Discuss Agency and the ways in which the relationship between Principal and Agent may arise
“An Agent is a person who is employed by another person, to bring that person, called the Principal, into contractual relations with a third party”. 1 For practical and commercial reasons the law allows a person to act through an Agent. ... There are some exceptions to this rule, agency cannot be used when someone is required to perform some act, for example if a singer who was contracted to sing at a concert, became ill, he/she could not hire an Agent to sing for them. Normally when an Agent has performed the required task he / she leaves and the Principal and third party continue with the contract. Because an Agent does not contract on their own behalf they do not have to have capacity to contract, but the Principal does. ... General Agent A General Agent has implied authority to represent the Principal in all matters of a particular kind. The acts performed by this General Agent are binding on the Principal, if they are in the scope of his implied authority. ... Special Agent A Special Agent is an Agent who has been employed by the Principal to perform an act or acts relating to one subject matter. For example, an Estate Agent would be classified as a special agent. He/ She is an Agent who, other than by auction, purchase or negotiate the sale or purchase of any building. If the acts of the special Agent are continuous, for example if he or she has acted for the Principal every time he or she wanted to purchase a house, this does not make them a General Agent. ... They contended that the mother’s conduct in relation to her son’s former purchases constituted him her general agent for the purchase of horses. Held: The action was dismissed, as there was no evidence of general agency in the son. Universal Agent A Universal Agent has unlimited authority to enter into contracts on behalf of the Principal. ... _________________________________________________________________ When an Agent enters into a contract on behalf of the Principal, the contract gives rise to legal effects between the Principal and the Agent, during this relationship certain rights and duties are to be obeyed. These rights are stated in the contract between the parties. However there are some basic duties that Agent and Principal must uphold. Duties of an Agent: Ø Obedience The Agent must show obedience and must act according to the terms of the contract. Where this is not done the agent is liable to the Principal for damages. ... Turpin –V- Bilton (1843) Bilton, an insurance broker was employed as an agent for Turpin and was paid to arrange insurance on Turpin’s ship. ... Held: Bilton was personally liable for the loss suffered by Turpin Ø Diligence and skill An Agent must exercise diligence and care on behalf of the Principal. ... Keppel –V- Wheeler Wheeler was employed as agent for Keppel to sell a block of flats. ... Instead of informing the owner Wheeler arranged resale between X and Y. Held: Wheeler was liable to Keppel for the difference between the offer made by X to Y, as he had committed a breach of duty.