An agency relationship can be created by the conduct of parties

Creation of Agency – Agency

an agency relationship can be created by the conduct of parties

An agency relationship is formed between two parties when one party The principal can control an agents conduct for any duties specified in. The legal relationship between the Agent and Principal will depend on how the An agency created by operation of law usually arises where for some and Agent, the court has found that the conduct of the parties binds the. Generally, in a business relationship, the principal and agent relationship requires Also, the CPA would be liable to 3rd parties relying on the CPA's work (but . to a third party for a contract made by an agent who is acting within the scope of.

In many cases the agency will terminate when a certain event occurs. For example, if an agent is hired to sell property for you, the agency terminates when the property is sold.

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A change of circumstances that materially changes the relationship will also terminate the agency. For example, closing of the business associated with the agency or the insolvency of either the principal or agent. A major breach of an agent's fiduciary duty will also terminate the relationship as will the death of either party or the loss of the capacity to enter into a contract, e. When corporations or partnerships are involved, dissolution will also terminate the agency.

Either party can terminate the agency by informing the other party. The power to terminate exists even in those cases when there is a contractual agreement not to terminate. In this case, the party breaching the contract might be liable for breach of contract, but he or she still has the right to cancel the agency.

an agency relationship can be created by the conduct of parties

The agent has the duty of undivided loyalty toward his or her principal. A person cannot act as an agent for more than one party or self-deal with the principal's property without the principal's expressed permission.

If the agent has any interests that are adverse to those of the principal he or she has a duty to disclose them. The agent is liable for any loss the principal suffers as the result of failure of the agent to complete his or her duties or follow the reasonable directions of his principal.

The agent is also obligated to perform his or her duties in a reasonable and prudent manner. This duty applies even to those situations in which the agent is gratuitously acting on behalf of the principal. If the agent breaches his or her duties, the principal can sue the agent for either breach of contract or in tort. Tort refers to an action brought because of negligent or wrongful acts that cause injuries to others.

Under a breach of contract action, an agent can be held liable for any reasonably foreseeable damages that his or her principal suffers as the result of the agent's failure to fulfil the agency contract. In a tort suit, the principal can recover for any damages suffered because of the agent's wrongful or negligent act.

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In some cases, the principal can also collect punitive damages. Punitive damages are those damages assessed by a court in excess of the actual damages and imposed as punishment.

The principal owes a duty to reasonably compensate the agent for the agent's time and effort unless the agent has agreed to act without pay. In addition, the principal must reimburse the agent for any reasonable expenses incurred. Additional duties may be imposed by the contract. In most situations, the agent has a lien against the property of the principal for any monies owed to him or her.

How Can An Agency Be Created?

To be liable there must be an agency relationship, and the conduct must be within the scope of employment. To be within the scope of employment, an employment situation must exist. This type of agency is created by the consent of the principal through the express appointment of the agent by the principal. Such appointment maybe made orally or by an informal writing. The powers of the agent are confined to those which are expressly conferred on him by the appointment.

Finally, he exercises natural authority. Agency by implied agreement: This type may arise under two circumstances; firstly, it may also arise from express authority. This happens in situations where an agent appointed to conduct a particular trade or business does all such things as are necessarily incidental to the 7 conduct of such trade or business.

For instance, an agent appointed to sale goods may show or describe them to a prospective buyer and accept a deposit.

This was the case in Ryan v. Pilkington where it was held that although the estate agent was not expressly given authority to accept deposits, he acted within the ostensible scope of his authority.

Thus, the authority or the agent here is incidental or ostensible.

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Secondly, this type of agency may be implied from the conduct of the parties. The law will imply such an agreement if the parties have, by their conduct consented to a state of affairs which is explicable only in terms of agency. Estoppel is the principle of law which prevents a person from asserting a reverse of what he has previously represented, if an innocent representee has materially changed his position in reasonable reliance on the previous representation.

This is aptly illustrated by the case of Summers v. Again, agency by estoppel may be created where a retiring partner retires without making a public announcement to that effect and the remaining partners enter into contract with persons who had previously dealt with the firm and who are aware of his membership but unaware of his retirement, in order to bind the affected partner by such contracts as he has by his conduct, held 8 himself out as a continuing partner.

Jardine, a member of the partnership, retired without notifying the public. It was held that the retired partner was bound by contracts made by the remaining partners with persons who had previously has dealings the firm or who were aware of his membership. Thus, in Drew v. That apart, for this agency to be created, the following conditions must be satisfied; 1 There must be a representation by the principal or someone authorized by him.

an agency relationship can be created by the conduct of parties

By ratification we mean authority given by a principal to a transaction entered into on his behalf by an agent who lacked the requisite prior authority to act. Agency by ratification is created where an agent or a person acting as one, acts in the name of a principal in existence, but without the principals authority, and the latter ratifies the act, making it as valid as if it had been done with his authority.

In other words, its effect is that it relates back to the time when the agent made the contract and the principal becomes liable and entitled under the contract as if the agent had acted with authority.

This is exemplified by the case of Buron v. However, for ratification to be valid, the following conditions must be satisfied; a The contract must be professedly made on behalf of a named, identified and or identifiable principal. Thus, in Caligara v. As incorporation the company cannot, after incorporation ratify or adopt any such contract because there is in such cases no agency since there is no company yet in existence; therefore, the contract is that of the parties making it.

Thus, the principal cannot ratify beneficial aspects and reject the others. Here, the law confers power to act as agents without obtaining assent of the other persons. The type of agency which may be created under this category is Agency of Necessity.

This arises when in emergency conditions a person is obliged to act in order to prevent irreparable loss or damage to another. This type is constituted given the following conditions; a. Ojukuku, the Privy Council held that a principal, who appoints an agent knowing his skill and experience, should not expect or require from such 12 an agent a higher measure of skill or knowledge than that which an agent of his position and experience could reasonably be expected to posses.

An agency relationship is formed between two parties when one party the agent agrees to represent the other party the principal. A principal-agent relationship is fiduciary, meaning it is based on trust. Normally, all employees who deal with third parties are considered agents.

As such, an agency relationship is governed by employment law. What Is the Purpose of an Agent? An agent is basically an employee. The key difference is that an agent and principal make an agreement that the agent will represent the principal in specific transactions or situations.

An agent can only act on behalf of a principal for certain issues depending on the agreement. For example, an NBA player hires an agent. An agreement between the two may only give the agent power and authority to negotiate contracts. The principal can control an agents conduct for any duties specified in the agreement. Though an agent can represent a principal in anything, many principals limit the scope of an agent's representation.