Scribd
Upload
5 views

The Law of Agency - Introduction

The Law of Agency outlines the legal relationship where an agent acts on behalf of a principal, affecting the principal's legal position with third parties. It defines various types of agents, including special, general, universal, and factor agents, as well as distinctions between agency relationships and other legal arrangements like bailment, trust, and independent contractors. The document also specifies the capacity required for individuals to act as agents or principals under the Contract Act.

Uploaded by

noelineatugonza59
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
5 views

The Law of Agency - Introduction

The Law of Agency outlines the legal relationship where an agent acts on behalf of a principal, affecting the principal's legal position with third parties. It defines various types of agents, including special, general, universal, and factor agents, as well as distinctions between agency relationships and other legal arrangements like bailment, trust, and independent contractors. The document also specifies the capacity required for individuals to act as agents or principals under the Contract Act.

Uploaded by

noelineatugonza59
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 5

The Law of Agency

An agency relationship can be understood by a layman to mean a legal arrangement in which


one party (the agent) acts on behalf of another party (the principal).
GHL Fridman in his Book The Law of Agency 6th edition defines
Agency as the relationship that exists between two people when one, called the agent is
considered in law to represent the other called the principal in such a way as to be able to
affect the principal’s legal position in respect of strangers to the relationship by making of
contracts or the disposition of property.
In the case of Lamb & Sons v Goring Brick Co. Ltd (1932)1 KB 710
Agency was defined as a situation where a person called an agent has the power to bring
another person called principal into a contractual relationship with a third party.
Qui facit per alium facit per se which means that he who acts through another does the act
himself.
In the case of Selle & Another v Associated Motorboat Co. Ltd & Others [1968] EA 123
Court held that where a person delegates a task or duty to another to do something for his
benefit, or for the joint benefit of himself and the other person the employer will be liable for
the negligence of that other in the performance of the task, duty or act.
The agent is authorized to perform certain tasks or make decisions that affect the principal
mainly: -
(i) Disposing of property on behalf of the principal.
(ii) Concluding contracts on behalf of the principal.

Definition of agent and principal


S.117 Contract Act Cap 284.
In this Part, unless the context otherwise requires—
“agent” means a person employed by a principal to do any act for that principal or to
represent the principal in dealing with a third person.
“principal” means a person who employs an agent to do any act for him or her or to
represent him or her in dealing with a third person;
Capacity in the law of agency.
In this regard we mean who can be a principal and who can be appointed as an agent.
S.118 Contract Act Cap 284.
Capacity to employ agent.
A person may employ an agent, where that person—

1
(a) is eighteen years or more;
(b) is of sound mind; and
(c) is not disqualified from appointing an agent by any law to which that person is subject.
S. 119 Contract Act Cap 284.
Capacity to act as agent.
A person may act as an agent where that person—
(a) is eighteen years or above;
(b) is of sound mind; and
(c) is not disqualified from acting as an agent by any law to which he or she is subject.
Types of agents
• Special agents
This is an agent employed to carry out a particular task. A special agent is authorized only to
perform a specific task or handle a particular transaction but does not have broad authority.
A special agent maybe given authority to dispose of a motor vehicle.
• General agent
This is an agent who has authority to act on behalf of the principal on all matters in relation to
a particular trade or business. A general agent has a broader authority to act on behalf of the
principal in all matters related to a particular business or role.
A property manager who handles all leasing, rent collection, and maintenance of an
apartment complex is a general agent.
• Universal agent
This is an agent whose authority is unlimited, and his acts bind the principal provided the acts
are legal. A universal agent has unlimited authority to act on behalf of the principal in all
legal and financial matters.
A person with a general power of attorney over all affairs of another individual.
• Factor agents
This is an agent who is employed to buy and sell goods on behalf of his or her principal.
The case of Boring v Cane (1818) 2 BE 137 defines a factor agent as: -
A person to whom goods are assigned for sale by a merchant residing abroad or a distance
away from the sale, the agent is entrusted with the possession of the goods for the purpose of
sale, and he has implied authority to sell in his or her own name.

2
• Del Credere agents
A del credere agent guarantees payment for goods sold to third parties, acting as both a sales
agent and a guarantor
This type of agent who for an extra commission undertakes to indemnify their principals
should the latter suffer losses because of a customer introduced by the agent to pay for the
goods when the price is ascertained and due.
• Estate agents
These are agents who have power to make representations about property but have no power
to make any contracts unless they are specifically authorized do so.
Especially in land matters.
• Brokers
This is an agent who is employed to make contracts with third parties on behalf of the
principal but is not entrusted with possession of the goods or documents thereto. A broker
acts as an intermediary between buyers and sellers but does not take possession of goods or
services.
He or she has no right or authority to sell in his name.
These are negotiators and make contracts between buyers and sellers of property.

Distinction between an agency relationship and other relationships.


1. Bailment
This is a contract is where possession of property is transferred from the bailor to the bailee
for a specified period of time but ownership remains with the bailor. The bailee can’t transfer
title of the bailed goods.
Bailment refers to a legal relationship in which the owner of a good or asset (the bailor)
delivers it to another party (the bailee) for a specific purpose, under the agreement that it will
be returned once the purpose is fulfilled or disposed of as directed by the bailor.
S.87 of the Contracts Act Cap 284 defines bailment to mean.
The delivery of goods by one person to another for some purpose, upon a contract that the
goods shall when the purpose is accomplished, be returned or disposed of according to the
direction of the person who delivered them.
Characteristics of bailment
• Delivery of possession by one person to another.
• Delivery is for some purpose.
• Delivery must be upon a contract that when the purpose is accomplished the goods
should be returned to the bailor.

3
2. Trust
A trust is a legal arrangement where one party (the trustor or settlor) gives another party (the
trustee) the right to hold and manage assets on behalf of a third party (the beneficiary).
Under a trust relationship the parties are a trustee and a beneficiary. The trustee only holds
property on the behalf of the beneficiary. The trustee is not an agent of the beneficiary and
can’t in any way bring a beneficiary into any legal relationship with a third party.
• Trustor/Testator/Settlor – The person who creates the trust and places assets into it.
• Trustee/Executor/Executrix – The person or institution responsible for managing the
trust assets according to the trustor’s instructions.
• Beneficiary – The person or group who benefits from the trust assets.
The difference here is that a trustee is just holding property in trust for the beneficiary and
can not in any way bring a beneficiary into a contractual relationship with a third party.

3. Independent distributors and contractors.


An independent contractor is a person or business that provides goods or services to another
entity under a contract but is not considered an employee. Independent contractors typically
work on a freelance or self-employed basis, meaning they control how and when they
perform their work.
An independent distributor is a self-employed person or a company that buys products
directly from a manufacturer or wholesaler and resells them to retailers, businesses, or
consumers. Unlike employees, independent distributors operate as their own business and are
not directly controlled by the company whose products they sell.
The distinction between an agency relationship and independent contractors and distributors
is that the independent distributors and contractors do not work under the authority of another
person.

4
5

You might also like