Agent: The word derived from the Latin word “agens,” which simply means to do or to act. (www.uslegal.com. Accessed 10/12/2015).
The term agency as described by Lord Mackay of Clasfern, 2008.Stated that “agency is used to connote the relation which exists where one person has an authority or capacity to create legal relation between a person occupying the position of principal and third parties”.
The principles of the term “Agent” differs in many ways; a representative or an administrative official of government is known as an agent (FBI/USA, MI5/Britain or Russia/KGB), an intermediary acting on behalf of a sportsman/woman and a sports club, also an agent can act on behalf of a land/homeowner and an occupier/tenant (third parties).
Agent relationship also exists between a cargo/freight organisation and a goods sender. An agent can be an object or body that brings about change to a situation i.e. a substance agent, or an electrical agent.
The conception of an agent which set out the origin of Agency in shipping originated in the time of the Roman law as represented by the Latin words ‘'qui facet per alium, facit per se'' (he who acts through another, acts as if directly himself) and any person whosoever is being represented by an agent is classified as the principal. (www.duhaime.org. Accessed 15/12/2015).
In a legal context, an agent is someone authorised to perform a deed under a given directive on behalf of the “Principal” to represents, or acts according to a contract or relation of agency.
The relationship between an agent/Principal and agent/third parties can be disclosed where an agent acts in the name of the principal or undisclosed where the agent acts in his own name.
Disclosed arise when an agent is sometimes not accountable except a deed is sign without any prior power of attorney, or the principal did not ratify unauthorized contracts which may lead to the agent being sued for breach of warranty of authority.
Undisclosed arrived when an agent is used to negotiate with the third party without any prior knowledge of the principal's agent. (www.legal-dictionary.freedictionary.com. Accessed on 20/12/2015).
Mann, Roberts, (2014) highlighted a case in their book which explains that “The undisclosed principal concept often arises in the context of real estate transactions, where a buyer risks a seller being less inclined to sell land, risks a seller demanding a higher price, or risks a seller becoming a holdout if the seller knows or can guess the identity of the buyer or the buyer's intended purpose for the land which would afford the land a higher value. The purchase of the land required to build the Walt Disney World resort in Orange County, Florida was accomplished with agents working for Walt Disney Productions as their undisclosed principal. Over eighteen months in 1964 and 1965, agents secretly working for Disney attorneys purchased 27,400 acres of Florida ranchland, swamp, scrub woods and road frontage for an average price of only $185 per acre ($5 million total). It is unlikely that Disney would have been able to acquire the land except at prohibitively high prices of hundreds of thousands of dollars per acre had the sellers known their buyer's identity, given the prices at which nearby land sold after Disney completed its acquisitions and publicly announced its plan. (The project could also have been delayed for years or decades as owners of crucial pieces of land held out for higher offers)”.
Types of Agent
Travel Agent: Many will walk into a travel agent office without any an idea of where they'd spend their family holiday, but one of the key functions of a travel agent is to proffer a knowledgeable, proper advice to clients about interesting places to spend their holidays, when and how to embark on their travel based on their needs.
These are businesses that provide travel and tourism related services to their customers (principal) they in turn get commission for their services which usually can be found within the airline sector, hotels, railway services, cruise/ship businesses, tour operators and hotels and management services.
Travel agents sometimes offers all one package trip consisting of all stated above and are obliged by the Package Travel, Package Holidays, and Package Tours Regulations 1992 for the provisions of complete comprehensive information about their services to their customers for making an informed decision prior to engaged in their services and in the UK they are controlled by the Association of British Travel Agents (ABTA).
Travel Agent duties include the following:
• Flights arrangements, flight insurance and client's accommodation.
• Knowledgeable insight of a reservation arrangement to secure holidays for clients.
• Collection and processing organisations cash clients and payments.
• Helping and advising clients on travel arrangements, and sometimes in procurement of travel visas on client's passports before travelling.
• Issuance of travel tickets to clients.
• Informing clients with up to date information and changes concerning their trips.
• Dealing with complaints or refunds.
Estate agents: Deals in real property on behalf of the owners to sell, letting of residential or commercial properties, businesses or land on behalf of their clients (principal). They inspect the conditions of the property in comparisons to others around the area to know the worth and get the best value for its client and market the said property and negotiate on deals on behalf of its client.
Residential estate: agents are into sales and purchases of houses, apartments, land and properties management and rental. While commercial estate agents transact with a wide range of business properties including offices, workshops, leisure accommodations, hotels and restaurants and rural estate agents major in land and rural businesses.
Estate agents sometimes often have to liaise with banks, building societies, mortgage brokers, surveyors, solicitors and other estate agencies during transactions. (www.prospects.ac.uk. Accessed 15/12/2015).
The work carried out also varies depending on the specialism of the agent, but there are some common tasks which include:
• collecting information about a property and arranging for photographs to be taken;
• visiting and talking to the sellers about their property and its special features;
• estimating the value of the property;
• marketing and promoting properties for sale;
• representing the sellers in negotiation with prospective buyers;
• monitoring sales as they proceed and liaising with all interested parties including mortgage brokers, solicitors, surveyors and other estate agents;
• advising clients and helping buyers to decide what they want to buy;
• making sure that a price is agreed that is acceptable to both buyer and seller;
• Keeping up to date with trends in the local residential property market, as well as the commercial market.
Those who work in the lettings area of estate agency also undergo the following:
• Vetting prospective tenant's references and past record through the stipulated authority.
• Making sure that properties under their care meet the health and safety requirements check, e.g. gas safety certificates.
• Drawing up the contract agreement between the Principal (owner) and the client).
• Payments are collected and made on behalf of the Principal (owner).
• Act as the property manager and solved issues that arises on the property.
Factors: A Latin word for "doer, maker" (from Latin facit, "to do, make"), Rossini (1998) connote that factors “ is a mercantile fiduciary who receives and sells goods on commission (called factorage), transacting business in his own name and not disclosing his principal, and historically with his seat at a factory (trading post). A factor differs from a commission merchant in that a factor takes possession of goods (or documents of title representing goods) on consignment, whereas a commission merchant sells goods not in his possession on the basis of samples. Most modern factor business is in the textile field, but factors are also used to a great extent in the shoe, furniture, hardware, and other industries, and the trade areas in which factors operate have increased”.
“In the UK, most factors fall within the definition of a mercantile agent under the Factors Act 1889 and therefore have the powers of such”
Brokers: These are agents who specialize on intangible property, and acts with utmost good faith in the best interest of its client (Principal) to negotiate business on behalf of the principal and any decisions reach on the other hands binds the principal as in the case of Barring v. Corrie (1818) 2 B & Ald 137. A stock exchange market broker can be equalled to an agent who places bet on behalf of its client at minimum prices for the financial gain of its client. (www.investopidia.com. Accessed on 17/12/2015).
Director/Partners: The Companies Act dictates that every company must have one Director, who is chosen by the shareholders or owners (Principal) of an organisation to act on their behalf to oversee their interest/affairs (profit) in the business. The Partnership Act 1890 of the United Kingdom rules on the constitutional rights and obligations of organisations involved in partnership business.
Banks: With accredited power bank act as an agent between an individual (Principal) to clients to facilitates services i.e. credit solicitation procedure and authentication services. (www.investorwords.com. Accessed on 17/12/2015).
Commission agent: Sometimes known as commission merchant make sales/acquisitions on behalf of the owner; without any existing contractual relationship between the Principal (owner) and the third party (buyer) and acts as principal in the negotiation with the third party. However, this type of agent are obliged to the owner all the duties of an agent to a principal.
In a transaction the agent is accountable to the third party (the buyer) for breach of the implicit terms as to goods quality, while in acquisitions the agent is accountable to the third party (the seller) for price, but not to the principal for goods quality.
Agent Capacity: Although it is not required fundamentally that an agent be legally adept of entering into a contract which implied that any individual can be an agent, i.e. a minor or a lunatic can be an agent, but the court of law would ignore both agents attempt to act as he/she would be so young or wholly incapable of understanding the apparent function they were attempting to perform. (www.duhaime.org. Accessed 15/12/2015).
Duties Rights and Powers of an Agent:
• Agents owe their duties to the principal who could sue them (agents) in case the principal suffers loss due to the acts or omissions of the agent.
• The duties of Agents are all in trust (fiduciary), honesty and faithful in nature.
• All agents have a duty of expertise and carefulness as well as to perform as stated in their contractual agreement.
• With regards to their powers, agents possess both the actual and apparent authority to a contract on behalf of the principal but they (principal) have the power of entitlement for breach of agent's duties in case they failed in their duties.
Features of Agency:
• Capacity to contract is not required from an Agent.
• Relationship between the principal and agent may not be contractual; however it does exists between agents and a third party.
• The objective of an agent is usually to save time, resources for the principal and benefit from expert knowledge of the agents.
There are numerous kinds of agent such as corporate agent, dual agent, foreign agent and independent agent. For example, an independent agent is one who makes a personal judgment and is accountable to the principal only for work performed by him.
This is a tripartite (contractual, quasi-contractual and non-contractual) relationship between a principal, agent and a third party in a fiduciary agreement conversant in today's business world, and it's not unusual for organisation, or an individual to engage a third party to negotiate expressly or implicitly a contract on their behalf. The agent acts on behalf of the principal in contract negotiation based on principal's guidelines and under different types of authority i.e. actual, usual or apparent authority and each with its own applicable guidelines. Thus, French jurists surmise from article 1984 of their Civil Code, which refer agency is the acts of the agent pour le mandant et en son nom (“for and on behalf of the principal”),
Macintyre (2015) stated that ‘an agent cannot act on behalf of a principal unless he has authority to do so'. A third party usually relies on good faith of an agent authority representation of a principal. Subsequently if an agent is found or alleged to be acting without necessary authority, the agent will largely be held accountable for false representation.
Creation of Agency
Agency are formed either by consent/agreement where agent are given actual authority/express (verbal, written or by Deed) or implied by the principal to act on its behalf.
Agency are formed by an edict either due to necessity or by decree (Partnership Act 1890, Companies Act 2006, DUGA 1952)
Agency can be created by estoppel using its apparent authority and the principal is prevented from refusing responsibility
By ratification where its Deed is adopt without authority by the principal.
Authority of Agents
Authority a Latin word derived from auctorial can be defined as ‘the right to exercise or implement control bestowed on some individuals or a created agency, so as to carry out their equal responsibility for actions or inaction successfully.
“The authority of the agent may be derived expressly from an instrument, either a deed or simply in writing, or may be conferred orally. Authority may also be implied from the conduct of the parties or from the nature of the employment”. (Lord Mackay of Clashfern, 2008)
Agents normally work within this binding scope of authority conferred by his or her principal against the third parties, and below are three kinds of agent authority the law recognized with each significance legal cases governing it.
Types of Authority
Actual authority (Express or Implied)
Macintyre (2015) recognized actual authority (express or implied) as the most important type of authority which “arises because the principal agrees with the agent that the agent should have the authority”. e.g. a relationship or agreement between an estate agent and a landlord.
Macintyre (2015) stated that “the principal might agree this using express word, in which case the authority is known as express actual authority. Or the principal might agree it impliedly, without express words, in which case it is known as implied actual authority” e.g. football agent which is a standard requirement between a player and football club. Authority arises through consensual arrangement, and it's based on circumstances of event.
Overall agent are entitled to be indemnified from the principal based on the scope of actual authority given, responsible for it, and liable to a third party for breach of the implied of authority given.
Express authority sometimes arises from instructions specified by a principal, as the case In Ireland v. Livingstone (1872), or in Hely-Hutchinson v Brayhead (1968).
Apparent authority and Estoppel
Macintyre (2015) implied that ‘apparent authority arises in a different way, where the principal represents to a third party that the agent has authority. Once the third party has acted on the representation, by agreeing the contract with the agent, the principal is not allowed to deny the truth of what he (agent) said. He is estopped from denying it. It is essential that the representation is made by the principal or by someone given actual authority by the principal to make it. It cannot be made by the agent'. e.g. a shop owner (Principal) employed a staff (agent) to manage his/her store, and any decision taken by the staff is binding on the apparent assumption of authority given by the customers (third party) about the employed staff in as much they acted reasonably well (agency by estoppel). As in the case of Rama Corp Ltd v. proved tin & General Investment Ltd (1952)
Authority by Ratification
Macintyre (2015) concurred that four conditions must be met for effective ratification to arise which are;
• The agent must have claimed to have acted as an agent, and the third party must have been able to work out who the principal was.
• The principal must have had full contractual capacity to make the contract both when the agent made the contract and when it was ratified.
• At the time of ratification the principal must have either known all of the material facts or intended to ratify no matter what they were.
• The contract must be valid; a void contract cannot be ratified.
Macintyre (2015) conclude that ‘ratification must take place within a reasonable time, and will have backdated effect'.
The basic principle of authority by ratification was practicalised concerning a case of Bolton Partners v Lambert. (1889).
Conclusion: Agents of the new era wield huge power in modern day business negotiation with huge benefit from the principal and sometimes from the third parties, because of the rise in their usage as a facilitator in dealings between (principal and third party), although they do not have a any prior contract with the third parties and does not have any real responsibility to them, but they can bind the principal on a contract so therefore a great care should be taken when the next dealings are deliberated.
Lord Mackay of Clashfern (ed.) 2008. Halsbury's Laws of England, Volume 1: Agency, Agricultural Land, Agricultural Production and Marketing. Edition. LexisNexis ( a Division of Reed Elsevier (UK) Ltd.).
Free Legal Information and Help - USLegal, Inc.. 2016. Free Legal Information and Help - USLegal, Inc.. [ONLINE] Available at: http://www.uslegal.com. [Accessed 09 January 2016].
Ewan Macintyre, Essentials of Business Law, 5th. Edition. (2015). Pearson Education Limited.
Richard .A. Mann. Barry. S. Roberts, Business Law and the Regulation of Business, 11th Edition. (2014). South-Western Cengage Learning. "29: Relationship with Third Parties". p. 607. ISBN 1133587577.
Christine Rossini, English as a Legal Language, 2nd Edition. (1998). Kluwer Law International, London.103.
W.J. Stewart. Robert Burgess, Collins Dictionary of Law, 2nd Edition. (2001). S.V. "factor" 163.
Elizabeth A. Martin, ed., Oxford Dictionary of Law, 5th edn., s.v. "factor" (Oxford: Oxford UP, 2003), 196
...(download the rest of the essay above)