Law of Agency, Essentials, Kinds of agents, Rights and Duties of agent and principal, Creation of agency, Termination of agency-sub agents and Substituted agents

The law of agency is the legal relationship between two parties, known as the principal and the agent, in which the principal gives the agent authority to act on his behalf. The principal can be an individual or an organization, and the agent can be an individual or a group of individuals.

The law of agency governs a wide range of business and personal relationships, including employment agreements, real estate transactions, and financial investments.

The Essential elements of agency are:

1. Consent: The principal must give the agent permission to act on his behalf, and the agent must accept the authority.
2. Control: The principal has the right to control the actions of the agent within the scope of the authority granted.
3. Fiduciary Duty: The agent owes a duty of loyalty and confidentiality to the principal, and must act in the principal’s best interest.

Types of Agents:

1. Universal Agent: A universal agent has the authority to act on behalf of the principal in all matters.
2. General Agent: A general agent has the authority to act on behalf of the principal in a specific area or business.
3. Special Agent: A special agent has the authority to act on behalf of the principal for a specific transaction or purpose.

Rights and Duties of Agents:

1. Right to compensation for services rendered.
2. Right to be reimbursed for expenses incurred while acting on behalf of the principal.
3. Duty to act within the scope of the authority granted by the principal.
4. Duty to act with due care and skill.
5. Duty to keep the principal informed of all matters relating to the agency.
6. Duty to account for any money or property received on behalf of the principal.

Termination of Agency:

1. Expiration of the agency period or completion of the purpose for which the agency was created.
2. Mutual agreement between the principal and the agent.
3. Revocation by the principal or renunciation by the agent.
4. Operation of law, such as the death or incapacity of the principal or agent.

Liability of Agent:

1. Liability for breach of fiduciary duty.
2. Liability for breach of contract.
3. Liability for torts committed while acting on behalf of the principal.

Liability of Principal:

1. Liability for contracts made by the agent within the scope of the authority granted.
2. Liability for torts committed by the agent while acting on behalf of the principal.

Creation of agency

An agency relationship can be created in several ways, including:

Express agreement: An agency relationship can be created by an express agreement between the principal and the agent, either in writing or orally. The agreement should clearly state the scope of the agent’s authority and the duties and responsibilities of both parties.

Implied agreement: An agency relationship can also be created by the conduct of the parties, which implies that the agent has the authority to act on behalf of the principal. For example, if a person hires a real estate agent to sell their property, an agency relationship is implied.

Apparent authority: An agency relationship can be created through the principle of apparent authority, which occurs when a principal holds an agent out as having the authority to act on their behalf. For example, if a company allows an employee to negotiate a contract with a customer, the customer may assume that the employee has the authority to do so.

Ratification: An agency relationship can also be created by ratification, which occurs when a principal accepts the actions of an agent who did not have authority to act on their behalf. For example, if an agent signs a contract on behalf of the principal without prior authorization, the principal may choose to ratify the contract.

Termination of agency-sub agents and Substituted agents

An agency relationship can be terminated in several ways, including:

• Revocation: The principal can revoke the agent’s authority at any time, provided the revocation does not breach a contract between the principal and the agent. The revocation may be communicated directly to the agent or to third parties who have dealt with the agent on the principal’s behalf.
• Renunciation: The agent can renounce their authority at any time, provided they give reasonable notice to the principal.
• Expiration of time: If the agency relationship was created for a specific period of time, it will terminate upon the expiration of that time period.
• Completion of the purpose: If the agency relationship was created for a specific purpose, it will terminate upon the completion of that purpose.
• Mutual agreement: The agency relationship can be terminated by mutual agreement between the principal and the agent.

Sub-Agents:

An agent can appoint a sub-agent to perform some or all of their duties. The appointment of a sub-agent does not terminate the agency relationship between the principal and the original agent. However, the original agent remains responsible to the principal for the acts of the sub-agent.

Substituted Agents:

An agent can also delegate their authority to a substituted agent. In this case, the agency relationship between the principal and the original agent is terminated, and a new agency relationship is created between the principal and the substituted agent. The principal must consent to the appointment of the substituted agent for the relationship to be valid.