Dicuss agency from the point of view of actuals, implied, and apparent authority, estoppel fiduciary duty,
breach of duty, ratification, and vicarious liability
LAW OF COMMERCE 2
Agency
An agency relationship arises where one party, the principal, empowers another party, the
agent to act on his/her behalf (Sealy & Hooley, 2009). The law recognizes three forms of
authority that the principal may confer to an agent, which include: actual authority, apparent
authority and ratified authority. Actual authority is classified into: implied actual authority and
express actual authority. Actual express authority arises where the principal expressly authorizes
the agent to act on his behalf. Actual implied authority arises where the principal does not
expressly specify the power to the agent but it can be reasonably inferred by the agent that he has
been delegated the authority. With regard to apparent authority, there is no express agreement
between the principal and the agent but it can reasonably be inferred by a third party from the
conduct of the principal that the agent was acting on his behalf. Ratified authority arises where
there is no other authority existing but the principal shows that he has agreed to the contract once
he becomes aware of it (Sealy & Hooley, 2009).
Under common law, contracts made by an agent on behalf of the principal are legally
binding to the principal. The principal is vicariously liable for any acts of the agent that occurred
in the course of their agency relationship. Agency is governed by the principle of estoppel in that
the principal is precluded from escaping liability arising from an agent’s actions in the event
where he could have made reasonable steps to intervene in preventing confusion over authority.
The agency relationship is a fiduciary relationship, requiring the agent to act in the best interests
of his principal. Where an agent acts in a manner that is not consistent with the duties owed to
the principal, breach of duty arises, and this waives the principal from liability.
LAW OF COMMERCE 3
Reference
Sealy, S. L. & Hooley, R. J. A. (2009). Commercial Law: Text, Cases and Materials. OUP.
