Presentation agency - Agency relationship All the sections...

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Agency relationship All the sections referred to are found in the Contract Acts. 2 contracts : i - contract of agency bet A and P ii – any other contract bet P and T concluded by A P rincipal A gent 3 rd party (T) 1 2
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Principal – the person who appoints another to contract with third parties. Agent – the person appointed to contract on behalf of another. Agency – contract under which one party is authorised to contract for another.
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Express authority: specifically delegated to agent by the agreement creating the agency. Implied authority: agent’s authority to do things in order to carry out express authority. Apparent authority : authority that an agent believes to possess because of principal’s behavior.
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When an agent (A) acts for the principal (P) w/in his authority the act binds P to 3 rd party (T). e.g. A bought a piece of land for the P from T. The contract binds P and T. They have incurred obligations and responsibilities towards each other. A is not responsible for the contract
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Creation of agency relationship i- by express appointment Oral or written. If the contract to be entered by A for P is a contract under seal such as sale of land, A’s appointment must be made under a written appointment by way of a power of Attorney (PA)
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ii- implied appointment (a) P’s the words or conducts informs others that A has authority to act as P’s agent. e.g. P allowed A to order goods for P and always paid for the goods. P is bound for the goods ordered by A as A was impliedly appointed as P’s agent.
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(b) Relationship bet husband (H) and wife (W). W becomes the agent for H to pledge H’s credit for necessaries suited to their style of living. e.g. H a rich businessman. W can bought goods on credit in a very expensive place. W is the agent of H because it suit their status and the goods are necessaries for their lives
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H/ever, W’ s action may not bind the 3 rd party and H if H can show that: - H had expressly forbade W from pledging his credit (bought goods etc on credit); or - H expressly warned 3 rd party against supplying W with goods etc on credit;or - W was sufficiently provided for the goods of that kind; or - W was given sufficient allowance (money) for buying the goods w/out the need to pledge H’s credit; or - The order was unreasonable considering H’s income at that time although it is for necessaries.
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(c) Section 7 of the Partnership Act 1974 provides that partners are agents to each others when contracting in the course of the partnership business.
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iii- Agency by ratification The acts of P in adopting contract entered into by A who has no authority or who has exceeded his authority.
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