Law of agency

DEFINITION

1. Agency is a common legal association which exist when one party, known as the principal, authorizes another party, known as the agent, to enter into contract with a third party in his or her name.
2. This is a contractual relationship between a principal and an agent, in order to the principal into an agreement with the third party.

AGENT: An agent is a person who is employed to act on behalf of another person called the principal.

WHO MAY APPOINT AN AGENT: The Law allows every person who is legally competent to appoint an agent. Companies, partnerships, clubs, churches and societies as well as individuals, may appoint agents.

HOW AN AGENT MAY BE APPOINTED

An agent may be appointed in the following ways. By,

1. Appointment: This is a statement by the principal authorizing a person to be his agent.
2. Ratification: This happens when one person approves an act preciously done by another in the former’s name without authority.
3. Estopel: This is an agency which arises when a person by word or conduct leads another person to believe that a third party is his agent or has the authority to execute particular acts.
4. Necessity: An agent arises by necessity when an unforeseen emergency occurs. For instance, the driver of a bus operation between Lagos and Maiduguri may pledge his principal’s credit. In order to have needed repairs and may thereafter send the bill to the bus owner for settlement.
5. By Implication: The circumstance of the situation may warrant a principal to appoint an agent by conduct or implication, but not in writing. In this case the persons finds himself in a position where his services are accepted as an agent.

TYPES OF AGENTS

Agents are of various types as follows;

1. Brokers: Brokers are commercial agents who link their principals with potential buyers. They just search for potential buyers and link them up with their principals.
2. Universal Agent: A universal agent is not restricted to any line of goods but is authorized by his principal to enter into all sorts of business transactions on the principal’s behalf.
3. General Agents: This type of agent has authority to represent his principal in all matters relating to a particular business.
4. Jobber: This type of agent buys from his principal and sells on his own behalf rather than on behalf of his principal.
5. Factor: A factor is a commission agent who sells goods on behalf of his principal.
6. Del-Credere Agent: This type of agent sells goods on credit on behalf of his principal and under takes responsibility for the collection of the proceeds of the sale. If the buyer defaults in payment the del-credere agent pays so that his principal does not suffer any loss.
7. Commission Agents: This is an agent who is engaged by his principal to buy and sell goods at competitive prices on his behalf. Such agents are seen more in foreign trade and they deduct the commission due to them before remitting the cash proceeds to their principals.
8. An Auctioneer: This is an agent who is licensed to sell the principal’s goods on auction to the highest bidders.
9. Forwarding and Clearing Agents: These agents function more in import and export trade. They work at seaports and airports. Their duty is to do custom’s formalities and forward goods to the foreign importer on behalf of the home exporter. They also clear imported goods on behalf of the home importer and deliver the goods to the named destination of the importer.
10. Advertising Agent: This is an advertising practioner who advertises goods and services for his principal.
11. Manufacturer’s representative: This is an agent who represents a foreign or local manufacturer in the marketing of the manufacturer’s goods.

AGENT’S DUTIES TO HIS PRINCIPAL

An agent owes five important duties to his principal. These are as follows:

1. Loyalty and good faith.
2. obedience
3. information
4. Reasonable skill and diligence.
5. Accounting

PRINCIPAL’S DUTIES TO HIS AGENT.

The principal has five important obligations to his agent. These are as follows;

1. compensation
2. Reimbursement
3. Abide by the terms of the agency.
4. Not to interfere with the agent’s efforts.
5. To make available all facilities that will enable the agent perform his duties satisfactory.

RIGHTS OF AN AGENT.

An agent enjoys the following rights.

1. Right of lien over the goods he sells. If he has assumed liability for payment of the purchase price to the principal, he has the right to stop the goods from being consigned to his principal.
2. He has the right to obtain refund of all expenses incurred on behalf of the principal.
3. He has the right to be indemnified for losses incurred in the course of the agency.
4. He has the right to his commission or remuneration.

RIGHTS OF THE PRINCIPAL

1. Repudiation of the contract.
2. Sue the agent for default.
3. He can sue the third party for default.
4. Takes over the secret profit made by the agent.
5. Refusal to pay the agreed commission.
6. Dismissal of the agent.

TERMINATION OF AGENCY

Agency come to an end in the following circumstances.

1. Bankruptcy of the principal.
2. Insanity of agent or principal.
3. Death of either the principal or agent.
4. By mutual agreement.
5. By completion of the agreement.
6. Breach of contract.
7. Frustration of the agency.
8. Illegality of object.
9. By lapse of time.

ASSIGNMENT

What are the right of an agent

State the right of the principal