the third
party has against the principal, the same rights as he would
have had as against the agent if the agent had been the
principal
• This means that the contract between the principal and the
third party will be subject to any rights or obligations
subsisting between the third party and the agent
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 52
• Hence, the third party has the right to set-off or
counterclaim from the principal any payment between him
Right to reject the contract
and the agent before the contract is performed
• Alternatively, he could show that he only intended to contract
with the agent personally, that had he known that the agent
Right to reject the contract was acting for the principal, he would not have entered into
the contract
• According to section 184(b), if the principal discloses his
identity before the contract is completed, the third party has
• Identity of the agent is important to him
the right to refuse performance of the contract if he could
show that the identity of the principal or agent is essential to
him • This right can only be exercised before the contract is
completed
• The third party has to show that the identity of the principal
is so material to him • Once the contract had been completed, the third party cannot
rescind the contract
• If he had known about the principal’s existence, he probably
would not have entered into the contract
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 53 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 54

Rights of the agent

LAW OF AGENCY
• If the agent had not disclosed the existence of the principal, he can
personally sue on the contract as the third party believes he is the party to
the contract
RELATIONSHIP OF AGENT
• As the third party does not know about the existence of the real principal,
he cannot refuse to perform the contract & PRINCIPAL (DUTIES)
• Section 189 provides that an agent can do so for an undisclosed principal Introduction
but not if the person is pretending to be an agent but is actually acting on
his own account
• Agency is a relationship based on mutual
TOPIC 3: trust and confidence
• The principal trusts the agent to carry out
his work
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 55 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 56
• The agent trusts the principal to pay his
remuneration
• Consequently, the law imposes duties and
rights on both parties
Duties of agent to principal
• Section 164 – 171 of Contracts Act 1950
1. To obey the principal’s instruction (Section 164)
• An agent must follow the instruction of the principal.
If agent does not follow, it is a breach of agency
contract.
• An agent has to follow the instruction if it is lawful.
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 57
Cohen v. Kittel [1889] 22 Q.B.D. 680.
The agent was held not liable for failing to place bets.
2. To act according to custom where
instruction is not given (Section 164)
• When the principal does not give any
instruction, agent has to act according to
normal standard in doing a business.
• Illustration (b) to S. 164
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 59
• Example: The principal (Encik Ahmad) instructed his
agent (Mr Naim) to sell his painting for RM100,000.00.
However, Mr Naim sell his painting for RN60,000.00.
Here Mr Naim has breached Section 164 of Contract
Act i.e. agent’s duty to obey the principal’s instruction.
He is liable for the loss of RM40,000.00 suffered by his
principal.
Turpin v. Bilton [1843] 5 Man. & G. 455.
Agent held liable when he failed to insure a ship when
instructed to do so and the ship was lost.
Bostock v. Jardine 3 H. & C. 700.
The agent was held liable when he bought more than he was
directed to buy. However, an agent is under no duty to obey
if the principal’s instructions are unlawful.
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 58
3. To exercise care, skill and diligence (Section
165)
• Agent must use his skill and be diligence
about the interest of his principal. Agent
must make sure that when he is acting on
behalf of the principal, it is important for
him to be careful.
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 60
 Keppel v Wheeler (1927) 1 KB Principal signed a contract
577 with A. Principal took an
action against Agent.
Facts: D was an agent for P. The so, he was liable to pay the
principal the difference 4. To render proper accounts when required
agent was asked by the P to
by the principal (Section 166)
OCT 2022 - FEB 2023

sell a house. One offer was made between the two offers.
by A through an agent and was Later, another offer was
accepted by the principal subject made by B, but this time the
• The agent must give all account for all monies and property
to a condition. offer is higher than the first
offer made by A. The agent that he is in charge when the principal asked for it.
did not inform the principal
Held: The agent was liable about B’s offer.
because he must use his • The principal’s property should not be mixed up with the
skill and care for the agent’s own property.
benefit of his principal.
Since agents failed to do

OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 62

DR RAFIDAH@MALISSA BINTI SALLEH 61

5. To pay the principal all sums received on • The agent also has the right to retain his
behalf of the principal. (Section 171) principal’s property in his possession until
his remuneration is paid. This right is called
• Agent must give the principal the money he as ‘lien’. (S. 174)
received on behalf of the principal.
• Agent may however, before giving all the • However, the lien gives only a right to retain
monies deduct the followings:- possession and the agent has no power to
a) advances paid by the agent first, on behalf sell the goods except with the consent of the
of the principal; principal.
b) agent’s commissions; 6. To communicate with the principal
c) agent’s remuneration (salary) (Section 167)

EB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 63 FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 64

 • Agent must try his best to communicate
with the principal.
• He must use all his skill and diligence in
giving any information to or getting any
instruction from the principal. In the
situation where it is impossible e.g in cases
of emergencies, the agent must use his
discretion to the best interest of the
principal
7. Agent must not let his own interest to
conflict with his duty
EB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 65
d) All monies & profits should be put into the
principal’s account.
• S. 169 – Principal has the right to recover
from the agent any benefit which he may
have obtained from the contract even
though there is no loss on the part of the
principal.
EB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 67
• Agent must do duty for the interest of his
principal. Agent must not allow his interest
to go against the interest of his principal.
• What is meant as acting in good faith is that:
(a) The agent cannot become a party to the
transaction with the principal.
(b)The agent cannot act on behalf of both
parties to a transaction at one time
without their consent.
c) The agent must disclose everything that he
knows to the principal relating to all
material facts of the contract.
FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 66
Wong Mun Wai v Wong Tham Fatt
& Anor (1987) 2 MLJ 249
Fact: The Agent (Defendant) sold the principal’s land below
the market price to the agent’s wife.
Held: The agent has failed in his duty on two grounds:-
i. He sold the Plaintiff’s land below the market price ii.
He sold it to his wife without telling it to the principal.
The court gave his decision based on the fact that the agent
had a duty to act in a good faith to protect the interest of his
principal and must not do any thing that would be conflicting
with the interest of the principal.
FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 68
 Fulwood v Hurley
Facts: The agent had acted on behalf of both
parties; the P and the 3rd party, by claiming
commission from both of them without their
knowledge and consent.
Held: The agent has breached his duty towards
the principal for not acting in good faith.
8. Not to make any secret profit out of the
performance of his duty.
EB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 69
b) If the principal does not like it, the
principal may repudiate the contract that
has been entered by the agent on his
behalf. (Section 168)
c) Principal may recover the bribe from the
agent (Section 169)
d) The principal may refuse to pay commission
or remuneration to the agent (Section 173)
e) The principal may dismiss the agent on the
ground of breach of duty
EB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 71
• What is secret profit? – It may mean:
i. bribe or payment of a secret commission
by a third party
ii. any financial advantage the agent
receive by third party on top of
commission or salary that has been
agreed by the agent and principal.
• If there is a secret profit, there are actions
can be taken by the principal. They are:
a) If the principal knows about it, and consent
to it, the agent can keep the
profit. (Section 168)
FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 70
f) Principal may sue the agent and third party for
damages. This is for any loss he suffered due
to entering the contract.
• In addition to the civil remedies above, the agent
and the 3rd party may be charged under a
criminal offence i.e. under S. 4 of the Prevention
of Corruption Act 1961 (Revised 1971).
Tam Kong Hwa v Andrew S.H Chong
(1974) 2 MLJ 188
Facts: Plaintiff bought a flat from Defendant as the agent to sell t
flat for RM45,000.00.
the Defendant’s company. Defendant sold the flat for
Plaintiff then authorized the
FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 72
 RM54,000.00. The difference Andrew v Ramsay and Co (1903) 2KB 635
RM9000 was kept by the Facts: The Plaintiff appoints the commission given by
Defendant’s company. Defendant as his agent to sell his the purchaser and 50
property and agreed to give the pound commission he
Mahesan v Malaysian Government
Officers Co-operative Housing Society.
agent 50 pound as a commission. has
Held: The Plaintiff has the
given to the agent.OCT 2022
right to recover the RM9000 - FEB 2023

because the Defendant has Held: The principal

breached his duty as an The agent sold the property to a can recover both the
agent. purchaser and P allowed D to kept sums.
50 pound as a commission. P later Facts: Appellant (agent) w
found out that the purchaser has a director & secretary of
also gave 20 pound to the agent as the Respondent co-
a commission. Principal then sue
- FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 73
the agent to recover the 20 pound operative society
DR RAFIDAH@MALISSA BINTI SALLEH 74

• Not to tell other parties about any

(principal) which bought a land at a price Held:
of $944,000 from a vendor who had Respondent(principal) information or document entrusted to
earlier paid $456,000 for it. could recover either him by his principal.
The appellant knew of this fact but the bribe or the
failed to inform the society amount of the actual 10. Not to delegate his authority
(principal). It was only after the sale loss suffered by the R
was completed that the society as a consequence of
discovered the fact and that the entering into the • Agent must not ask another person to
appellant had received $122,000 as contract with the perform his duty i.e. the agent must
vendor.
a bribe from the vendor. perform the duty asked by the principal on
9. Not to disclose confidential information his own.
or documents entrusted to him by his
principal. • This is based on the maxim “Delegatus non
potest delegare” i.e. that an agent cannot

OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 75 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 76
 employ another person to do his duty. He
must perform the duty by himself.
• The relationship between the principal and
the agent is personal where the principal
has put his trust in the agent he selects.
• Therefore, the agent cannot shift the authority by
employing another person to act. However, there
are exceptions to this rule.
• An agent may delegate his authority to another in
the following circumstances:-
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH
4. In case of necessity or unforeseen
emergency eg: illness of agent
5. If the act to be done is purely ministerial
or clerical which does not involve any
discretion or professional skill of the
agent.
Allam & Co v Europa Poster Services Ltd
Facts: The D carried on the business of outdoor advertising
contractors. They would obtain licenses or agreements from owners
of sites which allowed them to display advertisements on house sites.
The D obtained some of the owners’ consent to use sites which were
also used by the P who were their competitors in the same business.
They were also authorized by the site owners to give notice
terminating any existing licenses, including those of the Ps. The D’s
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH
1. Where the principal approves the delegation of
authority
De Bussche v Alt (1878)
Facts: The principal appointed an agent in China to sell a ship at certain
price. However, the agent was unable to sell the ship so he sought the
principal’s approval to appoint sub agent to sell the ship in Japan.
Held: There was no breach of the agent’s duty in appointing a sub agent
because there was an express consent to such delegation
2. Where it is presumed from the conduct of
the parties that the agent would have
power to delegate his authority.
3. Where custom of the trade or business
permits delegation
77 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 78
solicitors sent notices of termination to the P’s and one of the issues
before the court was whether the maxim of delegatus non protest
delegare had been violated.
Held: The delegation to the solicitors was a purely ministerial act not
involving confidence or discretion there was no unauthorized
delegation of duty.
Duties of Principal to his agent
• The duties of principal to agent is provided under
section 175 – 178 of Contracts Act.
• The duties of a principal to his agent include:-
a) To pay commission or remuneration to the agent
79 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 80
 • The principal has to pay the agent his
commission or remuneration as agreed in the
contract between them.
• The agent will loose his right to remuneration if
the agent is guilty of misconduct in the
business of agency. (Section 173)
b) Not to willfully prevent or hinder the agent
from earning his commission
• When a principal has appointed a person to
be his agent, he cannot employ a second
agent to do the same act as the first agent.
This is to protect the first agent from not
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH
c) To indemnify and reimburse the agent for
acts done in the exercise of his duty.
• The principal has the duty to indemnify the
agent for all losses and liabilities that the
agent incurred while he performs his duty
(S.175)
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH
getting the commission that has been
promised to him by the principal.
• Some examples where the principal is said
to have willfully preventing or hinder the
agent from earning his commission:
(1) The principal refused to accept the
contract made by the agent.
(2) The principal appointed another agent
to carry on the same duty, to deprive
the original agent from earning his
commission.
81 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 82
The duty to indemnify arises in the following circumstances:
(a) The agent has incurred losses or liabilities in performance of his
duties.
Kyall & Evatt v Lim Kim Keat
Facts: An executrix of an estate (principal) had instructed the P
(agent) who were share brokers, to sell on her behalf, shares in a
company registered in England. This is in accordance with a will.
The brokers then made a contract to sell the shares to the 3rd party.
Unfortunately, it was discovered that the will had not been proved
in England and therefore the shares cannot be delivered. The
brokers were then compelled to by other shares for substitution
and consequently suffered a loss in doing so. P sued the executrix
(principal) to secure an indemnify for loss.
83 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 84
Held: As the executrix (principal) knew that the will has not been
proved in England and failed to disclose that the fact to the P
(agent), the P were entitled to be indemnified for their loss.
(b)The agent causes injury to 3rd party in the
execution of his authority.
• S. 176
• Illustration (b) to S. 176
(c) The agent suffers injury during the course of
his duties due to the principal’s negligence.
• S. 178
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH
• The principal’s name has been disclosed to
the 3rd party by the agent.
• The 3rd party knows the name and the
identity of the principal and knows that the
agent is acting on behalf of the principal.
• The agent does not incur rights/liabilities
under the contract.
• It is the principal alone who can sue/ be sued
under the contract, provided that the agent
has acted within his authority in making the
contract.
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH
Effects of contracts made by agents
• A contract entered into by the agent on behalf of his principal
is binding on the principal and the effects of the contracts
may depend on whether the third party is aware of the
existence of the principal.
• 3 categories of principal:
1. Named principal.
2. Disclosed principal.
3. Undisclosed principal.
1. NAMED PRINCIPAL
85 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 86
•Exceptions:
a) The agent agrees to accept and make himself
personally liable or contracts in such a way as to
make himself personally liable.
b) The agent executes a deed/ agreement in his own
name.
c) The agent signs a negotiable instrument in his
own name without making it clear that he is
signing it only as an agent.
d) The agent exceeds his authority and the contract
has not been ratified by the principal.
87
OCT 2022 FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 88
e) It is the custom/norm of a trade which makes the
agent liable.
-
2. DISCLOSED PRINCIPAL.
• The principal’s existence is disclosed to the
3rd party by the agent but the identity is
unknown to the 3rd party.
• The 3 party knows that the agent is
rd
contracting as an agent but does not know the
name and identity of the principal.
• The agent has no right/liability under the
contract.
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH
principal and the agency relationship to the 3rd
party.
• This doctrine operates when an agent has
authority to bind the principal but neither the
identity nor the existence of the principal is
disclosed.
• Rights of the parties:
a) Rights of the 3rd party.
• The 3rd party has the right to claim from/sue
either the agent or the principal or both.
• S. 186
• The agent can be held personally liable on
the contract simply because the 3rd party,
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH
• The principal has the right and liability over
the contract.
3. UNDISCLOSED PRINCIPAL
• The principal’s existence and identity is
unknown to the 3rd party at the time of the
contract.
• The 3rd party acts under the impression that he is
contracting with the agent personally.
• Only after the contract has been
concluded/signed, the 3 party knows that the
rd
agent is acting on behalf of a principal.
• The rights and liabilities of each party depend on
the fact whether the agent has ‘disclosed’ the
89 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 90
when dealing with him, does not know that
he is in fact an agent for someone else.
Pernas Trading Sdn Bhd v Persatuan
Peladang Bakti Melaka
Facts: The respondent ordered chemicals and
fertilizers for themselves and not on behalf of a
principal. When the appellant sued for the balance of
the purchase price, the respondent denied liability on
the ground that the chemical and fertilizers were
ordered for the principal.
Held: The respondent had contracted for themselves.
Even if they were agents for a principal, they had
91 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 92
contracted in such a form as to make themselves
personally liable.
b) Rights of the principal.
• An undisclosed principal may require the
performance of the contract by the 3rd party
even though the 3rd party does not know
that there is a principal (S. 184 (a))
• However, the principal’s rights of the
performance of the contract is subject to
the rights and liabilities subsisting between
the agent and the 3rd party
(S. 185)
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH
c) Rights of the agent.
• The agent can claim his rights under the
contract if the contract is actually his
contract and he has been acting as if he was
the contracting party with the 3rd party.
• However, the agent is not entitled to enforce
the contract if he falsely contract with the
3rd party as agent but in reality he is acting
on his own account – S. 189
TOPIC 3:
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH
• The 3rd party, therefore can make use of any
set-off or counter-claims against the
principal which he would have against the
agent.
•The principal who discloses himself before the
contract is completed cannot enforce the
contract if the 3rd party can show that the
identity of the principal was material/
important to the contract (i.e. the 3rd party
would not have entered into the contract if he
had known who was the principal in the
contract or that he had known that the agent
was not the principal) - S. 184(b)
93 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 94
LAW OF AGENCY
TERMINATION OF AGENCY
Introduction
• Agency is a contract between a principal and an agent
• It may be terminated in the same way as a contract
• Once the contract is terminated, the relationship between
the agent and the principal comes to an end
• The agent will no longer have the power and authority to
act for and on behalf of the principal
95 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 96
 • If there is any wrongful termination of the contract, the • The law refers to the Contracts Act 1950 as
injured party may sue in court for relief well as case law

The manners of termination (1) By the Act of the parties.

The principal and the agent may terminate
• An agency may be terminated by the their agency relationship in 3 ways:
following ways;
1. By the act of the parties (a) By mutual consent between them
2. By operation of law (b) By unilateral revocation/termination
by the principal.
• If the parties did not make any arrangement
to terminate the agency, the agency may (c) By unilateral renunciation by the
still be terminated by the law agent

OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 97 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 98

a) By mutual consent between them b) By unilateral revocation/termination by the

• Both parties (principal and agent) may
terminate their agency relationship by
mutual consent between them.
• Once they agreed to terminate the
agency, the agent has no longer any
authority to act on behalf of the
principal, and the principal would not
be liable for any contract made by the
agent after that termination.
• S. 154
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH
principal.
• The agency may be terminated by the act of the
principal revoking the agent’s authority (S. 154).
• The principal may revoke the agent’s authority at
any time, before the agent has exercised the
authority (S. 156)
• The revocation may be done either expressly or
impliedly from the conduct of the principal (S. 160)
• In order to revoke the agent’s authority, the
principal must give a reasonable notice to the agent.
Otherwise, the agent is entitled to damages (S. 159)
• What would be reasonable notice depends on the
facts and circumstances of each case.
99 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 100
• Sohrabji v Oriental Security Assurance Co. AIR agent would be entitled to, is the amount that the agent might
have earned under the contract of agency had he not been
1946 prevented from continuing his duty as an agent.
Held: 3 and a half months notice was not
adequate to property terminate an agency which
• If the agency is for a fixed term, earlier termination might
had lasted nearly 50 years. In the circumstances, entitle the agent to claim for damages (S. 158)
2 years notice would have been
reasonable notice.

• Syarikat Jaya v Star Publication (M) Bhd [1990]

1 MLJ 31
Held: 6 months notice was reasonable in
terminating a sole agency agreement.
• If the principal failed to give a reasonable notice of
termination to the agent, the measure of damages that the
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 101 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 102

EXCEPTIONS: an interest in the goods, by paying the security of

• In certain situations, the principal is prevented
from revoking the agent’s authority. The
situations are:
1. When the agent himself has an interest in the
property, which is the subject matter of the
agency (S. 155)
Smart v Sanders [1848] 5 CB 895
Facts: A factor (agent) was sent with goods, to be
sold on behalf of the principal. The factor made
advances to the principal for the security of the
goods.
Held: The court held that the agency cannot be
terminated by the principal because the factor has
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH
the goods.
Firth v Firth [1906] AC 254
Held: The general authority of a factor, in
whose hands goods were placed for sale, is to
sell at the best price which could reasonably
be obtained. This authority could not be
revoked after the factor had made advances
for the security of the goods to the owner and
while these advances remained unpaid.
2. After the authority has been partly exercised by the
agent (S. 157)
103 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 104
 Read v Anderson [1884] 13 QBD 779 the knowledge of the agent and the 3rd
Facts: A principal instructed a turf commission agent to party (S.161)
place bets on his behalf. The agent placed the bets and lost.
By custom, a turf commission agent always bets in his own
• If either the agent or the 3rd party does not
name and becomes solely responsible to person with whom know about the notice of termination, the
the bet is made. If he failed to pay a lost bet, he is subject to revocation is not effective.
certain disqualification, which will have a serious impact on
his business.
Pichappa Chitty v Hj Jah [1897] 4 SSLR
125
Held: The P (3rd party) who advanced money to an
Held: The principal could not revoke the turf commission
agent appointed, but whose authority had been
agent’s authority after losing the bet. The principal would
have to indemnify the agent for the amount, which the agent revoked without the agent’s and the P’s
had paid to the person with whom he made the bet. knowledge, was entitled to recover the money
from the principal.
• The notice of termination by the principal
Trueman v Loder [1840] 11 Ad & El 589
would only be effective when it comes to
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 105 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 106

Held: A 3rd party who dealt with an agent • If the agency is for a fixed term, the agent is liable to
compensate the principal for premature renunciation
whose authority had been revoked, was able
without sufficient cause (S. 158).
to claim from the principal, the goods
supplied because the 3rd party had no (2)By Operation of Law
knowledge of the revocation.
• The agency may terminated in:
c) By unilateral renunciation by the agent.
(a) By the performance of the contract of agency (S. 154)
(b) By the expiration of the period fixed or implied in the
• Agency is also terminated by the act of the agent renouncing contract of agency.
the business or the relationship of the agency. • Once the agency is expired, the agency is terminated even
though the business has not been completed.
• S. 154 – “…or by the agent renouncing the business of the
(c) By the death of either the principal or the agent (S.
agency…”
154)
• The renunciation may be express or implied (S. 160)
• The agent must give a reasonable notice to the principal. •Exceptions:
Otherwise the principal is entitled to damages (S. 159)
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 107 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 108
i. The death of the principal would not
terminated the agency if the agent has an
interest in the property, which is the
subject matter of the agency (S. 154). ii.
Termination by death of the principal is
only effective upon the agent having notice
of the principal’s death (S. 161).
iii. When the principal dies, the agent must
take reasonable steps to protect and
preserve the interest of the principal (S.
162).
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH
(e)By the bankruptcy or insolvency of the
principal (S. 154)
• On a principal being declared a bankrupt,
his rights and liabilities are vested in the
official assignee.
(f) By the happening of an event which
renders the agency unlawful.
• This fall within the doctrine of
frustration in contract.
• E.g. Principal becomes enemy due to the
outbreak of war. A change in the law,
which makes the agency business
becomes unlawful.
OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH
(d)By the subsequent insanity of either the
principal or the agent (S. 154).
Yonge v Toynbee [1910] 1 KB 215
Held: The agent is liable to the 3rd party
because he acted without the authority due to
the fact that the principal become insane.
• On termination due to the insanity of
the principal, the agent is bound to take
all reasonable steps to protect and
preserve the principal’s interests.
109 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 110
Termination by frustration
• Upon happening of an event which renders the agency
unlawful, the agency may be terminated
• Stevenson v Aktiengesellschaf Fur Cartonnagen
Industrie [1918] AC 239
An outbreak of war made principal an
enemy alien. It was held that the agency
was terminated.
111 OCT 2022 - FEB 2023 DR RAFIDAH@MALISSA BINTI SALLEH 112