Agency:

It is based on the principle of qui Facit per alium Facit per se; he who acts through another
acts for himself. Iyere vs BFFM Ltd.

It is not every time a person acts fir another that it will be binding on that other person. There
are situations under which a legally binding agency would exist. This was laid down in the
famous case of UTC Nig Ltd vs Wema Bank. They are:

a. By express appointment either orally or in writing

b. By the doctrine of estoppel: this is the bindingness of the act of an agent on the principal
where the principal has acted in such a way that implies that the agent acts on his behalf. This
is his ostensible authority. See Jewsbury vs Newbold where it was held that a husband and
wife living together can have the woman act on his behalf especially for necessaries.

c. By subsequent ratification of a contract made on his behalf without his earlier

authorisation. This could occur in 2 instances. First, the principal could ratify the agent's act
where there was no agency relationship in the first place and Second, where there was an
agency relationship, but the agent exceeded the stated authority.

d. By implication of law in cases where it is extremely necessary for a person to act for
another. Under this agency by necessity, it occurs where it becomes extremely hard or
impossible for a person to act by himself and consequently, another must act for him.
Basically, this can only happen where 1, there is an emergency and 2, the act is done to
minimise the hardship caused by the emergency. See Prager vs Blatspeil

e. By presumption of law in the case of cohabitation.

Capacity to form Agency :

Just as a person must have the capacity to enter into a contract, a principal must have the
capacity to authorise an agent to act on his behalf.

The principle is that of nemo dat quod non habet, hence, the principal cannot authorise
another person to do acts that he himself cannot perform. See Bevan vs Webb
An infant may appoint an agent but the acts of such agent on the infants behalf will be
voidable at the instance of the infant. He may also ratify such acts upon attaining majority. If
the act is such that the infant could do by himself, he can appoint an agent to do it for him.

For insanity, an agent can act for a principal of unsound mind. However, innocent 3rd parties
must not suffer from such acts except where such 3rd party was aware of the principal's
malady before the transaction.

Types of Agents:

The types of agents depend on the kind of authority granted to them by the principal. They
are:

1. Mercantile Agent: this is an agent charged with commercial duties relating to trade. He has
the authority to sell goods, consign goods for the purpose of sale, to buy goods or to raise
money on the security of goods.

2. Factor Agent: he is usually an agent entrusted with the possession of goods of several
principals or even only one principal for the purpose of sale in his own name without
disclosing the name of his principal and he is remunerated by commission.

3. Auctioneer: he also sells goods on behalf of the principal who may be disclosed or
undisclosed, depending on the agreement, and the auctioneer has a lien in the goods which
are in his possession for the purpose of sale. A lien is a creditor's right in respect of a property
until the debt has been discharged. So, the auctioneer's lien in the goods exists until the
commission has been paid.

4. Del Credere Agent: he is a mercantile Agent who in considerable of extra remuneration,

called a Del Credere Commission, guarantees to his principal that 3rd parties he contracts
with on his principal's behalf shall duly pay monies due in the contract. Where such
transactions go wrong, the principal bears the loss under the agency rule but will have a
course of action against the agent the very reason why the agent collects extra charges.

Rights and Duties of the Agent:

1. Right to Remuneration: A labourer is entitled to his wages(1 Timothy 5vs18). The agent
has the right to receive pay for work done on behalf of his principal. This may be in the form
of a commission or other agreed payment arrangement.
Where the agent has performed the agreed task, the principal cannot escape payment by
going behind the agent's back to complete the transaction. Again, the remuneration of the
agent is usually tied to the task at hand such that where other opportunities arise out of
previously concluded and remunerated tasks, the agent may not be able to claim remuneration
for such.

2. Right of Indemnity: the agent has the right to receive compensation for any loss incurred as
a result of carrying on the agency; this is different from remuneration. Indemnity can only be
claimed for losses incurred as a result of regular business activities and not for losses
emanating from the fault of the agent. (Like agent going to lagos instead of remaining in
Abuja).

Duties of an Agent:

1. Duty to act with skill and care: an agent must discharge his duties with utmost care and
skill to the principal's advantage. If he fails to so act, he will be liable to pay damages to the
principal for any loss suffered or opportunities missed as a result. Note, where he discloses
his skill to the principal, the later cannot expect a higher skill from him.

2. Duty not to sub-delegate: the rule is that of delegatus non potest delegare, a delegate
cannot delegate else the principal becomes liable to an unknown 3rd party. Two exceptions
may lie here however. One, where the sub delegation was done with the consent of the
principal. And two, where the sub delegation is on non confidential little tasks. (With caution
though).

3. Duty of uberrimae fidel (utmost good faith): here, the agent must ensure that he acts in
good faith in discharging his duties and must ensure that there is no conflict of interest
between him and his principal.

It is immaterial whether the agent made extra profit or intended to cheat his principal, it is
that there was a possibility that the agent would act in a way as to protect his interest over
that of the principal. See Lucifero vs Castel (an agent bought a yacht and resold to his
principal for profit).
An exception is where the agent makes full disclosure to his principal and the principal
agrees to the terms of the agent's involvement in the transaction, he will be said to have acted
in good faith.

Another ambit of this duty is that the agent is not permitted to receive bribe in the course of
his duty. Voluntary tips will not suffice here.

4. Duty not to make secret profits: this is very close to the duty not to collect bribe. The agent
must not make an undisclosed profit from the transaction which is the subject of the agency.

Where the agent is guilty of any of the above duties, the original could:

a. Determine the agency contract without notice

b. Sue the agent for breach of contract except it is a gratuitous contract

c. Rescind any contract made with a third party

d. Refuse to pay the agent commission or any other remuneration

e. Sue in tort for negligence.

Termination of Agency:

This can happen in any of the following 3 ways:

A. By Act of the Parties: like other agreements, an agency could be terminated based on the
agreement of the parties, lapse of time or completion of purpose. Either of the parties may
also opt out of it may be 9n the ground of breach by the other party. However, where losses
have been incurred, indemnity may be unavailable.

B. Termination by Custom: an agency relationship may be brought to an end by generally

acceptable usage or custom. Such a custom must however not be repugnant to natural justice,
equity and good conscience nor inconsistent with the written agreement of the parties.

C. Termination by operation of Law: the instances include:

1. Death of either party: the death of either the principal or the agent (whether human or a
company) brings the agency to an end. In the principal's case, his personal representatives
may ratify whatever was Don 9n his behalf by the agent but this is their discretion. It is
however not open to the agent's personal representative to carry on the agency.
2. Insolvency: the bankruptcy of the principal terminates the agency but that of the agent does
not except where it renders the agent unfit to carryout the agency contract.

3. Mental incapacity: by the decisions in Yonge vs Toynbee and Drew vs Nunn, mental
incapacity terminates agency relationship between the principal and the agent but not third
parties who continue to believe that the agency still exists.

If the incapacity is on the agent, the agency subsists until discharged by the principal.

4. Frustration: by illegality or impossibility of performance (force majeur), agency may come

to an end. An example is where the subject matter of the agency has been destroyed. Another
example is in times of war or earthquake where it becomes impossible to perform.

5. Complete Performance: where the agent has completed the work for which the agency was
created and has been remunerated, the agency relationship happily comes to an end.

In conclusion, there are instances where the agent's authority cannot be terminated or revoked
and an attempt by the original to revoke will not just amount to a breach but also ineffective.
In such a case, death, insolvency, incapacity of the principal is immaterial.

An example is where the authority is supported by consideration by the agent