What is agency When one person with the necessary authority to do so conducts a juristic act for and on behalf of another in such a manner that he obtains rights and obligations for the other person without him acquiring any rights or becoming accountable ID: 648365
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Slide1
LAW OF AGENCY
B Com (SCM)Slide2
What is agency
?
…When one person, with the necessary authority to do so, conducts a juristic act for and on behalf of another in such a manner that he obtains rights and obligations for the other person without him acquiring any rights or becoming accountable
Fouché
(2007) pg 244Slide3
What is agency
Agency
arises when one person (agent) concludes a juristic act for or on behalf of another (principal) with the result that a legal bond arises between the agent and 3
rd
party
Commercial Law Study Guide, MANCOSA (2017)
pg
67Slide4
What is agency then
?
One person acts on behalf of another
The act is a juristic act
The act is authorised
The action results in a legal tie between two people, one of which was not involved in the original actionSlide5
The parties
The principal – gives the instruction
The agent – carries out the instruction
The duties (or instruction) is called a mandateSlide6
How does agency arise
?
By agreement (express authority)
Oral agreement
GPA
Special power of attorney
By operation of law
Negotiorum
Gestio
By ratificationSlide7
Authority by Agreement
By agreement Principal gives Agent authority to act on his behalf
No formalities required
Can be by way of written Power of AttorneySlide8
Authority by Operation of Law
Where one party in absence of agreement has authority by law to represent another
Eg
:
Guardian representing a minor
Curator acting for mentally insane
Partner representing a partnership or other partnersSlide9
Authority through
Estoppel
Where a person creates the false impression that another person may act on his behalf and a third party acts on the strength of that (
mis
)representation, the “principal” can be bound by the false impression he created.Slide10
Authority by Ratification
Where the “principal” gives his consent or authority after the representation has taken placeSlide11
The Effects of Representation
The legal bond will exist between the principal and the third party.
The agent does not acquire any rights or dutiesSlide12
Duties of the Principal
To pay the agreed remuneration
To reimburse the agent for all expenses necessarily incurred by him
To indemnify the agent for all losses or liabilities incurred in performing the authorised actSlide13
Duties of the agent
To execute the Principal’s instructions
To account to the Principal
To keep his property separate from that of the Principal
To act honestly and in good faith – fiduciary relationship exists
To avoid conflicts of interest
Not to delegate his authority
To act with care, skill and diligence
Slide14
The duty of good faith
Put the Principals interests above your own
May not make a hidden secret profit
May not sell his own goods to the Principal without disclosing the fact
Not to disclose confidential or private information of the PrincipalSlide15
Agents Liability
Generally, agent not liable to 3
rd
parties, but certain exceptions:
If principal does not exist (agent lies) – agent is liable
If principal does not have legal capacity
If agent acts beyond scope of authority
If agent fails to disclose he is an agent (see next slide)Slide16
The Doctrine of the Undisclosed Principal
Where the agent acts on behalf of a principal without disclosing the fact.
Requirements
Agent must be authorised to act for principal
Agent must have intended to contract on behalf of principal
Agent must fail to disclose agency at all
Third party can sue principal or agent but not bothSlide17
Termination of agency
Completion of the mandate
Effluxion of time
Death, insanity or insolvency of the Agent or the Principal
Revocation of mandate by the Principal
Renunciation of the mandate by the Agent
Mutual consentSlide18
Partnership
Between 2 and 20 persons
Each makes a contribution
Intention to make a profitSlide19
Essentials
Each partner must contribute
Money, services, stock, skill
Must have a profit motive
Profits divided in agreed ratio
Partnership for joint benefit of all partner
Not necessarily equallySlide20
Naturalia
Mutual mandate
Profit share ratio
Obligation to share in loss
Loss share ratio
Division of assets upon dissolution
Ownership ratioSlide21
Rights & duties
Comply with partnership agreement
Advance the interests of the partnership
Disclosure to partners
Right to claim promised contribution
Rights to inspect booksSlide22
Dissolution
Grounds
Consequences