Professional Documents
Culture Documents
By,
Ms. Sharvina Binti Shajahan
Faculty of Business
Introduction
Law of Agency is governed by Contract Act 1950;
Definition :
An agency is the relationship that exists between two persons
when one, called the agent, is considered in law to represent the
other, called the principal, in such a way as to be able to affect
the principal’s legal position in respect of strangers to the
relationship, by making of contracts or the disposition of property.
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Creation of Agency
The authority of an agent may be:-
Expressed
(given by words spoken or written)
Implied
(inferred from things spoken or written or from
the ordinary course of dealings)
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By express of appointment
Express appointment may be in written or oral form.
An example of an express appointment made in writing is
a Power of Attorney.
Involves actual consent of the principal and the agent -
Garnac Grain Co Inc v HMF Faure & Fairclough Ltd
[1968] AC 1130
By implied agreement
Actual implied authority is by way of the implied consent
of the principal and the agent. This is derived from the
words and conduct of the parties.
The Law can infer the creation of an agency by implication
when a person by his words or conduct holds out another
person as having authority to act for him.
Section 7 of the Partnership Act 1961, partners are each
other’s agents when contracting in the course of the 7
partnership business.
By ratification
Agency by ratification can arise in the following situations:-
i. An agent who was duly appointed has exceeded his authority; or
ii. A person who has no authority to act for the principal has acted as if he
has the authority.
Defined in the case of Hatman v Hornsby - “the approval by act, word or
conduct of that which was attempted, but was improperly / unauthorisedly
performed in the first instance.”
Section 149 CA - Ratification arise in situations :-
i. where an agent has exceeded his authority;
ii. where a person who has no authority to act for the principal has acted as
if he has the authority.
When the principal accepts & confirms such contract, the acceptance is
called ratification.
Section 150 CA - Ratification may be expressed / implied in the conduct
of the person on whose behalf the acts are done.
Effect of ratification - render the contract as binding on the principal as if
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the agent had been properly authorised beforehand.
By Necessity
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Authority of Agent
In agency law, authority means the power, right or commission
that an agent has or appears to have to do acts or make contracts
with third parties on the principal’s behalf.
An agent’s acts are binding on the principal if they are done within
the agent’s authority.
If an agent does an act beyond his authority – principal not bound
Authority may be:
i. Actual - authority expressly given by the principal or implied from
the express authority given;
ii. Apparent – not expressly given but which the law regards the
agent as possessing although the principal has not consented to
his exercising such authority
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Termination of Agency
An agency can be terminated by the following
ways:
1. By agreement
2. By the principal revoking the agent’s authority
3. By performance
4. By operation of law
5. By frustration
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Section 154 - agency is terminated by:
Principal revoking his authority;
Agent renouncing the business of the agency;
Business being completed;
Death of principal or agent;
Insanity of principal or agent;
Bankruptcy of principal or agent.
Section 156 - principal may revoke the authority given to agent at any
time before the authority has been exercised so as to bind the
principal
Section 159 - reasonable notice to be given of such revocation otherwise
the resulting damage must be compensated
Section 160 - Revocation may be expressed or implied
Section 161 - termination of the authority of an agent does not take effect
before it becomes known to him, or, so far as regards third person, 16
before it becomes known to them
If agency is created for a fixed period, the
agency is terminated at the expiry of the period
whether or not the business is completed.
Upon the happening of an event that makes the
agency unlawful, the agency is terminated by
frustration
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1. Define Agency.
2. What is the Act govern Agency Law in
Malaysia?
3. List down the duties of an agent.
4. Describes the five (5) ways an agency
can be created?
5. State the ways in which an agency can
be terminated.
6.List down the duties of principal to agent
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