Download Agency by Necessity - Harley Legal Technology

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Copyright Guy Harley 2008
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Types of Remedy
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Termination
Rescission
Recovery of Contract Price
Damages
Equitable Remedies
 Specific Performance
 Injunction
 Rectification
 Restitution
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Damages
 2 Types
 Liquidated Damages
 Unliquidated damages
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Agreed Damages
 The contract may provide for agreed damages
 Agreed damages must be a genuine preestimate of damages
 Courts will not enforce a penalty
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Penalty
An agreed damages clause will be a penalty if
 It is extravagant
 Where breach is failure to pay money and
clause provides for a greater payment
 Applies to several different types of breach
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Unliquidated Damages
 The amount of damages should place the
innocent party in the same position that he
would have been in had the contract been
properly performed
 Damages can include
 Expectation loses
 Personal injuries
 Disappointment, distress and discomfort
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Damages for Disappointment etc
 Courts have been reluctant to award damages
for disappointment, distress and injured feelings
 Not awarded for breach of most commercial
contracts
 Two cases where may be awarded;
 Distress flows from physical inconvenience
 Where enjoyment or entertainment or
freedom from molestation is an essential
feature of the bargain
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Remoteness of Damage (cont.)
A two part test
 Losses that flow ”according to the usual course
of things” from the breach
 Losses within the actual contemplation of the
parties at the time the contract was made
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Mitigation of Damages
 Plaintiff has a duty to mitigate losses
 Cannot claim losses which could have been
reduced or avoided by the taking of reasonable
steps
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Specific Performance
 Court orders a party to carry out their contractual
obligations
 Not available if:
 Damages would be an adequate remedy
 Court has to continually monitor performance
 Used to enforce a contract for personal
services
 Against a minor
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Injunction
 Court orders a party to a contract to refrain from
breaching their contractual duty
 Not available if
 damages would be an adequate remedy
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Quantum Meruit
 Where one party requests goods and\or services
without specifying a price
 Implied promise to pay a reasonable amount
 Need not show loss by plaintiff only benefit by
defendant
 Applies where
 Contract formed but no agreed price
 Partial performance of a contract has been
accepted
 Contract is void
 Contract is breached
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Agency
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Agency - Definition
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An agent
Has legal authority
To affect the legal rights and obligations
Of the principal
In dealings with third parties
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Agency - Requirement
 A person cannot always act personally
 Agencies are usually created for the making of
contracts in commercial situations
 It is a fiduciary relationship
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Agency - Contracts
 Two contracts
 Between agent & principal
 Between Principal and Third Party
 A principal is liable for the acts of an agent
that are committed within his authority
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Types of Agent
 Universal Agent
 Can enter into all contracts on behalf of
principal
 General Agent
 Agent has usual authority of someone in that
position in that trade
 Special Agent
 Given instructions to carry out a specific task
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Types of Agency
 Actual agency
 Express
 Implied
 Agency by Necessity
 Apparent Agency (Ostensible agency)
 Agency by Ratification
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Agency by Necessity
 Agency arises in an emergency situation
 Three requirements
 Agent is legally in possession of Principal’s
property
 Immediate action is required to avoid loss
 Agent is unable to communicate with Principal
to obtain instructions
 Springer v Great Western Railway
 Great Northern Railway v Swaffield
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Apparent\Ostensible Authority
 Agent has no actual authority but Principal’s
actions lead Third Party to believe that Agent
has authority
 4 conditions
 A representation made by Principal to Third
Party
 No actual authority
 Third Part is induced to enter into contract
 Principal had capacity to enter contract
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Apparent\Ostensible Authority
 Tooth v Laws
 Derham v AMEV
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Agency by Ratification
 Agent does not have authority
 Principal later ratifies (i.e. authorises) agent’s
actions
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Agency by Ratification - Requirements
 Agent expressly contracts on behalf of Principal
 Keighley Maxstead v Durant
 Principal must be in existence at time of contract
 Principal must have capacity at time of
ratification
 Principal must act within reasonable time
 Contract must not be void
 Whole contract must be ratified
 Langlands v Worthington
 Ratification must be retrospective
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Duties of Agent
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To follow Principal’s instructions
To use reasonable care & skill
Not to make a secret profit
Not to disclose confidential information
To keep proper accounts
Breach of duty = breach of contract
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To Use Reasonable Care & Skill
 Where paid must use the skill & competence of
a reasonable agent in the same trade
 Mitor Investments v General Accident Fire & Life
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Not to Make a Secret Profit
 Agent must not take advantage of position to
obtain extra benefit from Third Party of which
Principal is not aware
 Reiger v Campbell-Stuart
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Not to Disclose Confidential Information
 Fiduciary relationship
 Duty to disclose facts material to Principal’s
decision to contract with Third Party
 Must act in Principal’s best interests
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Keep Proper Accounts
 Money received on behalf of Principal must be
held in a separate account (trust account)
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Rights of Agent
 Right to Remuneration
 Paid agreed amount
 If no agreed amount then what is reasonable
 Right to indemnity
 Principal must reimburse expenses
reasonably incurred
 Principal must pay any claims against agent
 Right to a Lien
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Liens
 Particular Possessory Lien
 Where Agent has purchased goods on behalf
of Principal
 Can retain goods until Principal pays for them
 General Possessory Lien
 Agent can retain any of Principal’s goods in
Agent’s possession until paid
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Third Party’s Rights
 Can take action against Agent where Agent has
no actual authority (breach of warranty of
authority)
 If Agent has not disclosed agency, can take
action against Agent under contract
 If Agent has disclosed agency, can only take
action against Principal under contract
 Can always take action against Principal both in
contract and tort
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Independent Contractors
 Independent Contract acts on own behalf but
does work for “Principal”
 International Harvester v Carrigan’s
Hazeldene
 Person hiring independent contractor is not
liable for their actions
 Two contracts between
 independent contractor and Third Party
 “principal” and independent contractor
 Use of the word “agent” is not conclusive
 Potter v Customs & Excise Commissioners
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Indicators of agency
 Who keeps the profits and bears losses?
 Who provides office, staff, tools etc?
 Who decides when, where and how work is
carried out?
 Is the agent paid a commission?
 Does agent receive money on behalf of the
principal
 Does agent pay money on behalf of the principal
 Is agent authorised to make representations for
which the principal will be responsible
 Is the agent required to account to the principal?
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