Law of Agency Salient features Nature of agency

Law of Agency Salient features

Nature of agency • When one person, the agent concludes juristic act for or behalf of another, who is called the principal with the result that a legal tie arises between the principal & a third party.

Representative capacity • To conclude juristic acts o behalf of another. • Lack of authority may be cured by ratification.

Authority • Express agreement between principal and agent. • Formal appointment eg written power of attorney.

Authority by operation of law • Guardian and minor • Curator and an insane person • Director and company

Estoppel • If the principal has created false impression that another person has the authority to conclude juristic on his behalf, & third party then act to his detriment on the strength of that impression, the principal can be prohibited from denying such authorisation.

Ratification • Validation by a person of a juristic act concluded on his behalf by another who did not have the authority to do so.

Relationship between Principal and Agent • If agent acts on behalf of someone else intention should be apparent to the other party.

Duties of the agent a) He is obliged to follow his instructions b) He must exercise care and diligence c) The agent must show good faith

The agent must show good faith • Secret profits – all profits acquired by the agent in agency transactions is acquired for the principal. - Director must account for corporate opportunity.

The agent must show good faith • Conflicts of interest: There must be disclosed to the principal

The agent must show good faith • Abuse of confidential information: He may not misuse confidential information obtained through fiduciary relationship with his principal.

Duties of the agent d) The agent must account properly

Duties of the principal • He must reimburse the agent for expenses incurred in the exercise of a lawful instruction. • He remunerate the agent for his services.

Personal Liability of the Agent 1. He can bind himself by way of agreement as against the third party by warranting that he has necessary authority

2. A person who falsely represents that he has authority to conclude juristic acts on behalf of another can be liable in delict if the third person acts on his belief of this misrepresentation.

3. The agent can also tacitly warrant he has acquired authority.

• Where the representative acts for an undisclosed principal he can also incur liability.