involves: Principal, agent and third party.
Function: the agent act on the behalf of the principal, affects a contract between the principal and the
Two forms of agency:
- Express: where the job of the agent is expressed in the case of business.
Agent’s expressed authority: where the agent performs as per instructed by the principal
- Less than express:
Eg.1. President of company X is gonna have a lunch with the supplier. He is taking with him his national
sales manager. The president in the alcoholic dozed state tells the third party that the sales manager is
also responsible for marketing and advertising. But the third party in the believe that the manager was
responsible for marketing and advertising makes a contract with the sales manager.
The contract is binding and real.
a. Did the agent have an expressed authority to affect a contract with the third party? If no, next
b. Did the agent have apparent or ostensive authority (authority more than he actually does) to
affect that? If yes, next question
c. Did the third party know that the agent does not have the authority? If no, then there is a
contract. If yes, knowledge of the third party eliminates the contract.
Agency by estoppels: when the principal finds out about it and does not like it and wants to cancel the
contract. The third party can raise the agency’s authority so expressed and stop the principal from
cancelling the contract. The principal is estopped.
Agency by ratification: where the agency has no expressed or ostensive authority but enters into a
contract and the principal “ratifies” with the third party ( agrees to the contract). Note: there is a
contract even in the absence of agent’s authority.
Principal’s right against agent:
- An agent has a fiduciary duty to act in the best interest of the principal.
- Where there is breach of the fiduciary duty, agent loses out on his remuneration and be sued by