Commercial Law - Agency Contract

1857 WordsOct 5, 20138 Pages
Question 1. Outline and describe the ways in which an Agency Contract may be established. Agency According to Nicole Busby, an agency is a contractual relationships that entitles one party to act on behalf, or in favour of, the other party in contractual arrangements with a third party. In this regardthese circumstances, the former is known as an “agent” and the entity on whose behalf the agent performs is called a “principal”. Generally, the agency relationships arises in commercial transactions, partnership and employment. The term “agency” in commercial law is represented in the Latin phrase, qui facit per alium, facit per se, i.e. the one who acts through another, acts in his or her own interests. In terms of agreeing an Agency…show more content…
2006, 6-12) Agency by ratification Ratification is the post-dated approval by a principal of an act carried out by the agent. Such ratification may be express or may be established by the principal’s actings, in particular by accepting without demur the agent’s actions. But the ratifying principal must have the full facts before him and the agent must have made it clear to the third party that he was acting as an agent (Keighley Maxstead & Co. V Durant 1901). Furthermore the ratification must be timeous and the principal must have been legally capable of authorising the transactions or act when the agent undertook it (Busby et al. 2006, 6-13). Are all conditions fulfilled we must notice that a third party who contracts with an agent whose actings are subsequently ratified cannot withdraw from the contract (Bolton Partners v Lambert 1889). Agency by necessity An agency by necessity (negotiorum gestio – management of affairs) occurs when and where an agent does what is vital to preserve a principal’s assets, where the principal is not in a position to do so himself (e.g. because the person cannot be contacted), and where it is likely that authority would have been given. The agent (gestor) can get his expenses and be relieved of any liability (Fernie v Robertson 1871). “The agency by necessity is devoid of prior approval or consent when an
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