The agency authority The authority of the agent is the power of the agent to affect the legal relations

of the principal in accordance with the principals manifestation of consent to him. This authority may be expressed or implied in fact. For example, one company in the names of P sold two tyres to D. the order was taken by Dougherty who is p;s salesman. P says they never received payment of the purchase price, meanwhile D says he paid Doghertry. Can P recover the purchase price from D? it was held. Yes, an agent who solicits orders and transmits them to his principal to be filled has no implied authority to collect or receive payment for the goods, the purchaser will not be discharged by payment to him without proof of further authority in the agent than making of the sale In the other.. But has a secret arrangement with the agent limiting his actual author4ity, can the principal escape liability fo his agents acts which appea to thid pesons to be within the agents authority? The answer is obviously not. The principal is estopped to deny the actual authority of his agent when he has apparent authority. For example in the case of home owners loan coporation Vs Thornburg, A owed B money on deficiency decree. After B had foreclosed As mortgage, an agent of B released the deficiency in consideration for As giving up immediate possession and not filing a petition of bankruptcy. A knew that the agent did not have authority to give the release, but the agent said he had gone as the principal and obtained the authority. Is the principal bound in law by their release? It was held, No, the agent cannot increase his authority by his own act. When the agent says the principal has consented to give him the extra authority to close the deal, he is saying no more than he would imply anyway by the mere offer to transact the business for his principal. Liability of agent to third parties The agent may be liable on a contract as a party to it if the principal is undisclosed or if the agent intentionally makes himself a party to the contract. One way of making himself a party to the contract is by signing it personally without making it clear in the contract that he is signing on behalf of another person who is the principal. For example, in the case of F.R Conant company Vs Lavin. Lavin was the treasurer and manager of the metropolitan auction rooms and had done business with the F.R Conant company in the past, receiving and paying the bills in his own name. it was planned to build an annexed building owned by the auction rooms and Lavin arranged to procure the lumber of the conant company, the bills were sent to him personally, he never objected but he claimed that the bills were kept by the book keeper and that he did not see them. The metropolitan auction rooms was actually a corporation and it went bankrupt. Lavin claims he was not personally liable as he was just an agent for the corporation. Is this defence good? It was held that, No, Lavin was personally liable, if he was acting as an agent, the burden was on him to make it clear that he was not the principal and he did not do so. Duties and liabilities of agents to the principal. It is the duty of the agent to conduct himself with the greatest loyalty to his principal and not to allow his own interest to conflict with those of his principal. The agent is not permitted to act for two principals whose interests are contrary to each other, unless the principals are fully aware of the fact. The law does not allow a man to serve two masters. However if the two interests are not adverse to each other, the agent can serve both principals, for example he may be the middle man whose function is to locate a buyer and a seller who will later on bargain. Real estate brokers are often in this position and it is perfectly correct.

The agent must not act in his own behalf so as to make a profit for himself which should have been made by the principal. The agent is also liable to the principal for any loss which occurs through the culpable failure of the agent to stay within the bounds of his actual authority. The agent is under a duty to obey the lawful instructions of the principal, good faith on the part of the agent is no defence if he disobeys these instructions, unless it was an emergency. For example, in the case of Byrne Vs Barret, D was employed as a salesman for B. the firm of real estate brokers, his compensation being 50% of commissions as a result of negotiations carried on by him. His employment was terminable at will, he learnt that the New York trust company was considering the erection of a bank and office building on its own property. A bank officer acquainted him with bank requirements for such a building and asked him to find a purchaser willing to finance and erect it, D entrusted a prospect and then when things looked good resigned from Ps employment. He told P prospects looked poor for this particular transaction. He told the trust company that he would find a prospect and that he was not working on his own behalf, he eventually obtained a commission of 66,000 USD. Can P impose a trust on his commission? It was held that, yes, the duty of an agent not to use confidential knowledge gained in his employment in competition with the principal does not terminate when the agent terminates. This was not just a matter of general business knowledge, but was a special knowledge which was confidential. The least he should have done when resigning was to make a complete disclosure to be of the negotiations. This he failed to do. Duties and Liabilities of the principal to the agent The duties of the principal to the agent include the following 1. To pay him compensatiojn for services rendered