Scribd
Upload
287 views

Agency Part 1 Lecture Slides

An agent acts on behalf of and represents a principal. Through the agent's actions, the principal can enter into legally binding contracts with third parties. The key requirements for a valid agency relationship are that the principal must exist, the agent must have the capacity and authority to act on the principal's behalf, and it must be clear the agent is acting in a representative rather than personal capacity. Authority can be express, implied, or apparent based on the principal's words or conduct even if no actual consent was given.

Uploaded by

Siphesihle Shange
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
287 views

Agency Part 1 Lecture Slides

An agent acts on behalf of and represents a principal. Through the agent's actions, the principal can enter into legally binding contracts with third parties. The key requirements for a valid agency relationship are that the principal must exist, the agent must have the capacity and authority to act on the principal's behalf, and it must be clear the agent is acting in a representative rather than personal capacity. Authority can be express, implied, or apparent based on the principal's words or conduct even if no actual consent was given.

Uploaded by

Siphesihle Shange
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 14

Insurance and Agency

Agency Part 1
Introduction
• An agent is a person who acts in the name of and on behalf of
another, having been given and assumed some degree of authority to
do so.
• Most organised human activity—and virtually all commercial activity
—is carried on through agency.
• All corporate transactions, including those involving governmental
organisations, are so conducted because companies (business
entities) cannot actually act themselves. 
Nature of Agency
• Agency is defined as the relationship which arises where one person
known as the agent acts for another known as the principal.
• Through the acts of the agent, the principal and a third party may be
brought into a contractual relationship.
• Agent performs a legally binding act on behalf of the principal, who
becomes bound in law to the 3rd party as a result of the agent’s act.
PRINCIPAL

JURISTIC ACT CONTRACT OF AGENCY

THIRD PARTY AGENT


CREATION OF CONTRACT
Formalities
• No specific formalities
• Need to abide by general rules applicable to particular contracts
• Certain instances agent required written authority, to bind principal
and conclude contract
Principal
• Is anyone with a right in law.
• Capacity to contract through an agent is directly related to the
capacity to contract oneself.
• NB should personal performance be required—cannot appoint an
agent to act
• Not necessary for the principal to be disclosed
Agent
• A person who has the authority to create, vary or discharge contractual relations
between a principal and a 3rd party
• Agent performs a legally binding act on behalf of another, who becomes bound in
law to the 3rd party as a result of the agent’s act
• Agents acquire neither rights nor obligations ( can be negotiated otherwise)
• Agent is entitled to payment by Principal
• Agent’s authority to act is dependent on principal’s consent—Authority is KEY!!!!
• Principal must be in existence at the time when agent contracts
• Exception—Companies Act—allows for person to act as agent/trustee of company yet to be formed—
after incorporation contract will be adopted/ratified by Co
• Gardner v Richardt 1974 (3) SA 768 (C) at 769H-770A
Requirements for Representation
• Principal must exist
• Agent must have capacity to act as such
• Agent must have authority to perform the relevant juristic act on
behalf of the principal
• Must be clear from the circumstances that the agent is acting in a
representative capacity and not in a personal one
• Marais v Perks 1963 (4) SA 802 (E)
• The principal need not be named or identified.
• However an agent who does not disclose the existence of his principal, may
be held personally liable.
Formation of the Contract of Agency
• Authorisation
• A unilateral juristic act—though often negotiated
• Authority can be given expressly or tacitly
• Generally—power of attorney—written declaration that the agent is
appointed and authorised to perform the act(s) described in the document—
can be general or specific
Actual Authority
• Actual authority is the real or factual authority conferred on an agent
by his or her principal.
• This type of authority presupposes the existence of a consensual
relationship between the principal and the agent.
• The scope of this authority may be communicated to the agent
expressly, it may be implied by law from the overall circumstances of
a case, or it can be ex post facto subsequently ratified by the principal.
• The 2 subdivisions are express and implied authority.
Express Authority
• By agreement- oral or writing
• Actual authority
• Parties must agree on :
• what has to be done by the agent ( scope of authority); and
• remuneration to be paid to the agent
• The most important aspect of express authority is the scope or limit of the agent’s
authority.
• A rule stated in Colonial Banking and Trust Co Ltd v Estate Hughes is that:” …
authorisation should, if the language permits, be benevolently interpreted so as to
validate the acts of the agent…. “
• Agent entitled to reasonable remuneration
• Principal entitled to revoke authority
Implied Authority
• Any other conduct which implies that the principal has conferred
authority upon the agent and will validly create an agency
• Form of actual authority
• Nel v SAR&H 1924 AD 1930
• If principal know but does not object to it and allows an agent to
continue performing a juristic act on behalf of the principal, implied
authority will arise
• Coetzer v Mosenthals Ltd 1963 4 SA 22 (A)
• Faure v Louw [1880] 1 SC 3
Apparent or Ostensible Authority
• apparent authority gives rise to agency by estoppel.
• “ estoppel -the principle which precludes a person from asserting
something contrary to what is implied by a previous action or
statement of that person or by a previous pertinent judicial
determination.”
• Therefore, in a claim based on the apparent authority of the agent to
bind his or her principal, the third party was required to prove all the
elements of estoppel.
• This is known as agency by estoppel.
Apparent or Ostensible Authority
• These requirements were listed as follows by the court in Zelpy 1780
(Proprietary) Limited v Mudaly;
• there must be a representation by words or conduct,
• the representation must be made by the principal that a person has authority to act on his or her
behalf,
• the representation should be in such a form that the principal should have reasonably expected
that third parties would act on it,
• the party who seeks to estop the principal must have relied on that representation (reasonable
reliance) (also induced 3rd party to act), and
• in relying on that representation, such a party must have suffered a prejudice.
• If all these requirements are met, the principal shall be held liable on the
contracts made by the agent despite the fact that he never consented or
authorised the agent to bind him.

You might also like