11) Agency i) Types of agents ii) Types of agencies iii) Authority of an agent iv) Rights and duties of the

parties v) Personal liability of the agent vi) Termination of agency INTRODUCTION The complexities of modem business are such that it is not possible for any person to transact every business personally. It is therefore necessary to depend on the services of other persons in order to conduct day-to-day business affairs. Such other persons are called agents. Agency is a special branch of the la of contract. A contract that creates the relationship of principal and agent is !no n as agency. An agent means a person employed to do any act for another or to represent another in dealings ith third persons. The person for hom such an act is done" or ho is represented is called the principal. #e is merely a connecting lin!. After lin!ing the principal and the third party" he is no longer a party to the contract and the contract no binds the principal and the third party as if they have made it themselves. $hatever the type of agent one may be the test of agency is his po er to ma!e a binding contract bet een a principal and a third party ithout himself becoming a party to the contract. Any person ho is of the age of ma%ority according to the la to hich he is sub%ect" and ho is of sound mind and not dis&ualified from contracting may employ an agent. It therefore follo s that a lunatic" a minor or a drun!en person cannot employ an agent because an agency is a contracting lin! bet een the principal and a third party. #o ever a minor can be appointed an agent since agents need not posses full contractual capacity. 'iability arising out of the agency is to be borne by the principal. CLASSIFICATION OR KINDS OF AGENTS a. (lassification As Per )xtent *f Authority +. ,eneral Agent This is one ho has authority to do such acts normally ithin the scope of trade" business or employment entrusted to him e.g. a bro!er" a ban!er etc. A manager of a firm has an implied authority to bind his principal by doing anything necessary for carrying on the business of the firm. -. Special Agent This is one appointed to do a particular act or transaction e.g. an agent employed to sell a house or to bid in a particular auction. #e has limited authority and as soon as the act is performed" his authority comes to an end. #e cannot bind his principal in any matter other than that for hich he is employed. The person ho deals ith him must ascertain the extent of his authority. .. /niversal Agent This is one hose authority to act for the principal is unlimited. #e has authority to bind his principal by any act hich he does" provided such act is legal and agreeable to the la of the land. #e is appointed by a deed !no n as a 0po er of attorney1. b. (lassification As Per 2ature *f $or! 3ro!er This is a person employed to buy or sell goods on behalf of another. #e is not entrusted ith the #e is only concerned ith ma!ing bargains and contracts bet een the parties. #e receives bro!erage commission for his services.

4actor This is an agent entrusted ith the possession of goods for the purpose of selling them. #e has ostensible authority to do all things" hich are usual in conducting such business including pledging" receiving payment for goods sold and giving receipt. #e sells the goods in his o n name as an apparent o ner upon the terms he deems fit. #e may give reasonable credit as ell. #e has general lien on the goods of his principal for charges of his services. #e also has an insurable interest in the goods. 3ro!er contrasted ith a factor5 - #e rarely has possession of goods and therefore has no lien on them. - #e does not buy and sell in his o n name" unless there exists a trade custom enabling him to do so. - #e has no po er to pledge the goods. Auctioneer This is one appointed by a seller to sell his goods by public auction for a re ard !no n as commission. *riginally he is primarily the agent of the seller" as ell after the sale has ta!en place he becomes the agent of the purchaser. #e has authority to receive purchase price and sue for it in his o n name. Also $here he is appointed to sell goods ithout reserve price" he has the implied authority to sell to the highest bidder. #e has lien on the goods in his possession for his charges. (ommission Agent #is business is to receive and sell goods for a commission. #e is entrusted ith possession of goods to be sold. #e may sell in his o n name. 6el (redere Agent This is one employed to sell the goods of his principal. #e gives guarantees to his principal that the purchaser he finds ill pay for the goods sold to them. Therefore if the buyer does not pay the principal the agent ill have to do so. #e receives commission over and above the ordinary commission for this underta!ing. This re ard is called del (redere commission. 3an!ers The relationship bet een a ban!er and his customer is normally that of a debtor and creditor. 3ut there is a super-added obligation on the part of the ban!er to pay hen called upon" to do so by the draft or order 7(he&ue) of the customer. To this extent" a ban!er is the agent of his customer. 4or arding Agents These are persons ho act as agents of either exporters or importers. They are employed to collect and deliver goods on behalf of others. They possess speciali8ed !no ledge of customs and other formalities connected ith export and import trades. 2on-(ommercial Agents These include attorneys1" solicitors" advocates" insurance agents" etc" CREATION OF AGENCY The relationship of principal and agent may 7agency) be created5 - 3y express agreement - Implied agreement - 3y necessity - 3y ratification - 3y operation of la . 39 ):PR)SS A,R));)2T *rdinarily" the authority given by a principal to his agent is an express authority" hich defines the extent of his operations. In this case" the agent may be appointed either by ord of mouth or by an agreement in riting. The usual form of a ritten contract of agency is the po er of attorney 7a formal instrument by hich one person appoints<empo ers another to represent him) on a stamped paper.

A,)2(9 39 I;P'I)6 A,R));)2T Implied agency arises from the conduct" situation or relationship of parties. It may be inferred from the circumstances of the case" and things spo!en or ritten" or the ordinary course of dealing. 4or example A and 3 are brothers. A lives in ;ombassa hile 3 lives in 2airobi. A ith the !no ledge of 3 leases 3=s house in ;ombassa" collects rent thereof and remits the same to 3. A is the agent of 3 though not expressly" appointed as such. Implied agency arises hen the principal conducts himself to ards the person alleged to be the agent or the third parties in such a manner as if the principal had conceded to the appointment of that person as his agent. This may arise even if the principal and the agent did not recogni8e the relationship themselves.It includes5 a) Agency by estoppel and> b) Agency by holding out. a) Agency by )stoppel The principal of estoppel is that here a person by his ords or conduct has illfully led another to believe that a certain state of affairs exists and that the other has acted on the belief" he is estopped or precluded from denying the truth of such state of affairs. )xample5 - A> an agent" tells T> a third party ithin the hearing of P> principal that he 7A) is P=s agent. P does not ob%ect to this statement of A. 'ater T supplied some goods to A ho pretends to act as an agent of P. P is liable to pay the price to T. This is because by !eeping &uiet P had let T to believe that A is really his agent. b) Agency by 0holding out1 is based on the above explained principle of estoppel. Illustration5 Principal 7P) allo s his servant habitually to purchase goods for him on credit from T" and pay for them. *n one occasion he pays his servant cash to purchase the goods. The servant misappropriates the money and purchases the goods on credit. T can recover the price from P as he had held out his servant as his agent on prior occasions. b) Agency by cohabitation. $here a man and a oman are living together" the ife is presumed to be the husband1s agent to pledge his credit for necessaries suitable to his life style. In defining necessaries regard is had to the man1s style of living rather than his actual means. #e can ho ever rebut this position if5 a) #e has provided ade&uately for her necessaries or means ith hich to purchase. b) #e had forbidden her to pledge his credit. c) #e had previously arned the shop!eeper not to give her credit. d) #e had given a public notice terminating his responsibility to ards her. e) That the ife is excessively extravagant. A,)2(9 39 2)()SSIT9 In certain urgent circumstances" the la gives authority to a person to act as an agent for the benefit of another. This is because there is no opportunity to communicate ith that other party. Agency by necessity is formed by operation of la 7i.e. automatically). Thus the principal may be bound by a contract made on his behalf ithout authority and hich he has refused to ratify. 4or agency by necessity to exist or arise" the follo ing conditions must be satisfied5 - There should be a real necessity for acting or behalf of the principal. - The need to act must be out of emergency ma!ing it necessary for the agent to act as he did. - It should be impossible to communicate and get instructions from the principal ithin the time available. - The alleged agent should act in good faith and in the interests of the principal.

Agency by necessity arises in the follo ing circumstances5 a. $here the agent exceeds his authority in good faith in an emergency e.g. here P consigns fruits to A at ;ombassa ith directions to send them immediately to T at 2airobi. A may sell the fruits at ;ombassa if they ill not bear the %ourney to 2airobi ithout perishing. b. $here a person is entrusted ith another=s property" he must do all that is necessary to protect and preserve the property even though there is no express authority in that regard. 4or example5 A master of a ship is entitled incases of accident and emergency to sell or pledge the goods in order to save their value and the sale or pledge ill bind the cargo o ners. c. $here a husband improperly leaves his ife ithout providing proper means of her survival. In this case" the ife can pledge her husband=s credit. The ife is the agent of the husband as a matter of necessity. ?. A,)2(9 39 RATI4I(ATI*2 If a duly appointed agent exceeds his authority" or a person having no authority purports to act as an agent" the principal is not bound. Ratification means the subse&uent adoption and acceptance of an act originally done ithout instructions or authority. Therefore" here the principal affirms or adopts the unauthori8ed act of his agent" he is said to have ratified that act hence agency by ratification. )xample5 A buys five bag of mai8e on behalf of P. P did not appoint A as his agent. P may upon hearing of the transaction accept or re%ect it. If P accepts it" the act is ratified and A becomes an agent. )SS)2TIA'S *4 A @A'I6 RATI4I(ATI*2 +. The agent must purport to act as agent for a principal ho is in contemplation and is identifiable at the time of contract. The agent must expressly contract as an agent. The principal must be named or must be identifiable. An undisclosed principal cannot come in to ratify acts done by a third person. -. The principal must be in existence at the time of the contract. This is because rights and obligations cannot attach to non- existent person. )xample5 a company cannot ratify the contracts entered into by the promoters on its behalf before its incorporation. .. The Principal must have contractual capacity both at the time of the contract and at the time of ratification. If the principal as not competent at the time of the contract" he cannot validate it by subse&uent ratification hen he is competent to contract. ?. Ratification must be made ith full !no ledge of facts. 3ut if the principal is prepared to ta!e ris! of hat the purported agent has done" he can choose to ratify ithout full !no ledge of facts. A. Ratification must be done ithin a reasonable time of the act purported to be ratified. If it is made after the expiry of a reasonable time" it ill not be valid. B. The act to be ratified must be la ful and not void or illegal or ultra-vires in cases of a company. An agreement hich is void ab initio cannot be ratified. C. The hole transaction must be ratified. It must be ratified in toto 7entirely) or re%ected in toto. The principal cannot ratify a part of the transaction" hich is beneficial to him and re%ect the rest as burdensome to him. D. Ratification must be communicated to the party ho is sought to be bound by the act done by the agent. E. Ratification must be of the acts" hich the principal had the po er to do. The acts" hich the principal is incapable of doing" cannot be ratified. +F. Ratification should not put a third party to

damages. It should not have the effect of sub%ecting a third person to damages or terminating any right or interest of a third person. A,)2(9 39 *P)RATI*2 *4 'A$ Sometimes an agency arises by operation of la . $hen a company is formed" its promoters are its agents by operation of la . A partner is the agent of the firm for the purposes of the business of the firm and the act of a partner done in the usual ay of business of the !ind carried on by the firm binds the firm. 6I44)R)2()S 3)T$))2 A,)2(9 A26 *T#)R R)'ATI*2S#IPS SI;I'AR T* A,)2(9 Contrast between Agent an a Ser!ant"E#$%oyee An agent is not a servant of the principal. #e stands on a different ground and his duties and characters are not the same as those of a servant. (omparatively their positions are explained as follo s5 - Purpose of appointment. An agent is not a servant of the principal as he can create legal relations ith third persons or represent him in dealing ith third persons. A servant does not necessarily create legal relations bet een the employer and third persons. - Supervision and (ontrol. An agent is bound to follo all the la ful instructions of the principal but he is not sub%ect to the direct control and supervision of the principal. A servant" on the other hand" acts under the direct control and supervision of his employer and is bound to follo all reasonable orders given to him in the course of his employment. - 'iability of Principal. A principal is liable for the rongs of his agent done ithin the scope of his authority. A master is liable for the rongs of his servant if they are committed in the course of his employment. - 2umber of Principals. An agent may or! for several principals at the same time. 3ut a servant usually serves only one master. - Relationship. There is the relationship of principal agent bet een an agent and the principal hereas there is the relationship of master servant bet een a servant and the employer 7master). Agent an In e$en ent Contractor An independent contractor is employed to act for another but he does the or! independent of the employer=s control or interference. An agent on the other hand is bound to act ithin the scope of his express or implied authority. An independent contractor is personally liable for all acts done by him. An agent only represents his principal in dealings ith third parties and is not personally liable for acts done by him ithin the scope of his authority. 6/TI)S A26 RI,#TS *4 A,)2T D&t'es o( Agent +. To act as per principal=s directions and customs5 unless he is acting gratuitously 7 ithout remuneration)" an agent must act ithin the scope of the authority conferred upon him and perform his or! according to the principal=s directions. In the absence of such directions" he must act according to the custom" hich prevails in doing such business of the same !ind. -. To or! using reasonable care" s!ill and diligence5 The degree of s!ill expected of him depends on the circumstances. ;ore s!ill is expected of a professional person than of a layman.

If he does not do so" he must compensate his principal for the direct conse&uences of his neglect" ant of s!ill or misconduct. .. To render proper accounts to his principal5 #e must !eep proper accounts of his principal=s money or property and render them to him on demand or periodically as the case may be. ?. To (ommunicate ith Principal in case of difficulty5 In case of difficulty" it is the duty of the agent to use all reasonable diligence in communicating ith his principal and in see!ing to obtain his instructions. A. #e must not mix his o n financial affairs ith that of principal5 #e must not deal on his o n account in the business of the agency ithout first obtaining the consent of the principal and ac&uainting him ith all the material circumstances hich have come to his !no ledge. If he fails to do so" the principal may elect to repudiate the transaction or claim the benefit thereof from his agent. B. To pay sums received for Principal5 #e must pay to his principal all sums received on his account. #e may therefore deduct all moneys due to himself in respect of advances made or expenses properly incurred by him in conducting such business and also his remuneration as an agent. C. To Protect and preserve the principal=s interests on his death5 $hen an agency is terminated by the principal dying or becoming of unsound mind" the agent is bound to ta!e all reasonable steps for the protection and preservation of the interests on trusted on him for and on behalf of the representatives of his principal. D. 2ot to use information obtained in course of agency against principal5 The agent must pass on any information" hich he receives in the course of the agency to his principal. If he uses such information to the principal=s detriment" he must compensate his principal. E. 2ot to ma!e secret profits from agency5 An agent occupies a fiduciary position. #e must not ma!e any profit beyond the agreed commission or remuneration except ith prior consent of his principal. +F. 2ot to set up adverse title5 #e must not set up his o n title or the title of a third party 7unless he proves a better title in that person) to the goods" hich he receives from the principal as an agent. If he does so" he ill be guilty of conversion. ++. 2ot to put himself in a position here interest and duty conflict5 #e is under a duty to act in the interest of the principal. #e must not put himself in a position here his duty to the principal and his personal interest conflict unless he has made full disclosure of his interest to his principal specifying its nature and obtaining his assent. +-. 2ot to delegate authority5 As a general rule" an agent must not depute another person to do hat he has himself underta!en to do. This is underscored by the maxim 0delegatus non potest delegare1 i.e. a delegate shall not further delegate. R'g)ts o( Agent +. Right of retainer #e has to retain out of any sums received on account of principal" all moneys due to himself in respect of his remuneration and advances made or expenses properly incurred by him in conducting such business. -. Right to receive remuneration #e is entitled to his agreed remuneration or here there is no agreement to a reasonable remuneration. In the absence of any special contract the right to claim remuneration arises only hen the agent has done hat he had underta!en to do. .. Right of lien An agent is entitled to retain goods" papers and other properties be they movable or immovable property in his possession due to the amount o ed to him by the principal for

services" disbursement" or commission o ed to him. This is particular lien confined to claims arising in connection ith the goods or property for hich the right is claimed. 3ut by special contract" an agent may have a general lien extending to all claims arising out of agency. ?. Right of indemnification The agent has a right to be indemnified against the conse&uences of all la ful acts done by him in exercise of the authority conferred upon him. This right ho ever" does not extend to acts !no n to the agent to be unla ful. A. Right of compensation The agent has the right to be compensated for in%uries sustained by him by neglect or ant of s!ill on the part of the principal. )xample5 P employs A as a bric!layer in building a house and puts up the scaffolding himself. The scaffolding is uns!illfully put up and A is in conse&uence in%ured. P must ma!e compensation. B. Right of stoppage in transit This right is available to the agent in the follo ing t o cases5 a. $here he has bought goods for his principal by incurring a personal liability" he has a right of stoppage in transit against the principal" in respect of the money hich he has paid or liable to pay. b. $here he is personally liable to the principal for the price of the goods sold" he stands in the position of an unpaid seller to ards the buyer and can stop the goods in transit on the insolvency of the buyer. 6/TI)S A26 RI,#TS *4 PRI2(IPA' D&t'es o( *r'nc'$a% The duties of principal to ards his agent are the rights of the agent against the principal. The principal o es the follo ing duties to an agent5 - To indemnify the agent against the conse&uences of all la ful acts done by such agent in exercise of the authority conferred upon him. - To indemnify the agent against the conse&uences of acts done in good faith. - To indemnify the agent for in%ury caused by the principal=s neglect or ant of s!ill. - To pay the agent the commission or other remuneration agreed. R'g)ts o( *r'nc'$a% - To recover damages due to loss occasioned by the agent=s disregard of the directions of the principal or by not follo ing the custom of trade in the absence of direction by the principal. - To obtain an account of secret profits and recover his costs by resisting a claim for remuneration. - To resist agent=s claim for indemnity against any liability incurred by the agent out of his negligence. T#) 6*(TRI2) *4 /22A;)6 PRI2(IPA' The doctrine of unnamed principal arises in cases here the agent discloses the principal=s existence" but the name of the said principal is not disclosed. If the agent discloses the fact that he is acting for a principal" then the contract made by the agent binds the principal and the agent drops out of the transaction despite non-disclosure of the principle=s name. *n being discovered" the legal position of the unnamed principal is the same as here the principal is named unless there is a trade or custom ma!ing the agent personally liable. #o ever" if the agent declines to disclose the identity of the principal" he ill become personally liable on the contract. T#) 6*(TRI2) *4 /26IS('*S)6 PRI2(IPA'

Sometimes an agent not only conceals the name" of the principal but also the fact that he is an agent. This gives rise to the doctrine of undisclosed principal. In such a case" the agent gives an impression to the third party that he is contracting in an independent capacity. In the case of an undisclosed principal" the position of parties to such a contract is as follo s5 - 3ecause the agent has contracted in his o n name" he is liable to the third party personally. The agent may be sued on the contract and he has the right to sue the third party. - In case the third party comes to !no the existence of the principal before obtaining %udgment against the agent" he may sue either the principal or the agent or both. - The principal may intervene and sue the third party for non-performance of the contract. 3ut the principal cannot" exercise this right to the pre%udice of the third party. - If the principal discloses himself before the contract is completed" the third party may refuse to fulfill the contract if he can sho that had he !no n the principal or that the agent as not the principal" he ould not have entered into the contract. - If the third party has elected to sue one and obtained the %udgment" it ill extinguish the right to sue the other. A,)2TS A/T#*RIT9 The authority of an agent means his right or capacity to bind the principal. #e can bind his principal only if he acts ithin the scope of his authority. This scope of the agent=s authority may be5 a. - Actual or real authority or> b. - *stensible or apparent authority. Act&a% or Rea% A&t)or'ty This means the authority of the agent conferred upon him by the principal either expressly or by implication. It is express hen it is given by ords spo!en or ritten. It is implied hen it is to be inferred from the circumstances of the case or the ordinary course of dealings. Ostens'b%e or A$$arent A&t)or'ty $hen an agent is employed for a particular business" persons dealing ith him may presume that he has authority to do all acts as are necessary or incidental to such a business. Such authority of the agent is called ostensible authority. The scope of the agent=s authority is determined by his ostensible authority. If the act of an agent is in excess of his actual authority" but remains ithin the scope of his ostensible authority" the principal ill be bound by the act of the agent. The concept of ostensible authority is based on the principal that if a person employs another as an agent in a character" hich involves a particular authority" he cannot by secret reservation divest him of that authority. 3ut if the third party !no s of the limitation then the principal ill not be liable for such act of the agent. P)RS*2A' 'IA3I'IT9 *4 A,)2T The general rule is that only the principal can enforce and can be held liable on a contract entered into by the agent" except hen there is a contract to the contrary" #o ever" an agent is personally liable in the follo ing cases5 -

i. $here the contract expressly provides5 A person hile entering into a contract ith an agent may expressly stipulate that he ould hold that agent personally liable in case of breach of contract. If the agent agrees to such a contract" he becomes personally liable. ii. $hen the agent acts for a foreign principal5 $hen the contract is made by an agent" for the sale or purchase of goods for a merchant residing abroad" the agent is personally liable. #e can exclude his personal liability by express provision to this effect in the contract. iii. $hen he acts for an undisclosed principal5 $here an agent acts for an undisclosed principal" he is personally liable" though the principal" on being discovered by the third party" is also liable. iv. $hen he acts for a principal ho cannot be sued5 $here the principal is incompetent to enter into a contract e.g. here he is a minor or an idiot" the agent is personally liable. This is because the credit is presumed to have been given to the agent and not the principal. v. $here he signs a contract in his o n name5 An agent ho signs a contract in his o n name ithout &ualification is understood to have o ned benefits and liabilities under the same contract unless contrary intention appears from the body of the instrument. vi. $here he acts for a principal not in existence5 )xample5 The promoters of a company yet to be incorporated sometimes enter into contracts on behalf of the company. In such a case the company" hich is the alleged principal has no legal existence till the time of incorporation. The promoters become personally liable. vii. $here his authority is coupled ith interest5 $here an agent has an interest in the sub%ect matter of the contract entered into by him ith a third party" his authority is coupled ith interest. In such a case he has the right to sue and be sued but only to the extent of his interest in the sub%ect matter. viii. $here the agent exceeds his authority5 $here an agent exceeds his real and apparent authority" he ill be personally liable to the third party for the excess part" if it can be separated from the authori8ed part" other ise he ill be liable for the hole transaction. ix. $here there is a trade" usage or custom5 $here there is a trade" usage or custom ma!ing the agent personally liable" he is liable unless there is a contract to the contrary. x. $here he received or pays money by mista!e or fraud5 $here an agent receives money to a third party by mista!e or fraud" he is personally liable to the third party li!e ise" he has the right to sue the third party for the recovery of the money here he has paid it by mista!e or under fraud of the third party. 6)'),ATI*2 *4 A/T#*RIT9 The general rule is that an agent is not entitled to delegate his authority to another person ithout the principal=s consent. This is based on the maxim Gdelegatus non potest delegareH" hich means that the person to hom authority has been given cannot delegate that authority to another. To this general rule" there are exception as follo s5 a) Sub-agent5 An agent may appoint a sub-agent and delegate the or! to him if there is a custom or trade to that effect or if the nature of or! is such that a sub-agent is necessary. A subagent is a person employed by and acting under the control of the original agent. b) $here the principal is a are of the intention of the agent to appoint a sub-agent but does not ob%ect to it. c) $here unforeseen emergencies arise rendering appointment of a sub-agent necessary. d) $here the act to be done is purely ministerial and not involving confidence" s!ill or use of discretion. e) $here the principal permits appointment of a sub-agent.

(o-agent or substitute agent A co-agent or substitute agent is a person ho is named by the agent on an implied or express authority from the principal to act for the principal. #e is not a sub-agent but an agent of the principal" for such part of the business of the agency as is entrusted to him. #e is the agent of the principal through he is named 7at the re&uest of the principal) by the agent. Sub-agent and substitute agent distinguished - A sub-agent does his or! under the control of the agent hereas a substitute agent or!s under the control and instructions of the principal. - There is no privity of contract bet een the sub-agent and the principal hile there is privity of contract bet een the principal and a substitute agent. - The agent is responsible to the principal for the acts of the sub-agent hereas he is not responsible for any act or negligence of the substitute agent. T)R;I2ATI*2 *4 A,)2(9 Agency may be terminated by5 a) - Act of the parties and> b) - *peration of la T)R;I2ATI*2 39 A(T *4 T#) PARTI)S +. Agreement Relationship bet een the principal and agent may be terminated at any time by the mutual agreement bet een the Principal and the Agent. -. Revocation by principal5 The principal may revo!e the authority of the agent at any time before the agent exercises his authority so as to bind the principal" unless the agency is irrevocable. .. Renunciation5 An agency may also be terminated by an express renunciation by the agent after giving a reasonable notice to the principle other ise he ill be liable to compensate the principal for any damage resulting thereby. T)R;I2ATI*2 39 *P)RATI*2 *4 'A$ +. Performance of the (ontract5 $here the agency is for a particular ob%ect" it is terminated hen the ob%ect is achieved or hen the accomplishment of the ob%ect becomes impossible. )xample5 $hen a la yer is appointed to litigate in a suit his authority comes to an end ith the %udgment. -. )xpiry of Time5 $hen the agent is appointed for a fixed period of time" the agency comes to an end after the expiry of that time even if the or! is not complete .. 6eath or insanity5 Agency relationship is a personal relationship. 4or this reason" it comes to an end in the event of death or insanity of either the principal or the agent. ?. 6issolution of company5 $here the principal or the agent is an incorporated company" the agency automatically ceases to exist on dissolution of the company. A. 6estruction of sub%ect matter5 An agency that is created to deal ith a certain sub%ect matter comes to an end by the destruction of the sub%ect matter. )xample5 $here an agent is contracted to effect insurance on a particular house" the agency is terminated if the house is destroyed by fire before the insurance is effected. B. Insolvency5 The insolvency < ban!ruptcy of the principal determines the agency. Though nothing is mentioned in la of agency regarding insolvency of the agent" it is accepted that insolvency of an agent also terminates the agency unless the acts to be done by the agent are merely formal acts.

C. Principal becoming an alien enemy5 $hen the agent and the principal are aliens" the contract of agency is valid as long as the countries of the principal and the agent are at peace. If ar brea!s out bet een the t o countries" the contract is terminated. D. Termination of Sub-agent=s authority5 The termination of an agent=s authority puts an end to the sub-agent=s authority. 2ote5 The termination the authority of an agent ta!es effect hen it becomes !no n to the agent" or the principal or the third parties as the case may be. IRR)@*(A3') A,)2(9 $hen an agency cannot be terminated or put to an end" it is said to be an irrevocable agency. An agency is irrevocable in the fallo ing cases5 i. $here the agency is coupled ith interest5 An agency is said to be coupled ith interest hen it is created far securing same interest or benefit to the agent over and above his remuneration" as an agent. )xample5 P gives authority to A to sell P=s land and to pay himself" out of the proceeds" the debts due to him from P. In this case" P cannot revo!e A=s authority" nor can it be terminated by his insanity or death. ii. $here the agent has incurred a personal liability5 $here an agent incurs a personal liability" the agency becomes irrevocable. In such a case the principal cannot revo!e the agency leaving the agent exposed to the ris! or liability he has already incurred. iii. $here the agent has partly exercised the authority5 The principal cannot revo!e the authority given to his agent after the authority has been partly exercised" so far regards such acts and obligations as arise from acts already done in the agency. )xample5 P authori8es A to buy +"FFF bales of cotton on account of P and to pay for it out of P=s money remaining in A=s hands" A buys +"FFF bales of cotton in his o n name" so as to ma!e himself personally liable for the price. P cannot revo!e A=s authority so far as regards payment for the cotton.