QUESTION 1

(a) Sweet Peng wants to appoint Yee Quin as her agent. Sweet Peng is 20 years old but Yee
Quin is 17 years old. Is the agency contract valid? (5 marks)

This question is relate to capacity. Sweet Peng is 20 years old, wants to appoint a 17 years old
girl, Yee Quin, as her agent. The issue in this question is whether the agency contract valid.

The issue with “capacity of principals and agents” is related to the topic of “Agency”. The word
“Agency” is defined as a triangular legal relationship that exist between a principal, an agent and
a third party. The agent is empowered to enter into contracts with the third party on behalf of the
principal. This means that an agency is needed for an agent to enter into contract with third party
on behalf of the principal.

This question relates to capacity of principals and agents. Sweet Peng is 20 years old, wants to
appoint a 17 years old girl, Yee Quin, as her agent. Sweet Peng is 20 years old which is of the
age of majority and may employ an agent. Yee Quin is 17 years old which is below the age of
majority and therefore not able to be appointed as an agent.

Capacity of principals and agents states that:- Under Section 136 Contracts Act 1950, “Any
person who is eighteen years old or above and who is sound mind may be a principal”; under
Section 137 Contracts Act 1950, “Any person may become an agent, but persons of unsound
mind and who are below eighteen years of age are not liable towards their principles for acts
done by them as agents”.

In the case Armitage v Widoe, Armitage hired a man named Hart as his agent to purchase a farm
from Widoe. Hart represented himself to Widoe as an agent of Armitage and negotiated the
purchase of the farm. However, after the sale was completed, Armitage refused to pay for the
farm and claimed that Hart had no authority to act as his agent. The court held that Armitage was
liable for the actions of Hart as his agent, as Hart had apparent authority to act on behalf of
Armitage. However, the court also noted that there are limits to who can act as a principal or
agent in agency relationships. The court stated that any person who is eighteen years old or
above and who is of sound mind may act as a principal in an agency relationship. This means
that they can authorize another person to act on their behalf and can be held liable for the actions
of their agent. On the other hand, the court noted that persons of unsound mind and those who
are below eighteen years of age cannot be held liable for acts done by them as agents. This is
because they lack the capacity to enter into contracts and make legal decisions. Overall,
Armitage v. Widoe established important principles in agency law regarding the capacity of
principals and agents. It underscores the importance of ensuring that both parties involved in an
agency relationship are legally capable of entering into such a relationship and that the agent has
the authority to act on behalf of the principal (Mechem 1893).

In the case Knox v. Flack, Knox, a principal, had appointed Flack, an agent, to sell a property on
his behalf. However, at the time of the appointment, Knox was declared insane by a court of law
and was placed under guardianship. Knox's guardianship had not been communicated to Flack at
the time of the appointment. Flack went ahead and sold the property to a third party without
knowing about Knox's incapacity. When Knox regained his sanity, he sued Flack for selling his
property without his consent, claiming that the contract was void due to his incapacity. The court
had to determine whether Flack was liable for the contract he had made on behalf of Knox,
considering that Knox was under guardianship at the time of the appointment. The court held that
Flack was not liable for the contract because Knox lacked the capacity to appoint an agent while
under guardianship. The court explained that a principal must have the mental capacity to
understand the nature and consequences of appointing an agent. A principal who is under
guardianship lacks this capacity, and any contract made by the agent on behalf of such a
principal is void. Therefore, Flack was not liable for the contract he had made on behalf of Knox,
and the sale of the property was deemed invalid (Mechem 1893).
In the case Lawrence v. McArter, the plaintiff, Lawrence, had sold some land to McArter through
his agent, but the sale was later disputed. The plaintiff claimed that the agent had exceeded his
authority, as the plaintiff had suffered a stroke and was unable to communicate his intentions to
the agent. The court held that the agent was not authorized to sell the land, as the principal was
not capable of giving his consent due to his physical incapacity. The courts emphasized the
importance of the principal's capacity to authorize an agent. They held that a principal who is
under a legal or physical disability cannot authorize an agent to act on his behalf, and any
contract entered into by such an agent would be deemed invalid. The principle of capacity is
important in agency law to ensure that the parties involved have the legal capacity to enter into
the contract and that the agent has the authority to act on behalf of the principal (Mechem 1893).

The fact in this question is similar to above cases. Sweet Peng is 20 years old, wants to appoint a
17 years old girl, Yee Quin, as her agent. Sweet Peng is 20 years old which is of the age of
majority and may employ an agent. Yee Quin is 17 years old which is below the age of majority
and therefore not able to be appointed as an agent. Based on Section 137 Contract Act 1950,
capacity of agents states that:- “As between the principal and third persons, any person may
become an agent; but no person who is not of the age of majority and of sound mind can become
an agent, so as to be responsible to his principal according to the provision in that behalf herein
contained”.

In conclusion, the agency contract is invalid based on the Section 137 Contract Act 1950. Yee
Quin is not able to be assigned as an agent because she is only 17 years old and is not of the age
of majority. Therefore, contract between Sweet Peng and Yee Quin is invalid.
(b) Chin Nam is interested to buy Marcus’ car. However, Marcus tells Jing Nam to negotiate
with his personal assistant, Jia Hui. But Marcus has not actually appointed Jia Hui to sell
the car. Can there still be an agency created? (5 marks)

This question is relates to estoppel. Chin Nam wants to buy Marcus’ car but Marcus tell Jing
Nam to negotiate with Jia Hui, which is Marcus’ personal assistant. Marcus has not actually
appointed Jia Hui to sell the car. The issue in this question is can there still be an agency created.

The issue with “estoppel” is related to the topic of “Creation of Agency”. “Creation of Agency”
is said to be expressed or implied from the circumstances and the conduct of the parties. Based
on Section 139 Contracts Act 1950 states that:- “The authority of an agent may be expressed or
implied”. The implied and implied authority is defined in Section 140 Contracts Act 1950 states
that:- “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 the ordinary course of dealing, may be accounted circumstances of
the case.

In an agency, consideration is not necessary. Section 138 Contracts Act 1950 states that:- “No
consideration is necessary to create an agency”. For example, principal appoint an agent to sell
his property without consideration, the agency is valid is the appointed agent accept the terms.

This question relates to estoppel. Chin Nam wants to buy Marcus’ car but Marcus tell Chin Nam
to negotiate with Jia Hui, which is Marcus’ personal assistant. This means that although Marcus
has not actually appointed Jia Hui as his agent, but by words, we can know that Marcus tell Chin
Nam to negotiate with Jia Hui is mean by allow Chin Nam, a third party, to believe that Jia Hui
will act as Marcus’ agent to sell Marcus’ car.

Section 190 Contracts Act 1950 states that:- “When an agent has, without authority, done acts or
incurred obligations to third persons on behalf of his principal, the principal is bound by those
acts or obligations if he has by his words or conduct induced such third persons to believe that
those acts and obligations were within the scope of the agent’s authority”. For example, when A
wants to buy a watch from B, B tells A to contact C for the negotiation. But A has not actually
appointed C as agent to sell the watch. In this situation, A by word, already inform B to contact C
for the negotiation, it means A allows B to believe that C as agent, is acting on A behalf.
Therefore, A is estopped from denying that C is not acting as an agent to A.

In the case Bank of Batavia v Railroad Co., Railroad Co. had hired an individual named Johnson
to work as its agent in the capacity of a purchasing agent. Johnson had approached the Bank of
Batavia for the purpose of obtaining a loan to purchase goods for the Railroad Co. The bank had
agreed to provide the loan on the condition that the Railroad Co. would agree to pay the loan.
Johnson, acting on behalf of the Railroad Co., had agreed to this condition. However, when it
came time for the Railroad Co. to pay the loan, they refused, stating that Johnson did not have
the authority to enter into such an agreement on their behalf. The Bank of Batavia sued the
Railroad Co. for breach of contract. The court, in its ruling, held that the Railroad Co. was
estopped from denying that Johnson had the authority to enter into the loan agreement on their
behalf. The court found that the Railroad Co. had created the appearance of authority in Johnson
by hiring him as its agent and allowing him to act as a purchasing agent. By allowing Johnson to
act in this capacity, the Railroad Co. had led the Bank of Batavia to believe that Johnson had the
authority to enter into such agreements on behalf of the company. Therefore, the Railroad Co.
was estopped from denying that Johnson had the authority to enter into the loan agreement
(Mechem 1893).
In the case Sioux City R. R. Co. v First National Bank, the Sioux City Railroad Company
authorized one of its agents, J.M. Woolworth, to sell some of its bonds. Woolworth then sold
some of the bonds to the First National Bank, and the bank paid for them. Later, the Sioux City
Railroad Company refused to acknowledge Woolworth's authority to sell the bonds and argued
that it was not bound by the sale. However, the court held that the railroad company was
estopped from denying Woolworth's authority as its agent because it had allowed him to act as its
agent in the past and had given him the appearance of authority to sell the bonds. The court
further held that the First National Bank had relied on the railroad company's representations that
Woolworth was its authorized agent, and therefore, the railroad company was bound by
Woolworth's actions (Mechem 1893).

In the case National Bank of Commerce vs Chicago, B. & Q. R. Co., the plaintiff (National Bank
of Commerce) had allowed its cashier, Mr. Wells, to purchase railroad tickets on behalf of the
bank using the bank's funds. However, when Mr. Wells retired, the bank demanded that the
railroad company refund the cost of the tickets purchased by Mr. Wells, claiming that he did not
have the authority to make those purchases. The court held that the bank was estopped from
denying Mr. Wells' authority to make those purchases. The court noted that the bank had allowed
Mr. Wells to purchase tickets on its behalf for a long period of time, and that the railroad
company had relied on that representation of authority in accepting the tickets and providing
transportation services. Therefore, the bank was estopped from denying Mr. Wells' authority to
make those purchases, and was held liable for the cost of the tickets (Mechem 1893).

The fact in this question is similar to above cases. Chin Nam wants to buy Marcus’ car but
Marcus tell Jing Nam to negotiate with Jia Hui, which is Marcus’ personal assistant. Marcus has
not actually appointed Jia Hui to sell the car. Based on Section 190 Contracts Act 1950, estoppel
under creation of agency states that:- “When an agent has, without authority, done acts or
incurred obligations to third persons on behalf of his principal, the principal is bound by those
acts or obligations if he has by his words or conduct induced such third persons to believe that
those acts and obligations were within the scope of the agent’s authority”.
In conclusion, although Marcus has not actually appointed Jia Hui to sell his car, but Marcus, the
principal, by words allow Chin Nam, the third party, to believe that Jia Hui act as his agent to sell
his car. Based on Section 190 Contracts Act 1950 estoppel under creation of agency, the agency
is created where in the agency, Marcus is the principal, Jia Hui is the agent, and Marcus is
estopped from denying that Jia Hui is not acting for him.

(c) Poh Li appoints Mei Yee to sell her pet hamster. But one week later, Poh Li decides to
terminate the agency but Mei Yee is not aware of the termination. What is the effect on the
agency? (5 marks)

This question relate to apparent or ostensible authority. Poh Li appoints Mei Yee to sell her pet
hamster. After one week, Poh Li decides to terminate the agency without informing Mei Yee
about the termination of contract. The issue in this question is what is the effect on the agency.

The issue with “Apparent or ostensible authority” is related to the topic of “Authority of an
agent”. Authority of an agent is defined as an agent’s acts are binding on the principal if they are
done within the agent’s authority. If an agent does act which exceeds that authority so given, the
principal is not bound unless he adopts and ratifies the unauthorized act.

This question relates to apparent or ostensible authority. Poh Li appoints Mei Yee to sell her pet
hamster. After one week, Poh Li decides to terminate the agency without informing Mei Yee
about the termination of contract. In this case, Mei Yee will go on with the agency because she is
not familiar with the termination of agency by Poh Li.

Section 190 Contracts Act 1950 states that:- “When an agent has, without authority, done acts or
incurred obligations to third persons on behalf of his principal, the principal is bound by those
acts or obligations if he has by his words or conduct induced such third persons to believe that
those acts and obligations were within the scope of the agent’s authority”. For example, when A
appoint B as her agent to sell a product, after a period of time, A decides to terminate the agency
without informing B. In this case, B continue with the agency and has found C, the third party
that interested to buy the product, B is eligible to claim the commission from A although A has
terminated the agency as B does not know the agency is terminated.

In the case Fay v Noble, the plaintiff, Mr. Fay, entered into a contract with the defendant, Mr.
Noble, for the sale of a horse. The defendant's son, who was employed at his father's stable, had
negotiated the sale of the horse with the plaintiff. However, it was later revealed that the
defendant had terminated his son's employment and revoked his authority to act on his behalf
before the sale was completed. The plaintiff argued that he had entered into the contract with the
defendant's son under the apparent or ostensible authority of the defendant, and therefore the
contract was binding. The court held that the defendant was liable for the contract even though
he had terminated his son's employment and authority to act on his behalf before the sale was
completed. This was because the defendant had allowed his son to hold himself out as an agent
of the defendant, and the plaintiff had relied on the son's apparent authority to enter into the
contract. Therefore, even though the defendant had terminated his son's employment and
authority, he was still responsible for the contract under the doctrine of apparent or ostensible
authority. This doctrine holds that a principal can be held liable for the actions of an agent who
appears to have authority to act on the principal's behalf, even if the agent's authority has been
terminated or revoked, as long as the third party reasonably believes the agent still has authority
based on the principal's actions or statements (Mechem 1893).

In the case Ayer v R.W. Bell Manufacturing Company, Ayer was an agent of R.W. Bell
Manufacturing Company and was authorized to purchase goods on credit for the company's
business. However, the company had also informed its creditors that Ayer had no authority to
pledge the company's credit or make purchases that would bind the company beyond a certain
limit. Despite this, Ayer continued to purchase goods on credit beyond the limit and the company
did not notify its creditors that Ayer's authority had been terminated. When Ayer failed to pay for
the goods, the creditors sued the company for payment. The court held that Ayer had apparent or
ostensible authority to make purchases on credit on behalf of the company, even though the
company had limited his authority. This was because the company had not notified its creditors
of the termination of Ayer's authority, and the creditors had relied on Ayer's apparent authority in
extending credit to the company. As a result, the company was held liable for the purchases made
by Ayer beyond the authorized limit, despite the fact that the company had terminated his
authority without notifying the creditors (Mechem 1893).

In the case Insurance Co. v McCain, an insurance agent named Thayer was authorized by the
Insurance Company to solicit and underwrite insurance policies. Thayer had hired an agent
named McCain to assist him in this task. However, Thayer terminated McCain's employment
without informing the Insurance Company. Despite being terminated, McCain continued to act as
an agent of the Insurance Company and underwrote a policy for a customer. When the customer
made a claim, the Insurance Company refused to pay, arguing that McCain had no authority to
bind the company to the policy. The court held that the Insurance Company was liable for
McCain's actions because McCain appeared to have authority to act on behalf of the company,
and the company did not notify the customer or McCain of Thayer's termination or revoke
McCain's apparent authority. The court stated that a principal is responsible for the acts of an
agent who, although not actually authorized to act, is believed by a third party to have authority
because of the actions or words of the principal. Therefore, in this case, the court applied the
concept of apparent or ostensible authority, which holds a principal liable for the actions of an
agent who appears to have authority to act on behalf of the principal, even if the agent exceeded
their actual authority, as long as the principal did not revoke the agent's apparent authority or
notify third parties of the agent's termination (Richard 1996).

The fact in this question is similar to above cases. Mei Yee has been appointed by Poh Li as
agent to sell the pet hamster of Poh Li. However, Poh Li decides to terminate the agency after
one week without notifying Mei Yee. Based on Section 190 Contracts Act 1950, apparent or
ostensible authority under authority of an agent states that the law can presume that the agent
possesses certain authority, where the agent previously had authority to act, but that authority
was then terminated by the principal without notifying it to the agent and third party.

In conclusion, Mei Yee are able to claim the commission from Poh Li if she already deal with
third party that interested with the pet hamster although it is not within that one week. This is
because Mei Yee previously had authority to act, but that authority was then terminated by Poh
Li without notifying Mei Yee and the third party about the termination of agency. Therefore, Mei
Yee as an agent, possesses the authority to claim the commission form Poh Li in this kind of
situation.

(d) Ah Beng appoints Venice as his agent to negotiate and buy a piece of land. After several
weeks of negotiation, the parties agreed on the price. However, Ah Beng was infected
with Covid-19 and suddenly dies. Venice decides to buy the land herself. Did Venice
breach any duties as an agent? (5 marks)

The question relate to “Termination by operation of law”. Ah Beng appoints Venice as his agent
to help Ah Beng to negotiate and buy a piece of land. The parties has agreed on the price after
several weeks of negotiation but Ah Beng suddenly dies due to infected of Covid-19. In this case,
Venice decides to buy the land herself. The issue in this question is whether Venice breach any
duties as an agent.

The issue with “Termination by operation of law” is related to the topic of “Termination of an
agency”. Termination of an agency states that an agency may be terminated by act of the parties
or by operation of law.
This question relates to operation of law. Ah Beng appoints Venice as his agent to help Ah Beng
to negotiate and buy a piece of land. The parties has agreed on the price after several weeks of
negotiation but Ah Beng suddenly dies due to infected of Covid-19. In this case, Venice decides
to buy the land herself. This means that the agency between Ah Beng and Venice has come to an
end due to the dead of Ah Beng.

Termination by operation of law states that:- “An agency may be revoked by operation of law in
any of the following circumstances which are termination by performance, termination upon
expiry, upon the death of the principal or the agent, when the principal or agent become insane,
when the principal or agent becomes insolvent or bankrupt, and termination by frustration”. The
circumstance in this question is upon the death of the principal or the agent. Section 154
Contracts Act 1950 states that:- “An agency is terminated by either the principal or agent dying”.
For example, A appoint B as agent to sell a house, but after several weeks, A dies because of
heart attack. In this case, the agency has comes to an end due to the dead of the principal.

In the case Griggs v Swift, the plaintiff, Griggs, was a creditor of a deceased individual named
J.C. Dozier. The defendant, Swift, was the executor of Dozier's estate and had been appointed by
the court to administer Dozier's affairs. Griggs claimed that he had loaned money to Dozier while
he was alive and that the loan was secured by a mortgage on Dozier's property. However, Swift
argued that the agency relationship between Griggs and Dozier was terminated upon Dozier's
death, and therefore Griggs had no right to claim the money owed to him by the estate. The court
ultimately ruled in favor of Griggs, holding that the agency relationship between Griggs and
Dozier was terminated by operation of law upon Dozier's death. However, the court also held
that Griggs had a valid claim against Dozier's estate because he had a mortgage on the property,
which was a valid lien against the estate. Overall, the case of Griggs v. Swift established the
principle that an agency relationship is terminated by operation of law upon the death of the
principal. However, this termination does not affect the validity of any liens or other security
interests that may exist against the property of the deceased principal (Munday 2010).
In this case Yerrington v Greene, Mrs. Ingraham had appointed Greene as her agent to manage
her property. However, Mrs. Ingraham died without leaving a will, which meant that her property
would pass to her heirs under the operation of law. As a result, the agency between Mrs.
Ingraham and Greene was terminated. Greene argued that he was entitled to compensation for
the services he had rendered to Mrs. Ingraham, even after her death. However, the court held that
since the agency between the two parties was terminated by operation of law, Greene was not
entitled to compensation. The court reasoned that an agency relationship is based on the
principal's authority to control the actions of the agent. When the principal dies, the authority to
control the agent's actions ceases to exist, and the agency relationship is terminated. Therefore,
Greene could not claim compensation for services rendered after Mrs. Ingraham's death. Overall,
Yerrington v. Greene established an important precedent in agency law regarding the termination
of an agency relationship under the operation of law (Mechem 1893).

In the case Fereira v Sayre, Fereira and Sayre entered into an agency agreement, wherein Fereira
was authorized to sell Sayre's property. However, before Fereira could complete the sale, Sayre
died. Fereira argued that the agency relationship terminated upon Sayre's death, and therefore, he
was entitled to his commission for the work he had done up until that point. Sayre's executor, on
the other hand, argued that the agency relationship continued even after Sayre's death, and
therefore, Fereira was not entitled to any commission. The court held that an agency relationship
terminates upon the death of the principal, unless there is an agreement to the contrary. In this
case, there was no express agreement between Fereira and Sayre that the agency relationship
would continue after Sayre's death. Therefore, the court ruled in favor of Fereira, and he was
entitled to his commission. The case of Fereira v. Sayre established the general rule that an
agency relationship terminates upon the death of the principal, unless there is an agreement to the
contrary. This principle is based on the idea that an agency relationship is a personal one between
the principal and the agent, and therefore, it cannot continue after the principal's death (Mechem
1893).
The fact in this question is similar to above cases. Ah Beng appoints Venice as his agent to help
Ah Beng to negotiate and buy a piece of land. The parties has agreed on the price after several
weeks of negotiation but Ah Beng suddenly dies due to infected of Covid-19. Based on Section
154 Contracts Act 1950, upon the death of the principal or the agent, the agency is automatically
terminated. Therefore, upon the termination of the agency, agent is no longer an agent on behalf
on the principal or vice versa.

In conclusion, although after the dead of Ah Beng, Venice decides to buy the land herself, she did
not breach any duties as an agent. This is because based on Section 154 Contracts Act 1950, the
agency is terminated when Ah Beng, the principal dies. Therefore, Venice no longer act as an
agent on behalf of Ah Beng and Venice will not beach any duties for the decision she made to
buy the land herself.

[Total: 20 marks]