I declare that no element of this assignment has been plagiarised: Student Signature| | “An Agent is a person who is authorised to act for another, the Principal in the making of legal relations with third parties” Discuss this statement and give examples and referring to case law when answering. To full discuss the statement above we will examine the relationship of an Agent in the context of company law. It is important for people to understand what an Agent is, and the legal bearing they can have on companies and organization is when acting on their behalf.
Irish companies have been using such agents for decades. This enables them to take advantage of an agent’s local understanding or existing trade acquaintances. An agency relationship arises where an “individual”, known as the Agent is authorised to enter into negotiations for the Principal. These negotiations are reconised through a binding contract between the third party and the principal. On conclusion, obligations of the contract are the responsibility of the Principal and the Third Party.
The Principal can only be bound by a contract entered into on their behalf if the Agent had the legal capacity to enter into such an agreement. An Agency relationship can arise by: 1. Express Authority 2. Implied Authority 3. Apparent or Ostensible authority 4. Agency By Ratification 5. Agency By Necessity 6. Agency By Estoppel Express Authority Where an agent’s power to act on behalf of a principal will be explicitly granted to the agent by an agreement between the agent and principal. The agent’s authority can be contracted written or orally.
Implied Authority This gives agent’s the power to act on behalf of a principal. The principal because of the principal’s actions may grant this. The failure to object after prior exercise of such power to the agent or failure by the principal to engage this implied authority in an express authority agreement may give rise to implied authority been authorised to the agent. Apparent or Ostensible authority This is a type of agency power that arises when third party reasonably believes an agent has the authority to act on behalf of the principal.
Apparent authority typically becomes important where an agent purports to take some action on behalf of a principal, such as signing a contract, which the agent did not have, actual authority to do. If the third party reasonably believes the agent has that authority, then the principal will be bound to the contract. Hely-Hutchinson v Brayhead Ltd  (1) is a UK company law case on the authority of agents to act for a company. Lord Suirdale (Richard Michael John Hely-Hutchinson) sued Brayhead Ltd for losses incurred after a failed takeover deal. The CEO, chairman and de facto managing director of Brayhead Ltd, Mr.
Richards, had guaranteed repayment of money, and had indemnified losses of Lord Suirdale in return for injection of money into Lord Suirdale’s company Perdio Electronics Ltd. Perdio Ltd was then taken over by Brayhead Ltd and Lord Suirdale gained a place on Brayhead Ltd’s board, but Perdio Ltd’s business did not recover. It went into liquidation, Lord Suirdale resigned from Brayhead Ltd’s board and sued for the losses he had incurred. Brayhead Ltd refused to pay on the basis that Mr. Richards had no authority to make the guarantee and indemnity contract in the first place. (www. suood.
com) Roskill J held Mr. Richards had apparent authority to bind Brayhead Ltd, and the company appealed. In his judgment Lord Denning MR held that he did have authority, and it was actual authority because (like a “course of dealing” in contract law) the fact that the board had let Mr. Richards continue to act had in fact created actual authority. Agency By Ratification A situation in which a person or company inaccurately claims to be an agent for another person or company and conducts some act in that capacity, but which the principal who is not actually a principal later accepts and recognizes.
Because the agent is not actually an agent, any act they conduct on behalf of the principal ordinarily would be invalid; however, agency by ratification exists because the “principal” confirmed the act. Making the principal liable for consequences that may occur. This is particularly demonstrated in the case Black v Smallwood Australian High Court (1966) (2), where a contract was entered into by Robert Smallwood and contained his signature under the name of Western Suburbs Holdings Pty. Ltd. As Western Suburbs Holdings Pty.
Ltd which was not incorporated at the time and Smallwood and Cooper signed as directors thinking the company had been incorporated and that they were directors. The plaintiffs wanted to impose liability on the basis of a rule of law reading of Kelner v. Baxter (1866) saying that a contract was clearly intended and since it could not be with the principal which was not in existence it must have been with the purported agents Smallwood and Cooper personally. The defendant was held liable as the company could not ratify a contract that was created prior to it existence. (www. thefreedictionary. com) Agency By Necessity
This is recognized in the court system and usually will apply when one party is not able to make a critical decision. Type of relationship where one of the parties can make essential decisions for another party. In certain circumstances, the law authorizes a person to act as agent for another without any regard to the consent of the Principal. An Agent exceeding his authority, bona fide, in an emergency or the carrier of the goods acting as bailee and doing anything to protect or preserve the goods in an emergency, although there is no express authority, are the examples of implied agency by necessity.
The court will only bind the principal if: 1. An emergency situation arose 2. It is impossible to obtain instructions from the principal 3. The agent acted in good faith in the Principals interest and not just for their own convenience. In Prager v Blatspiel. Stamp & Heacock Ltd. (1924) (3) where, during the first world war an agent of a fur merchant in Bucharest bought ? 1,900 worth of skins. The merchant paid for the skins but owing to the war the agent could not dispatch the skins to him. The skins increased in value and the agent sold them.
The defendants argued that they were the plaintiff’s agents of necessity in selling the skins. The plaintiff on the other hand contended that the facts of the present case did not show any necessity to sell the skin and that the defendants had not acted bona fide. The court ruled there was no agency of necessity. The skins were not likely to drop in value and could be preserved by proper storage. (www. jiclt. com) Agency By Estoppel A rule of evidence whereby a person is precluded from denying the truth of a statement of facts he has previously proclaimed.
This occurs where a Principal by words or conduct represents to a third party that another person has authority to act on his or her behalf. If an agency relationship does not actually exist the Principal may be estopped from denying the existence of the agency relationship and may be bound by the contract. The Bahia and San Francisco Railway Co Ltd -v- Trittin and others (1868)(4). Miss Trittin left her share certificates with a broker. A forged transfer together with the certificates, was lodged with and with registered by the company.
The new certificates certified that the named person as registered holder. He then sold them to innocent purchasers who in turn lodged transfers and certificates and obtained certificates in their own names. The company had become obliged to restore Miss Trittin’s name to the register but refused to recognize the innocent purchasers as shareholders. The courts ruled that claimants, therefore, are entitled to recover from the company the value of the shares at the time when they were deprived of them. (www. rothschildarchive. org)
A person who is authorized to act for another is their for known as an agent to their principal through employment, by contract or apparent authority. The importance is that the agent can bind the principal by contract or create liability if are seen to causes injury while in the scope of the agency. Who is the agent is often a difficult and crucial factual issues, but by using the above information Agents can be categorized in their correct position. Mary advertised her garden furniture for sale in the local paper and then went on vacation. Jane seeing the advertisement went to look at the garden furniture and decided to make an offer.
Mary’s neighbour, Ann pretending to act with Mary’s authority entered negotiations with Jane and accepted Jane’s offer on Mary’s behalf. Ann had no authority to act in this way. When Mary returned from her holiday, she wrote to Jane saying she was ratifying Ann’s act. Advise Jane as to whether she is bound by the contract Under The Sale Of Goods Act it is assumed the seller has the right to sell there, goods and that the buyer will enjoy quiet possession of the goods. In the case of Mary and her neighbor, Ann had no permission to sell of the garden furniture.
It states in the information provided that Mary now wishes to ratify Ann’s act and writes a letter to Jane stating her wishes. To give advice I have made the following assumption! 1. Mary has stated in her letter to Jane that Ann had acted without her permission. 2. Mary is now satisfied to ratify the arranged sale. 3. Jane no longer wants the garden furniture. When advising Jane I will be taking the following information into consideration. Ann at the time of viewing the garden furniture was Acting as the principal’s agent but did not have acting authority to do so.
As Ann acted without actual authority, this results in Ann been liable to indemnify Mary for any loss or damage that has been or might be incurred. According to the sale of goods act the seller must own the goods for sale. Ann does not own the furniture meaning she legally cannot sell the goods herself. I would there for advice Jane to reply back to Mary she no longer requires the Garden Furniture, no contract have been put in place and due to the fact Ann acted as her Agent under false pretenses any loss or damages should be achieved from Ann.
1.The Doctrine Estoppel in Maldivian Contract Law | Husnu Al Suood. 2013. The Doctrine Estoppel in Maldivian Contract Law | Husnu Al Suood. [ONLINE] Available at: http://www. suood. com/2012/08/23/the-doctrine-estoppel-in-maldivian-contract-law/. [Accessed 03 March 2013]
2. Agency by Ratification – definition of Agency by Ratification by the Free Online Dictionary, Thesaurus and Encyclopedia.. 2013. Agency by Ratification – definition of Agency by Ratification by the Free Online Dictionary, Thesaurus and Encyclopedia.. [ONLINE] Available at: http://www. financial-dictionary.thefreedictionary. com/Agency+by+Ratification. [Accessed 10 March 2013].
3. Article Download. 2013. Article Download. [ONLINE] Available at: http://www. jiclt. com/index. php/jiclt/article/viewDownloadInterstitial/56/55. [Accessed 03 March 2013].
4. Loans Department. 2013. Loans Department. [ONLINE] Available at: http://www. rothschildarchive. org/textguide/? doc=/textguide/articles/loans. [Accessed 13 March 2013]. Bibliography www. webcontentsolutions. com www. thefreedictionary. com An Introduction To Irish Company Law 3rd Edition Author Grainne Callanan The.