Chapter 7: Law of Agency

Definition:

The law of agency is an area of commercial law dealing with a set of contractual, quasi-contractual and non-contractual fiduciary relationships that involve a person, called the agent, that is authorized to act on behalf of another (called the principal) to create legal relations with a third party.

the relationship of agency.
  

agents and principals:(internal relationship), known as the principal -agent relationship.

     agent and the third parties: with whom they deal on their principals'                                         behalf(external relationship.

     principals and third parties: when the agents purport to deal on their behalf. 

Type of Agency.

 general agency: authorized to conduct a series of transactions involving a continuity of service.

special agency: authority is limited to accomplishing a specific, and limited assignment.

Duties of an Agent

-Loyalty : must act at all times solely in the best interests of his or her principal to the exclusion of all other interests.

-obedience: obliged to obey promptly and efficiently all lawful instructions of his or her principal, within the scope of the agency.

-Disclosure:An agent is obligated to disclose to her or his principal all relevant and material information(unless obtained through another fiduciary relationship) that the agent knows and that pertains to the scope of the agency.

-Confidentiality:An agent is obligated to safeguard his or her principal’s confidence and secrets.

   The duty confidentiality continues forever.

-Reasonable care and Due Diligence:obligated to use reasonable care and diligence in pursuing the principal’s affairs.

-Accountability:obligated to account for all money or property belonging to the principal, which entrusted to the agent.

Rights of the Agent

*To payment

*Exists only where the agency agreement indicates such an intention.

*If the agency is gratuitous no payment is intended.

*If the agency is contractual, the agent may sue for breach if the principal fails to make appropriate payment.

 *To indemnity

*Whether the agency is gratuitous or contractual an agent is entitled to recover any expenses incurred or losses suffered.