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Agency Answer Guide


Parties: X v Y Jurisdiction: Told on the facts the events happened in Queensland (Qld)/would have to assume
the events happened in Queensland (Qld) for Qld law to apply

Definition: Agency exists where an agent consents to an act on behalf other principal, and where
one person has the authority to create legal relations between principal and a third party: International Harvester co of Australia Pty Ltd v Carrigans Hezldene Pastroal Company.

Was A the agent of B?


Whether an agency relationship exists is determined as a question of law which the courts approach objectively: Garnac Grain Company Inc v HMF Faure & Fairclough Limited

Does the Principal have capacity?


The principal must have legal capacity to do the act which the agent performs on the principals behalf: Christie v Permewan Wright & Co Limited On the facts *principal+ does/does not have the legal capacity to perform *agents+ actions as

Does the Agent have capacity?


Agent is not personally required to have legal capacity, the principals legal capacity is delegated onto the agent: Watkins v Vince. As such, [agent] does have the requisite capacity.

Was the dealing authorised?


*Agents+ acts must have been authorised by *principal+ Actual express authority? Express authority is where an agent is given express authority to perform certain acts: Toll v Alphapharm. On the facts [agent] was/was not given express authority to perform their acts as [State why e.g. no authority as the decision must be made by a board of directors/it is prohibited by contract]. *Agents+ acts must be within the scope of their authority. Scope depends on a construction of the terms of any instructions given [principal]: Tobin v Broadbent. *Agents+ acts were/were not within their scope as *state why+ Case analogy:

Toll v Alphapharm allowing an agent to agree upon rates of freight, terms of payment and other standard terms and conditions of a contract for storage and transportation is sufficient In the case of Toll v Alphapharm a subsidiary of a company that improted vaccines was to look after the vaccines. The subsidiary engage a transport and storage company. The vaccines were damaged whilst possessed by the storage company. The subsidiary had signed a contract containing a clause excluding liability. The storage company was held not liable as the subsidiary had the actual authority to agree on things such as rates of freight, terms of payment and other standard terms and conditions of a contract for storage and transportation.

If this isnt satisfied, look at actual implied authority.

Actual implied authority? Authority may be implied in a number of ways, the relevant one/s here being: Incidental Authority: Where the act of the agent is normally incidental to the authorised act, the agent is taken as having authority (Example: If authorised to deliver pizzas, theres an incidental authority to put fuel in the car) Usual Authority: Usual authority is the authority to do acts that are usually part of the job: Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (Example: If someone is appointed to managing director of a company, they can do anything that generally applies to that job)

If relevant, note the pre-established usual authority categories: Managing director has usual authority to employ others to provide services to the company, guaranteeing loans, indemnifying guarantors, borrowing money and giving security over companys property, authorising agents to enter contracts on behalf of company They do not have the authority to bend the company: Northside Developments Pty Ltd v Registrar-General Real estate agent has implied authority to find purchaser, but not to bind vendor to terms with purchaser: Brien v Dwyer Solicitor has no implied authority to make contract on behalf of client: Nowrani Pty Ltd v Brown

Solicitor has no authority without express grant or receive on behalf of a client a revocation of offer, and revocation will be ineffective if so given: IVI Pty Ltd v Baycrown Pty Ltd

If it is expressly prohibited: If the principal has given instructions to the agent which prevent the implication being made the principal will not be bound by acts of the agent, though ostensible authority may still exist: Waugh v HB Clifford& Sons Ltd Customary Authority Customary authority covers activities that are typically carried out in a particular kind of business: Con-Stan Industries Australia Pty Ltd. Course of Dealing Authority may be gleaned where, in the circumstances, certain things are commonly accepted. Implications can be drawn from this as to what else will have authority: Hely Hutchinson v Brayhead Ltd Case analogy for course of dealing: Hely-Hutchinson v Brayhead Ltd In the case of Hely-Hutchinson v Brayhead Ltd a director of a company became the director of a different company. He agreed to give more money to his original company on the condition that his newer company gave an indemnity regarding further money lent. These conditions were accepted by the CEO of the second company but was not disclosed to the board. The directors first company went into liquidation. The director then sued his second company. The board claimed the CEO did not have the authority. It was held that the CEO had actual implied authority, implied from the conduct of the parties and circumstances of the case.

Ostensible Authority
Ostensible authority arises from the words or conduct of the principal in intentionally holding out another person to be his or her agent: Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd (Freeman) Element 1: Representation made? There must be a representation by words or conduct by the principal (or someone expressly authorised by them) to the third party that the agent acts for them: Freeman Case analogy: Freeman appointed to managing director suffices to establish ostensible authority In the case of Freeman, the director of a company acted as the managing director to the knowledge of the board of directors, though never being appointed to that position. Director engaged work from a third party. Third party claimed fees, but the company

refused to pay, claiming the director wasnt authorised to enter into the arrangements with them. It was held that it permitting the director to act as the director, the board made a representation he had the authority to contract.

If the agent self-authorised: Where an agent self authorises, a representation may be made in certain circumstances, the relevant one being here: Failure of the principal to interfere when such interference could reasonably be expected: Hely-Hutchinson v Brayhead Ltd Failure of the principal to take proper safeguards against a representation of authority by the Agent: Crabtree Vickers If the principal is a company: As the principal in this case is a company, the representation must be made by someone who has: State which one is relevant Actual authority from the company to make the representation; or Actual authority to do the act concerned; or Actual authority to manage the business of the company generally or in respect of those matters to which the contract relates: Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd Case analogies for principal being a company: Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd someone with ostensible authority/without actual authority cannot make a valid representation In the case of Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd an agreement was entered into. At the time of agreement, the managing director was supervising the executive whilst he signed for a printing machine. The managing director gave the executive a blank order form. Under the company constitution contracts had to be entered into by the board or the executive, governing director and managing director. There was no representation here as the managing director had only ostensible authority. Pacific Carriers v PNB Paribas bank teller has the authority of a bank more factors listed under the facts. In the case of Pacific Carriers v PNB Paribas a was sued for damaging goods by the owner. The charterer in turn sued the seller, claiming the seller and the bank executed an indemnity in its favour. Banks employee had signed indemnity on behalf of

bank, but believed she was only verifying sellers signature already on document. It was held she had authority for a number of reasons: Bank placed her in a position which equipped her to deal with the indemnity requested by the seller. She was the one who dealt with the request and communicated the response. Bank permitted her to sign and stamp documents in an unqualified form not limited only to witnessing signatures Nothing in organisational structure or banks public documents which ruled out possibility that officer might have authority to bind the bank. No internal checks or qualification of capacity in which bank was participating in the transaction Form and content of the document itself, and stamp of the bank which she used

Essington Investments v Regency Property Group In the case of Essington Investments v Regency Property Group A company was selling development property. An agent of the company took a contract to an agent of a potential buyer. The other agent signed but made it clear to not forward the contract to the development company. He faxed it soon after. It was held there was no representation on behalf of the second agent, therefore no binding contract.

Write these statements of law if relevant: The representation may be made by standing mute whilst agent deals with a third party: Freeman The representation may be made by describing the agent in a particular way: Freeman. A representation may flow from supplying a person with a blank order form, arming them with a document which, when signed, would bear the hallmark of authenticity: Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd Other circumstances in which ostensible authority will occur: Entrusting Indicia Of Title To An Agent In case of Egan v Ross, principal gave agent ostensible authority by giving a signed memoranda in blank to the agent who then completed them by inserting name of purchaser to whom principal

stated he would not sell this authority didnt extend to receipt of deposit Possession Of Property For The Purposes Of Sale Mere possession of property of another doesnt give any rights against third party: Motor Finance and Trading Co Ltd v Brown In case of Motor Finance and Trading Co Ltd v Brown, a agent was permitted to hold the relevant vehicle as an item of their stock-intrade for sale in the normal course of their business. Agents possession of car was representation to anyone entering the showrooms that they had authority to sell it. The representation was made with owners approval, the third-party acted on it and owner couldnt deny agents authority Occupancy Of A Particular Position Permitting agent to act in some way in the conduct of the principals business with other persons creates apparent authority: Freeman & Lockyer: Middle East v Sun Life Assurance of Canada (UK) Ltd The case of British Bank of the Middle East v Sun Life Assurance of Canada (UK) Ltd, it was held only representation by principal was investing someone with the title Branch Manager. This did not, however, give branch manager authority of any kind to represent another employee had authority to make certain undertakings on behalf of employer Within The Ordinary Scope Of Business Or Custom Of The Particular Agent If its normal for an agent to do certain things within ordinary course of their business, this will provide foundation for agents ostensible authority: London Joint Stock Bank v Simmons; Tobin v Broadbent Provision In Articles Authorising Delegation Of A Power To An Officer Acting On Behalf Of The Company Person who has no knowledge of companys articles cannot rely on them as conferring ostensible authority on the agent with whom they dealt. This only applies where contract sought to be enforced is not a contract of a kind which a person occupying the position of the agent would normally be authorised to enter into on behalf of the company: Rama Corporation Ltd v Proved Tin & General Investments Ltd Permitting Business Card To Be Used

In the case of Prospect Industries v Ancor Pty Ltd, the principal permitted the agent to use pre-printed business cards which identified agent as an authorised representative of the principal. Third party knew agent wasnt there on behalf ot the company named on the card so there was no representation

Element 2: Reliance? Must be a causal connection between the representation to the third party and the dealing between the third party and agent: Hely-Hutchinson Note if relevant: The third party cannot hold the principal liable where the third party was not aware of the representation, did not believe it, or where the third party knew or had the power to know the truth: HelyHutchinson Element 3: Detriment? The third party must have suffered a detriment in relying on the representation as to authority. Substantial detriment is not necessary. Conclude as to whether or not ostensible authority has been made out. If it has, go on to write: Principal will be bound to third party Third party is able to sue Principal Principal can sue Agent for breach of duty

If no authority is made out, go on to look at ratification

Has there been a ratification?


Where an act is done purportedly in the name or on behalf of another by a person who has no authority to do that act, the person in whose name or on whose behalf the act is done may, by ratifying the act, make it as valid and effectual, subject to certain provisos, as if it had originally been done by his authority... : Firth v Staines Can [ratifying party] make the ratification? The ratification must be made by the person: in whose name the act was purported to be done; who must be in existence at the time the act was done; who must be competent at that time to be the principal of the person doing the act OR their agent: Firth v Staines

Principal can only ratify when they are aware of all the material facts OR show they know the material facts: Taylor v Smith. Write whether or not this is satisfied, if it is not satisfied, look at imputed knowledge (just under the exception) Exception to the knowledge requirement: Exception to this is to show they would have ratified no matter what the agents actions were: Bayley v Fitzmaurice Can knowledge be imputed? A principal is taken to know a fact known to their agent which is material to the agency and which the agent had a duty to communicate to the principal

State if relevant: The person may not necessarily be known, personally or by name, to the third party: Keighley Maxsted & Co v Durant

Ratification must occur within a reasonable time of the act. What is a reasonable time is a factual issue: Celthene Pty Ltd v WKJ Hauliers Pty Ltd

Apply and say who will be ratifying. Case analogy: Keighley Maxsted & Co v Durant agent must profess to act for the principal. In the case of Keighley Maxsted & Co v Durant a principal let an agent by wheat on a joint account for principal and agent. Agent was unable to source wheat for the agreed price so bought wheat at a higher price. Principal consented to this. Agent and principal then decided not to pay. Principal was not liable for breach of contract as the agent did not profess to act for the principal. Agent could still be sued. Has there been a ratification? Ratification may be express or implied. Express? On the facts *principal+ has expressly consented to *agents+ actions by saying *what they expressly said]. A valid ratification has occurred: Crabtree-Vickers Implied? For implied ratification to exist the words or conduct of the principal must have no other explanation: Forman & Co Pty Ltd v Liddesdale Write if relevant: Ratification can be implied from mere inactivity or acquiescence of the principal: Cox v Isles, Love Co Ratification by agent?

The agent who ratifies only requires authority to ratify, not authority to have performed the act ratified: Re Portuguese Consolidated Mines Ltd. So then go on to look at whether or not the agent had ostensible, actual or implied authority. Limits on ratification? A court will not invoke the doctrine of ratification where: write what is relevant The ratification does not occur within a reasonable time: Bolton Partners v Lambert There is a time stipulation in which the contract is to be accepted . Cannot ratify after that time: Dibbins v Dibbins There has been a breach or loss under the contract before ratification: Grover & Grover Ltd v Matthews Where ratification occurs after withdrawal of the offer: Bolton Partners v Lambert Ratification must take place at a time, and under circumstances, when the ratifying party might themselves have lawfully done the act which they ratified: Bird v Brown Ratification is not allowed where to permit it would unfairly prejudice a third party: Adams v Elphinstone

Effect If there was a ratification: The ratification places the parties in the positions they would have been in, if, at the time of the act, the agent had been duly authorised. If no ratification: Ratification has not occurred, therefore *principal+ not bound by *agents+ actions.

Agency Imposed by law? Only talk about this if it is relevant


Law imposes an agency: state what is relevant: In an emergency to enable the preservation of the principals property or interests In a cohabitation for the purpose of ensuring the female partner can purchase necessaries Where there is a commercial impossibility or extreme difficulty of communicating with the principal The agent acted bona fide in the principals interests there is a presumption principal authorises such acts

Is [agent] in breach of their duty? only talk about this if the questions asks you to
An agency is characterised as a fiduciary relationship with the principal. [Agent] has a duty to: state what is relevant Act bona fide in principals interest Avoid conflict between principals interests and interests of a third party, without full

disclosure to principal Act in accordance with their appointment; cannot do anything out of their authority Perform lawful instructions of principal, providing they are reasonable, in respect of performance of their duties Perform agency with due care and skill State whether or not it was breached by applying the above rules.

What rights does [agent] have? only if relevant


Agents have a number of rights, the relevant one/s here being: Right to remuneration Agent has no right to remuneration other than from their principal, unless there is a contract expressed or implied to that effect: Smith v Stallard & French If relevant, write: An agent is not entitled to profits from any arrangement they help set up, unless a contract provides otherwise Right to indemnity Agents are entitled to be compensated and indemnified in respect of losses, liabilities and expenses incurred in performance of their duties as an agent. The agent must be acting within the scope of their authority: Re Clune; Ex parte Verge v Isabella Nominees Pty Ltd (in liq) Right to a lien If an agent is not compensated they are entitled to exercise a lien over principals property in respect of obligations incurred in respect of that property. (obligations that are relating to the property, by way of their agency): Re Clune Note: Does not apply to money.

Agency and Third parties just look at this bit if you think the doctrine of undisclosed principal arises.
Disclosed but unnamed principal: Where the agent makes existence of the principal clear but does not name the princpal then the agent will not, generally, be liable on the contract.

Undisclosed principal: Where an agent does not disclose the existence or identity of the principal, the principal may be liable under the contract with the third party and can enforce it provided the agent acted within his

or her actual authority. However, until the principal intervenes, the agent may sue and be sued on the contract: Keighley Maxsted & Co v Durant State whether agent was acting within their actual authority and whether or not principal has intervened. Exceptions to the doctrine of undisclosed principal: Where the express or implied terms of a contract provide that the actual parties are the real and only principals, evidence tending to prove that someone else is also liable as P is not admissible: Humble v Hunter The contract must not be of such a kind that the personality of the contracting parties is material: Carberry v Gardiner

Breach of warranty?
Where a person professes to act as agent for another, they will be liable to the third party where: (a) If they have been fraudulent (b) If they have without fraud untruly represented that they had authority when they had not (c) Also where they innocently misrepresent that they have authority where the fact is either (i) that they never had authority or (ii) that their originally authority has ceased by reason of facts of which they have no knowledge or means of knowledge: Collen v Wright

Termination of authority?
An agency/agents authority may be terminated in a number of ways, the relevant method/s here being: Completion of the agents task. If agency for a specified time, then at expiration of that time, the agency may be terminated When either principal or agent wishes to terminate then by giving notice to the other of intention to withdraw from the agency agreement By operation of law in case of death, insanity or bankruptcy of either party.

Questions to ask: Do we always have to look at who will ratify, and if so, are the first 3 elements the only essential ones: in whose name the act was purported to be done; who must be in existence at the time the act was done; who must be competent at that time to be the principal of the person doing the act.