TERMINATION OF AGENCY

Azri directed Sally to sell certain goods belonging to him as he is leaving for
New Zealand. He agreed to give Sally 5 percent commission on the
proceeds of the sale. A few weeks later, Azri then revokes Sally authority
by a letter. Meantime, Sally had already sold the goods for RM150 each.
Advice Azri.

Sally was terminated his authority by his principal, Azri in termination of

agency by the act of the parties

The same case like AZRI V SALLY is :

SOHRABJI V ORIENTAL SECURITY ASSURANCE CO. AIR 1946

Held:
3 months of notice that given by the P was NOT Adequate to terminate the
agency properly which had lasted nearly 50 years.
The measure of damages: the amount the agent might have earned under the
contract of agency had he not been prevented from continuing his duty.

The link case on website : http://www.bailii.org/uk/cases/UKPC/1945/1945_50.html

EXCEPTIONS:-

1. The termination is void because of after the authority has been partly exercised
by the agent.
Section 157
The principal cannot revoke the authority given to agent after the
authority has been partly exercise

READ v ANDERSON [1884]

After the authority has been partly exercised by the agent
The principal who was the defendant instructed the plaintiff, a turf commission
agent, to place bets on his behalf. The plaintiff placed the bets and lost. By
custom, a turf commission agent always bets in his own name and becomes
solely responsible to the person with whom the bet is made. If he is declared a
defaulter owing to his failure to pay the lost bet, he is subject to certain
disqualifications which will have a serious impact on his business.

Held:

The defendant could not revoke the plaintiffs authority after losing the bet.
He would have to indemnify the plaintiff for the amount which the latter had
paid to the person with whom he made the bet.
Though, the general rule stipulates that a principal can revoke the authority given to an
agent at any time as he wishes, he is not allowed to do so if:

(1) part of the job has been done, and

(2) the agent has an interest in the contract.

Part of the Job Has Been Done

Section 157 Contract Act 1950 reads, The principal cannot revoke the authority given to his
agent after the authority has been partly exercised, so far as regards such acts and
obligations as arise from acts already done in the agency.

READ v ANDERSON [1884] 13 QBD 779

The principal who was the defendant instructed the plaintiff, a turf commission agent, to
place bets on his behalf. The plaintiff placed the bets and lost. By custom, a turf commission
agent always bets in his own name and becomes solely responsible to the person with
whom the bet is made. If he is declared a defaulter owing to his failure to pay the lost bet,
he is subject to certain disqualifications which will have a serious impact on his business.
It was held that the defendant could not revoke the plaintiffs authority after losing the bet.
He would have to indemnify the plaintiff for the amount which the latter had paid to the
person with whom he made the bet.

Irrevocable Agency

An agency coupled with an interest is a special type of agency relationship that is created
for the agents benefit. This type of agency is irrevocable by the principal (i.e., the principal
cannot terminate it). An agency coupled with an interest is not also terminated by the death
or incapacity of either the principal or the agent. It terminates only when the agents
obligations are performed. However, the parties can expressly agree that an agency
coupled with an interest is terminated.

Section 155 Contract Act 1950 provides, Where the agent has himself an interest in the
property which forms the subject-matter of the agency, the agency cannot, in the absence
of an express contract, be terminated to the prejudice of such interest.

Illustration
A gives authority to B to sell As land, and to pay himself, out of the proceeds, the debts due
to him from A. A cannot revoke this authority, not can it be terminated by his unsoundness
of mind or death.

In SMART v SANDERS (1848) 5 CB 895, a factor was sent goods to sell on behalf of the
principal and he made advances to the principal on the security of these goods. Lord
Atkinson in Firth v Firth [1906] AC 254 at p. 261 explained the earlier case in the following
manner, the general authority of a factor in whose hands goods were placed for sale, to
sell at the best price which could reasonably be obtained, could not be revoked after the
factor had made advances on the security of the goods to the owner of them and while
these advances remained unpaid.