Sl.

No

Name

ID No.

1 2 3 4 5 6 7 8

Muhammad Asaduzzaman
Abul Fattah Al Imran Anika Rahman

3-10-18-026
3-10-18-064 3-10-19-070

Md. Rakibul Islam

Ummay Kulsum Md. Masuduzzaman

3-10-18-069
3-10-19-068 3-10-18-071

Touhidul Islam
Md. Mustafa Shahed

3-10-18-031
3-10-18-003

Presenter: Muhammad Asaduzzaman 3-10-18-026

The law of agency is an area of commercial law dealing with a set of contractual, quasi-contractual and noncontractual relationships that involve a person, called the agent, that is authorized to act on behalf of another (called the principal) to create a legal relationship with a third party. Succinctly, it may be referred to as the relationship between a principal and an agent whereby the principal, expressly or impliedly, authorizes the agent to work under his control and on his behalf. The agent is, thus, required to negotiate on behalf of the principal or bring him and third parties into contractual relationship

Agency: An agent is a person employed to do any act for another or to represent another in his dealings with third parties. The person for whom such act is done or who is so represented is called the principal. The relationship between agent and principal is called Agency. Agency is founded upon a contract, either express or implied, by which one of the parties confides to the other the management of some business to be transacted in his name or on his account and by which the other assumes to do the business and to render an account of it. The essence of agency is that the principal authorizes the agent to represent him in bringing or to aid in bringing the principal into contractual relation with a third party.

Agency Contract: Most businesses (and particularly those that wish to trade nationally or internationally) use intermediaries in their dealings with the outside world. Agents can provide businesses with, amongst other things, specialist knowledge of a particular market, commodity or area and an immediate presence for negotiating contracts in any geographical location. They can also be used to find and introduce customers to the business and to purchase goods or services on behalf of the business. The purpose of an agency agreement is to set out the terms and conditions of the relationship between the business which wants to sell stuff (the Principal) and the intermediary who agrees to sell it on their behalf (the Agent). When a sale is made by the Agent, the law deems that a contract is formed between the Principal and the end customer. It is important that an agency agreement, like other agreements, deals with each party's expectations and that it details the rights and obligations of each party.

A consensual relationship created by contract or by law where one party, the principal, grants authority for another party, the agent, to act on behalf of and under the control of the principal to deal with a third party. An agency relationship is fiduciary in nature and the actions and words of an agent exchanged with a third party bind the principal. An agreement creating an agency relationship may be express or implied, and both the agent and principal may be either an individual or an entity, such as a corporation or partnership. It is important that an agency agreement, like other agreements, deals with each party's expectations and that it details the rights and obligations of each party. A voluntary, Good Faith relationship of trust, known as a fiduciary relationship, exists between a principal and an agent for the benefit of the principal. This relationship requires the agent to exercise a duty of loyalty to the principal and to use reasonable care to serve and protect the interests of the principal. An agent who acts in his or her own interest violates the fiduciary duty and will be financially liable to the principal for any losses the principal incurs because of that breach of the fiduciary duty. For example, an agent who accepts a bribe to purchase only the goods from a particular seller breaches his fiduciary duty by taking the money, since it is the agent's duty to work only for the best interests of the principal.

A power of attorney (POA) or letter of attorney is a written authorization to represent or act on another's behalf in private affairs, business, or some other legal matter. The person authorizing the other to act is the principal, grantor, or donor (of the power), and the one authorized to act is the agent, donee, or attorney or, in some common law jurisdictions, the attorney-infact. Formerly, a power referred to an instrument under seal while a letter was an instrument under hand, but today both are under hand (i.e., signed by the donor), and therefore there is no difference between the two. Depending on the jurisdiction, a power of attorney may be oral and whether witnessed or not, will hold up in court, the same as if it were in writing. For some purposes, the law requires a power of attorney to be in writing. Many institutions, such as hospitals, banks and, in the United States, the Internal Revenue Service, require a power of attorney to be in writing before they will honor it, and they will usually keep an original copy for their records.

Durable power of attorney

Health care power of attorney Springing power of attorney

Under the common law, a power of attorney becomes ineffective if its grantor dies or becomes "incapacitated," meaning unable to grant such a power, because of physical injury or mental illness, for example, unless the grantor (or principal) specifies that the power of attorney will continue to be effective even if the grantor becomes incapacitated. This type of power of attorney is called "power of attorney with durable provisions" in the United States or "enduring power of attorney" elsewhere. In effect, under a durable power of attorney, the authority of the attorney-in-fact to act and/or make decisions on behalf of the grantor continues until the grantor's death.

In some jurisdictions, a durable power of attorney can also be a "health care power of attorney", which empowers the attorney-in-fact (proxy) to make health care decisions for the grantor, up to and including terminating care and ending life supports that are keeping a critically and terminally ill patient alive. Health care decisions include the power to consent, refuse consent or withdraw consent to any type of medical care, treatment, service or procedure. In many jurisdictions, a health care power of attorney is also referred to as a "health care proxy" and, as such, the two terms are sometimes used interchangeably.

In some jurisdictions it is possible to grant a springing power of attorney; i.e., a power that only takes effect after the incapacity of the grantor or some other definite future act or circumstance. After such incapacitation the power is identical to a durable power, but cannot be invoked before the incapacity. This may be used to allow a spouse or family member to manage the grantor's affairs in case illness or injury makes the grantor unable to act. If a springing power is used, care should be given to specify exactly how and when the power springs into effect. Determining whether or not the principal is "disabled" enough for the power of attorney to "spring" into action is a formal process. Springing powers of attorney are not automatic, and institutions may refuse to work with the attorney-in-fact. Disputes are then resolved in court, which is of course a costly, and usually unwanted, procedure.

Presenter: Abul Fattah Al Imran 3-10-18-064

To bring about contractual relations between the principal and the third parties, which is done by the agent. Agents are appointed with specific instructions that binds the principal as if he has done them himself. The principal and third parties, have the same legal consequences as if it had been given to or obtained by the principal. The act of an agent is the act of the principal.

1. 2.

Agency exists whenever a person can bind another by acts done on his behalf. The constituted attorney of a person is his agent for the purposes mentioned in the power of attorney. Example: wife to husband. One person (the agent) consents to act on behalf of another person (the principal) and subject to that person's control.

3.

Auctioneer Broker Factor Del Credere Agent Commission Agent General Agent Particular Agent

An auction is a process of buying and selling goods or services offering them up for bid, taking bids, and then selling the item to the highest bidder. In economic theory, an auction may refer to any mechanism or set of trading rules for exchange.

An auctioneer is an agent who is authorized to sell goods of his principal to the highest bidder at a public sale for a commission. He is an agent as well of the buyer as of the owner.
An auctioneer has no authority to sell goods by private contract. He has a particular lien on the goods for his remuneration. He has the goods in his possession and can sue the buyer in his own same for the purchase price.

An auctioneer acts in a double capacity. Up to the moment of sale, he is the agent of the seller. After the sale, he is the agent of the buyer. An auctioneer has implied authority to sell the goods without any restriction. Therefore, a sale by him in violation of instructions is binding on the owner. If the owner directs the auctioneer not to sell below a reserve price and the auctioneer sells it below the price, the sale is binding on the owner except in cases where the buyer knew that there was a limitation on the auctioneers authority.

A broker is an agent whose business is to bring about a contractual relation between the principal and a third party. He has no authority to contract in his own name. He generally reduces the terms of a contract into writing and delivers to each party a note In general a broker is an independent agent used extensively in some industries. The prime responsibility of a broker is to bring sellers and buyers together. Therefore, a broker is the third -person facilitator between a buyer and a0 seller. An example would be a real estate broker who facilitates the sale of a property.

Brokers also can furnish considerable market information regarding prices, products and market conditions. Brokers may represent either the seller (90 percent of the time) or the buyer (10 percent) but not both at the same time. An example would be a stockbroker, who makes the sale or purchase of securities on behalf of his client. Brokers play a huge role in the sale of stocks, bonds and other financial services.

A factor, from the Latin "he who does" (from Latin facit, to do, parallel to agent, from Latin agents), is a person who professionally acts as the representative of another individual or other legal entity, historically with his seat at a factory (trading post) He is an agent entrusted with the possession of goods and empowered to sell them in his own name as apparent owner. A factor is remunerated by a commission.

The contract made by the factor is binding on the principal. If any special authority is given to him and he acts beyond the scope of that authority, but within the scope of the apparent authority, the contract is nonetheless binding on the principal. For example, A deposits certain articles with B asking him not to sell them below a stated price. B undersells them to C, who is ignorant of As instruction to B. A cannot set aside the contract with C.

A Del Credere Agent is one who for an extra remuneration, acts as the surely for the purchaser, and thus, guarantees the due performance of the contract by the buyer. By reason of his charging a del credere commission he assumes responsibility for the solvency and performance by the contract by the vendees, and thus indemnifies his employer against loss. He therefore gives an additional security to the seller, but that does not shift to the responsibility of payment from the buyer to the seller. A del credere agent, like any other agent, is to sell according to the instructions of his principal, to make such contracts as he authorized to make for his principal and he is bound, as soon as he receives money, to hand it over to the principal. He is distinguished from other agents, simply in this that he guarantees that those persons to whom he shall perform the contracts, which he makes with them.

The agreement between him and his principal need not be reduced to or evidenced by writing, for his undertaking is not a guarantee within the Statute and Frauds. A Del Credere Agent is an agent who not only establishes a privities of contract between his principal and the third party, but who also guarantees to his principal the due performance of the contract by the third party. He is liable, however, only when the third party fails to carry out his contract, e.g., by insolvency. He is not liable to his principal if the third party refuses to carry out his contract for example, if the buyer refuses to take delivery. In a contract del credere agency, the guarantor is to answer for the solvency of the vendee and to pay the money if the vendee does not. But a demand on the principal debtor must be proved before the agent can be held liable.

Commission (remuneration), is a form of payment to an agent for services rendered. A commission agent is the one, whose business is to purchase goods at the lowest price from one person and sell them to another without any profit, receiving only a commission for his service. Strictly speaking, he is not an agent at all, for he does not bring about any privacy of contract between the person from the buys and the person to whom he sells.

A general agent is one who represents the principal in all names concerning a particular business. A particular agent is one who is appointed fo a specific purpose e.g. to sell a particular article. Factors and Commission agents are usually General Agents.

Section 183 says, Any person who is at the age of majority according to the law to which he subject and who is of sound mind may employ an agent. Under Section 184 of the Act, any person may become an agent, but one who is a minor or of unsound mind cannot be appointed to act as an agent to a principal so as to be personally liable to the latter. When a minor is appointed as any agent, he can undoubtedly bring about a contractual relation between the principal and a third party, but personally he is not responsible to the principal like other adult agents follows therefore, that a person and who engages a minor agent does so at his own risk, for, if any loss is done to his property on account of the mismanagement of the minor, he cannot recover compensation from him.

Minors may act as agents, although a minors appointment of an agent is generally voidable or void, if otherwise unexceptionable. In such cases, it will be binding on principals. A mentally incompetent person cannot act as the agent of another always. One who knowingly appoints another to act as his/her agent is conclusively presumed to guarantee the capacity of such agent to act.

The principal will not be excused by reason of the impairment, if the principal knowingly appoints a mentally impaired person as agent or permits such a person to act for him/her after knowledge of the impairment. If the principal selects a mentally competent person as agent, the principal is not bound by the acts of such person who thereafter becomes mentally impaired without the principals knowledge. If an intoxicated person is able to understand and execute with skill and fidelity the business entrusted to his/her care, s/he may serve as agent

Presenter: Anika Rahman 3-10-19-070

Agency by Authority
Agency by Ratification Agency of Necessity Agency by Estoppels or by Holding Out

An agency may be created in any of the following ways: Agency by authority is also known as agency by contract. The authority conferred may be either express or implied. Section 187 of the Act defines express and implied authority in the following way: An authority is said to be express when it is given by words spoken or written. An authority is said to imply when it is to be inferred from the circumstances of the case. Example: A owns a shop in Dhaka, himself living in Comilla and visiting the shop occasionally. The shop is managed by B and he is in the habit of ordering goods from C in the name of A for the purposes of the shop and of paying for them out of As funds within As knowledge. B has an implied authority from A to order goods from C in the name of A for the purpose of the shop. Extent of Agents authority: An agent may be special or general. When appointed to do one specific act or enter into one particular contract, an agent is a special agent. But when entrusted with all acts of some general kinds, e.g. all necessary acts connected with some business, the agent so entrusted is a general agent.

Section 188 of the Contract Act lays down: An agent having an authority to do an act has authority to do every lawful thing which is necessary in order to do such an act. An agent having an authority to carry on a business has authority to do every lawful thing necessary for the purpose or usually done in the course of conducting such business. Example: a) A is employed by B, residing in London, to recover at Karachi a debt due to B; A may adopt any legal process necessary for the purpose of recovering the debt and may give a valid discharge for the same. b) A constitutes B his agent to carry on his business of a shipbuilder, B may purchase timber and other materials and hire workman for the purpose of carrying on the business. Illustration (a) above refers to the authority of a special agent and illustration (b) refers to the authority of a general agent. In an emergency an agent has far wider authority than he has in normal circumstances.

Ratification means the subsequent adoption and acceptance of an act originally done without instruction or authority. As for example P buys ten maunds of wheat on behalf of Q. Q did not appoint P as his agent and did not instruct him to buy wheat for him. Q may, upon hearing of the transaction, accept it. If he does, the act is ratified and P becomes his agent with retrospective effect. Effect of ratification: Where acts are done by one person on behalf of another, but without his knowledge or authority, he may elect to ratify or to disown such acts. If he ratifies them, the same effects will follow as if they had been performed by his authority. (Section 196) Ratification may be express or implied i.e. it may be by express words or by conduct. (Sec. 197)

Examples of Implied ratification: D, without authority, buys goods for B. Afterwards B sells them to C on his own account. Bs conduct implies a ratification of the purchase made by D for him. D, without Bs authority lends Bs money to C. Afterwards B accepts interest on the money from C. Bs conduct implies a ratification of the loan.

Conditions: To be valid, a ratification must fulfill the following conditions: The agent must expressly contract as agent. A man cannot enter into a contract in his own name and later shift it on to a third party. The act to be ratified must be a lawful one. There can be no ratification of an illegal act or an act which is void. Ratification must be made within a reasonable time. No valid ratification can be made by a person whose knowledge of the fact of case is materially defective (Section -198). Ratification must be of the whole contract. There cannot be partial ratification and partial rejection. (Section - 199) For valid ratification, the agent must have a principle who is in actual existence at the time of the contract. Example a person cannot ratify a contract entered into by a promoter on its behalf before the company came into existence by incorporation. The principal must have contractual capacity at the date of the contract and at the date of the ratification. Ratification is not valid where the effect of ratification is to subject a third person to damages or of terminating any right or interest of a third person

Circumstances sometimes force a person to act on behalf of another without any express authority from him. In such cases an agency of necessity is said to be created. Three conditions must be satisfied before an agency can be created by necessity: It must be impossible to get the principals instructions. There must be an actual necessity for acting on his behalf. The agent of necessity must act honestly in the interest of the parties concerned. Examples: The captain of a ship finds himself in a distant port without money. The owner cannot be communicated with. The captain can pledge the ship for obtaining money. He will be considered the agent of the owner by necessity. A horse, sent by a train, arrived at a station with nobody to receive it. The railway company fed the horse. Held, the railway company was an agent of necessity and was entitled to recover the money from the owner.

Agency may be created by estoppels. When a man has by his conduct or statements induced others to believe that a certain person is his agent he is precluded from subsequently denying it. Thus an agency is created by implication of law. Examples: i) Y allows his servant X to buy goods for him on credit regularly. On one occasion the servant buys some goods not ordered by his master, on credit. Y is responsible to the shopkeeper for the price because X will be deemed to be his agent by estoppel. P employed X a broker, to buy hemp for him and at Ps request it was kept in a warehouse in Xs name. X without Ps authority sold the hemp. Held, P was bound by the sale because he had allowed X to assume the apparent right of disposing of the hemp in the ordinary course of business.

There are three possible cases of agency by estoppels:

A person can be held out as an agent although he is actually no so. Example as (i) above A person acting as an agent may be held out as having more authority than he actually has. Example as (ii) above. A person may be held out as an agent after he has ceased to be so. Section-237 provides as follows: When an agent has, without authority done acts or incurred obligations to third persons on behalf of his principal, the principal is bound by such acts or obligations if he has his words or conduct induced such third persons to believe that such acts or obligations were within the scope of the agents authority. Example: (i) A consigns goods to B for sale and gives him instructions not to sell under a fixed price. C, being ignorant of Bs instructions, enters into a contract with B to buy the goods at a price lower than the reserved price. A is bound by the contract. A entrusts B with negotiable instruments endorsed in blank. B sells them to C in violation of private orders from A. The sale is goods.

Express and Implied Authority:

The authority of an agent may be express or implied. (Section 186) The authority is said to be express when it is given by words spoken or written. The authority is said to be implied when it is to be inferred from the circumstances of the case. The inference as to implied authority, may be drawn from things spoken or written, or the ordinary course of dealing between the parties and others. (Section 187) Example: A owns a shop in Serampur, living himself in Calcutta, and visiting the shop occasionally. The shop is managed by B, and he is in the habit of ordering goods from C in the name of A for the purposes of the shop, and of paying for them out of As funds with As knowledge. B has an implied authority from A to order goods from C in the name of A for the purposes of the shop.

Examples: A is employed by B, residing in London, to recover at Bombay a debt due to B. A may adopt any legal process necessary for the purpose of recovering the debt and may give a valid discharge for the same. A constitutes B his agent to carry on his business of a ship-builder. B may purchase timber and other materials, and hire workmen, for the purpose of carrying on the business. Authority in an Emergency: An agent has authority, in an emergency to do all such acts for the purpose of protecting his principal from loss as would be done by a person of ordinary prudence, in his own case, under similar circumstances. (Section 189)

When the authority is separable: When an agent does more than he is authorized to do, and when the part of what he does, which is within his authority, can be separated from the part which is beyond his authority, so much only of what he does as is within his authority, is binding as between him and his principal. (Section-227) Example: A, being owner of a shop and cargo, authorizes B to procure an insurance for Taka 4,000 on the ship. B procures a policy for Taka 4,000 on the ship, and another for the like sum on the cargo. A is bound to pay the premium for the policy on the ship, but not the premium for the policy on the cargo.

When the authority cannot be separated: Where an agent does more than he is authorized to do and what he does beyond the scope of his authority cannot be separated from what is within it, the principal is not bound to recognize the transaction. (Section-228) Example: A authorizes B to buy 500 sheep for him. B buys 500 sheep and 200 lambs for one sum of Taka 6,000. A may repudiate the whole transaction. Where the principal is bound by unauthorized acts of agent: The principal may be bound by unauthorized acts of an agent in two cases: Where by the rule of estoppel the principal is precluded from denying the authority of the agent. Where an agency has been terminated, but notice of termination has not been received by the other parties concerned.

Presenter: Md. Rakibul Islam 3-10-18-069

 Agents duty in conducting principals business: An agent is bound to conduct the business of his principal according to the directions given by the principal, or in absence of any such directions, according to the custom which prevails in doing business of the same kind at the place where the agent conducts such business. When the agent acts otherwise if any loss be sustained he must make it goods to his principal and if any profit accrues, he must account for it. (sec. 211).

Skill and diligence required from agent: An agent is bound to conduct the business of the agency with as much skill as is generally possessed by persons engaged in similar business unless the principal has notice of his want of skill.
The agent is always bound to act with reasonable diligence, and to use such skill as he possesses; and to make compensation to his principal in respect of the direct consequences of his own neglect, want of skill or misconduct, but not in respect of loss or damages which are indirectly or remotely caused by such neglect want of skill or misconduct. (Sec.212)

 Agents duty to render accounts: An agent is bound to render proper accounts to his principal on demand or periodically if so provided in the agreement. Agents duty to communicate to principal: It is the duty of an agent, in cases of difficulty to use all reasonable diligence in communicating with his principal, and in seeking to obtain his instructions. Agent not to deal on his own account: If an agent deals on his own account in the business of the agency without first obtaining the consent of his principal and acquainting him with all material circumstances which have come to his own knowledge on the subject, the principal may repudiate the transaction, if the case shows either that any material fact has been dishonestly concealed from him by the agent, or that the dealings of the agent have been disadvantageous to him. The agent has a duty to avoid conflict of interest between the agent and the principal.

 Principal to get benefit of agents dealings: If an agent without the knowledge of his principal, deals in the business of the agency on his own account, instead of on account of his principal, the principal is entitled to claim from the agent any benefit which may have resulted to him from the transaction. The agent has duty not to make secret profits. Agents duty to pay sums received for principal: the agent is bound pay to his principal all sums received on his account after deducting there from his dues on account of remuneration and expenses.

 Principals death or insanity: When an agency is terminated by the principal dying or becoming of unsound mind. The agent is bound to take on behalf of the representatives of his late principal, all reasonable steps for the protection and preservation of the interests entrusted to him. Miscellaneous: The agent has other duties also. The agent must give all information to the principal. He must not delegate his authority. He must avoid the clash between his duty and self-interest. He should be loyal to the principal. He must not set up an adverse title against the principal. He is not entitled to remuneration in certain circumstances.

 Agent to be indemnified against consequences of lawful acts: The principal is bound to indemnify the agent against the consequences of all lawful acts done by such agent in exercise of the authority conferred upon him. Agent to be indemnified against consequences of acts done in good faith: Where one person employs another to do an act and the agent does the act in good faith the employer is liable to indemnify the agent against the consequences of that act though it causes an injury to the rights of third persons. Non-liability for criminal acts: Where one person employs another to do an act which is criminal, the employer is not liable to the agent either upon an express or an implied promise, to indemnify him against the consequences of that act. Compensation for principals neglect: The principal must make compensation to his agent in respect of injury caused to such agent by the principals neglect or want of skill.

Compensation: The principal is entitled to compensation for any breach of duty by the agent. Agents duties: The agents duties are the principals rights. Revocation: The principal can revoke the agents authority, subject to certain conditions.

Enforcement of rights: The agent can enforce all the duties of the principal. The principals duties are the agents rights. Agents right of retainer: An agent may retain out of any sums received on account of the principal in the business of the agency, all moneys due to himself in respect of advances made or expenses properly incurred by him in conducting such business and also such remuneration as may be payable to him for acting as agent. When agents remuneration becomes due: In the absence of any special contract, the agents remuneration does not become due until he has completed the act for which he was appointed agent. But an agent may detain moneys received by him on account of goods sold, although the whole of the goods consigned to him for sale may have been sold, or although the sale may be actually complete.

Agent not entitled to remuneration for business misconducted: An agent who is guilty of misconduct in the business of the agency is not entitled to any remuneration in respect of that part of the business which he has misconducted.

Agents lien: In the absence of any contract to the contrary, an agent is entitled to retain goods, papers and other property, whether movable or immovable of the principal, received by him, until the amount due to himself for commission, disbursements and services in respect of the same has been paid or accounted for to him.

Presenter: Ummay Kulsum 3-10-19-068

As mentioned already, the general rule is that any contract entered into by an agent is between the principal and the third party, even though it is arranged by the agent. Therefore, only the principal can sue and be sued under that contract. However, there are exceptions to this rule:

1.

Where the agent discloses the existence of the principal. The agent does not have to disclose the principals name, only that he is an agent for a principal. Here the general rule is that any contract entered into by an agent is between the principal and the third party, even though it is arranged by the agent. Therefore, only the principal can sue and be sued under that contract.

 a)

b)

Exceptions to this rule: Where the agent has expressly accepted liability with the principal in order to persuade the third party to make the contract. By implication This usually happens where the agent signs the contract with the third party in his own name only instead of signing to show that he is acting on behalf of a principal.

2. 3.

4.

Where the agent does not disclose the existence of a principal. The third party can enforce the contract against the agent and the agent can enforce it against the third party. The principal may also enforce the contract. In English law, when an agent makes a formal contract on behalf of his principal, he can sue or be sued along with the principal.

In order, that a principal may be liable for a contract made by his agent the following conditions must be satisfied: i. The agent must act within the express or implied authority given to him by his principal; or, ii. The act though done without authority, must be ratified by the principal; or, iii. Agency by estoppels must arise; or, iv. The agent must show that he is an agent of necessity.

If an agent makes a contract with a person who neither knows nor has reasons to suspect that he is an agent, the principle of the agent is known as undisclosed principal. The agent who makes the contract becomes personally liable for it. He can sue or be sued for the contract.

The legal consequences of contracts with undisclosed principal are as follows:

i. ii. iii. iv.

Principal may require performance of the contract The other party may refuse to fill the contract Performance is subject to the rights and obligations between agent and the other party Agent is personally liable

Features of a Pretended Agent: i. A pretended agent has no authority to act as agent. ii. When the other party to the contract suffers damage as a result of such want of authority, he can sue the agent for breach of warranty of authority. iii. The pretended agent is liable to pay damages under the law of torts. iv. The liability arises even when the agent acted innocently.

A person untruly representing himself to be the authorized agent of another, and thereby inducing a third person to deal with him as such agent, if his alleged employer does not ratify his acts, to make compensation to the other in respect of any loss or damage which he had incurred by so dealing (Section 235).

Presenter: Md. Masuduzzaman 3-10-18-071

Misrepresentation is a contract law concept. It means a false statement of fact made by one party to another party, which has the effect of inducing that party into the contract. For example, under certain circumstances, false statements or promises made by a seller of goods regarding the quality or nature of the product that the seller has may constitute misrepresentation. A finding of misrepresentation allows for a remedy of rescission and sometimes damages depending on the type of misrepresentation. According to Gordon v Selico (1986) 18 HLR 219 it is possible to make a misrepresentation either by words or by conduct, although not everything said or done is capable of constituting a misrepresentation. Generally, statements of opinion or intention are not statements of fact in the context of misrepresentation. If one party claims specialist knowledge on the topic discussed, then it is more likely for the courts to hold a statement of opinion by that party as a statement of fact.

As enacted by the Misrepresentation Act, the statement in question may constitute a representation even if later incorporated into the contract as a term (i.e. a warranty, condition or innominate term). An alternative approach, applied in parallel but in exclusivity to, is to find a collateral contract by interpreting the representation as a promise accompanied by some sort of consideration (see Heilbut, Symons & Co. v Buckleton [1913] A.C. 30 (H.L.)). The collateral contract will have the effect of adding the representation as a term to the contract. If the representation is found to be a term then the normal remedies for breach of contract apply.

Misrepresentation is one of several vitiating factors which can affect the validity of a contract. A misrepresentation occurs when one party makes a false statement with the intention of inducing another party to contract. For an action to be successful, some criteria must be met in order to prove a misrepresentation. These include: A false statement of fact has been made, The statement was directed at the suing party and The statement had acted to induce the suing party to contract

A representor may make a statement which prima facie is technically true; however this may tell only half the story. If a statement of fact is made but the representor fails to include information which would significantly alter the interpretation of this fact, then a misrepresentation may have occurred. In Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563, Krakowski agreed to enter into a contract to buy a shop premises from Eurolynx as long as a 'strong tenant' had been organized. The contract proceeded on the grounds that such a tenant had been arranged.

Unbeknown to Krakowski, Eurolynx had entered into an additional agreement with the tenant to provide funds for the first three months rent to ensure the contract went ahead. When the tenant defaulted on the rent and subsequently vacated the premises, Krakowski found out about the additional agreement and rescinded the contract with Eurolynx. It was held that Eurolynxs failure to disclose all material facts about the 'strong tenant' was enough to constitute a misrepresentation and the contract could be rescinded on these grounds

The negotiating stage of a contract can be a time consuming process. Because of this, new information may arise and circumstances may change. This can result in two situations which can result in a misrepresentation if silence is kept. The first is if the representor subsequently discovers that the statement was false, the second being if the statement becomes false at a later time. If a statement is made and it is subsequently made known to the representor that it is false, it would obviously be inequitable to allow the representor to remain silent with the new information. In Lockhart v. Osman [1981] VR 57, an agent had advertised some cattle as being well suited for breeding purposes. Later on it was discovered that the stock had been exposed to a contagious disease which affected the reproductive system. It was held that the agent had a duty to take remedial action and correct the representation.

The failure by the agent to take such measures resulted in the contract being set aside. Should a statement be made which is true at the time, but subsequently becomes untrue due to a change in circumstances, the representor is obligated to amend the original statement. In With v OFlanagan [1936] Ch. 575, the plaintiff entered into a contract to purchase OFlanagans medical practice. During negotiations it was said that the practice produced an income of 2000 per year. Before the contract was signed, the practice took a downward turn and lost a significant amount of value. After the contract had been entered into the true nature of the practice was discovered and the plaintiff took action in misrepresentation. In his decision, Lord Wright said "...a representation made as a matter of inducement to enter into a contract is to be treated as a continuing representation." This means that the representation must be true till the contract is made; creating the obligation mentioned above and accordingly the plaintiffs petition was successful.

Some relationships also provide that silence can form the basis of an actionable misrepresentation. Fiduciary Relationships A fiduciary relationship is one of trust and confidence; it involves one party acting for the benefit of another. For this reason, when entering into a contract, it is important for a fiduciary to disclose all facts which could be considered material even if not expressly asked about. In Lowther v Lord Lowther (1806) 13 Ves Jr 95, the plaintiff handed over a picture to an agent for sale. The agent knew of the pictures true worth yet bought it for a considerably lower price. The plaintiff subsequently discovered the pictures true worth and sued to rescind the contract. It was held that the defendant was in a fiduciary relationship with the plaintiff and accordingly assumed an obligation to disclose all material facts. Accordingly the contract could be rescinded.

Statement of Fact It is a general requirement that for an action in misrepresentation to proceed, that the statement in question be one of present or past fact. This has its grounding in that only facts can be distinguished as being true or untrue at the time they are made. Opinion Statements of opinion are not often seen as sufficient to produce a misrepresentation. Obviously it would be unreasonable to treat opinions in the same manner as truths as opinions can be based purely on personal beliefs with no additional foundation. There are however some exceptions where opinions can give rise to an action in misrepresentation: where an opinion is expressed yet this opinion is not actually held by the representor, where it is implied that the representor has facts on which to base the opinion, or where one party should have known facts on which such an opinion would be based.

Statements which are made in relation to the intention of a party or the occurrence of some event in the future do not constitute misrepresentations should they fail to eventuate. This is because at the time the statements were made they can not be categorized as either true or false. However, similarly to the first point above, an action can be brought if the intention never actually existed. This can be illustrated by the decision in Edgington v Fitzmaurice (1885) 29 Ch. D. 459, which deals with a statement of intention by the directors of a company to use loaned money to alter company buildings and make purchases to expand the companys operating options. It was found that the directors actually intended to repay current debts and according it was held by the judges that the contract was voidable

Statements of law were, in the past, considered to be free from claims of misrepresentation because it is equally accessible by both parties and is "...as much the business of the plaintiff as of [the defendants] to know what the law [is].". This has since changed and it is now more recognized that statements of law should be treated as akin to statements of fact rather than occupy a special isolation. As stated by Lord Denning "...the distinction between law and fact is very illusory.".

An action in misrepresentation can only be brought by a representee. This means that only those who were an intended party to the representation can sue. This principle can be seen in Peek v Gurney (1873) LR 6 HL 377, where the plaintiff sued the directors of a company for indemnity. The action failed because it was found that the plaintiff was not a representee (an intended party to the representation) and accordingly misrepresentation could not be a protection. It is not required that in order to be a representee, the representation must be received directly. It is sufficient that the representation was made to another party with the intention that it would be made known to a subsequent party and ultimately acted upon by them as a representee.

Types of misrepresentations are identified with different remedies available: Fraudulent misrepresentation Negligent misrepresentation Innocent misrepresentation

occurs when one makes representation with intent to deceive and with the knowledge that it is false. An action for fraudulent misrepresentation allows for a remedy of damages and rescission. One can also sue for fraudulent misrepresentation in a tort action. Fraudulent misrepresentation is capable of being made recklessly.

Negligent misrepresentation at common law occurs when the defendant carelessly makes a representation while having no reasonable basis to believe it to be true. This type of misrepresentation is relatively new and was introduced to allow damages in situations where neither a collateral contract nor fraud is found. It was first seen in the case of Hedley Byrne v Heller [1964] A.C. 465 where the court found that a statement made negligently that was relied upon can be actionable in tort. Lord Denning in Esso Petroleum Co. Ltd. v Mardon [1976] Q.B. 801 however, transported the tort into contract law, stating the rule as:

under Statute, enacted by the Misrepresentation Act 1967. When dealing with a negligent misrepresentation it is most lucrative (joint with fraudulent misrepresentation, Contributory Negligence notwithstanding) for an action to be brought under statute law as the burden of proof that is required passes to the person who made the statement. So it is for the person who made the negligent statement to prove that the statement was either not one of fact but opinion and that "had reasonable ground to believe and did believe up to the time the contract was made that the facts represented were true" - the socalled innocent defense.

Innocent misrepresentation occurs when the representor had reasonable grounds for believing that his or her false statement was true. Prior to Hedley Byrne, all misrepresentations that were not fraudulent were considered to be innocent. This type of representation primarily allows for a remedy of rescission, the purpose of which is put the parties back into a position as if the contract had never taken place. Section 2(2) Misrepresentation Act 1967, however, allows for damages to be awarded in lieu of rescission if the court deems it equitable to do so. This is judged on both the nature of the innocent misrepresentation and the losses suffered by the claimant from it.

Time to time notice is given to the agent for different purposes. When the agent deviates from the contract then the principal may give notices to the agents. Or when the quality of the products does not conform the agreement or if there is any claim against the agent, then the principal may generate notice to an agent.

Presenter: Touhidul Islam 3-10-18-031

The principal is not liable for a contract made by his agent outside both his real and his apparent authority.

1.

The liability of the principal where the agent has exceeded his authority depends on principles of estoppels. If no facts exist, therefore, to stop the principal from denying the authority of the agent, persons dealing with the agent must take notice of his powers.
So persons dealing with an agent are bound by known limitations on his authority. So where the agent is a special agent of limited powers, the principal in the absence of estoppels or ratification, is not bound by his contract in excess of his authority. Thus an agreement by a local railway agent in violation of a known rule of the railway to make no charge to a large shipper for demurrage or storage is not binding on the company. So an agent having an assignment of a judgment for safe keeping cannot assign such judgment to one who knows the facts.

2. 3.

4.

5.

6.

So a conveyance by an attorney in fact, having known authority to convey only on approval by his principal, is of no validity if made without such approval. So if A buys a piano from B as agent of X and makes his note therefore payable to B personally, it has been held that if B does not account to X for the proceeds of such note, X may recover the piano, X not having ratified the sale and no such custom of business being shown. So a principal is not bound where an agent with mere power to sell, inserts in a contract a clause for interest in case of delay in delivery, or makes specific representations that the threshing-machine sold by him has been shipped, thereby inducing the vendee to deliver his old machine in part payment, and thus leaving him without any threshing machine when needed.

7.

9.

10. So if an insurance agent delivers a policy which by its terms effect until the first premium is paid, and the insured agrees to by giving the agent credit for such premium on his private insurance company is not liable if the agent does not account premium.

is not to take pay therefore account, the to it for such

11. So if an insurance policy shows on its face that an agent has no authority to waive certain provisions thereof, an attempted waiver by an agent not having such authority in fact is invalid. 12. So while a rule of an express company that express orders must be signed by their local agent does not prevent recovery on express orders signed by a clerk in the office of the local agent, such rule not being known, 13. Yet if this clerk had solicited business outside the office and had made no charge therefore, the person buying such orders with knowledge of these facts must take notice that such business is outside the apparent authority of an express agent. So an agent who has merely power to sell cannot bind his principal by a contract of sale which provides for payment in something other than cash, such as lumber,

14.
15.

Secondhand machinery,
or a note and a certificate of deposit.

16. An agent with authority to inspect lumber cannot bind his principal by agreeing to accept lumber which he has not inspected.

17. So an agent with authority only to collect rents cannot bind his principal by a contract to lease.
18. So a principal is not bound by the act of his agent after the authority of such agent is known to the third person to be revoked.

19. Thus an agent originally authorized to sell realty, cannot bind his principal by accepting money from a vendee and putting him in possession, after such vendee knows that the principal has already sold the realty to another.
20. If the contract of the agent exceeds his authority, it will be held good as far as his authority extends if such part can be separated from the rest. Thus if an attorney in fact is authorized to execute a quit-claim deed only, a warranty deed executed by him will pass title, though the covenant of warranty will not bind the Principal.

A sub-agent is defined by Section 191 of the Contract Act, as a person employed by a person employed by and acting under the control of the original agent in the business of agency. A sub-agent may be a properly appointed one or an improperly appointed one. Where an agent, having authority to do so, appoints a sub-agent, he is known as a subagent properly appointed (sec. 192.) Where an agent without authority appoints a sub-agent, he is called a sub-agent improperly appointed. (sec.193.).

With regard to the appointment of SubAgent, Sec 190 clearly states: An agent cannot lawfully employ another to perform acts which he has expressly or impliedly undertaken to perform personally, unless by the ordinary custom of trade a subagent may or from the nature of the agency, a sub-agent must be employed

A "Co-agent" or a "substituted Agent" is a person who is appointed by the agent to act for the principal in the business of agency with the consent of the principal. Section 194 enacts, "where an agent holding an express or implied authority to name another person to act for the principal, names another person accordingly, he is not a sub-agent, but a substituted agent for the principal"

Presenter: Md. Mustafa Shahed 3-10-18-003

TERMINATION BY ACT OF PARTIES

TERMINATION BY OPERATION OF LAW

When the principal revokes the authority of the agent: Such revocation must be made before the agent has exercised his authority and must be for a just excuse. Revocation has, however, to be made subject to the following restrictions: Where the agent has himself an interest in the property which forms the subject matter of the agency, the agency in the absence of an abstract contract, cannot be terminated to the prejudice of such interest. Thus, 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 the authority nor can it be terminated by As insanity or death. If the agency has been formed for a definite period, the principal cannot revoke unjustly the authority without paying compensation to the agent.

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. Thus, A authorizes B to buy 1000 bales of cotton on account of A and to pay for it out of As money remaining in Bs hands. B buys 1000 bales of cotton in his own name, so as to make himself personally liable for the price. A cannot revoke Bs authority so far as regards payment for the cotton. If, however, B purchases the cotton in As name so as not to render himself personally liable for the price, A can revoke Bs authority to pay for the cotton.

When the agent renounces the business of the agency.

Reasonable notice for such renunciation must be given. Renunciation can be made only for a just cause. If the renunciation unwarranted or otherwise amounts to a breach of the contract, the principal is entitled to compensation. By the insolvency of the principal. A person who has been adjudged an insolvent cannot act as a principal because his contractual capacity has thereby lapsed. Hence, all contracts of agency which he has made with others also are dissolved. By death or insanity of the Principal or the Agent The relationship between an agent and a principal is entirely personal. Therefore, death or insanity of either terminates the agency, subject to the provisions of Sections 202 and 204 of the Contract Act.

On the completion of the business of the agency If an agency has been formed for a definite period, the agency is dissolved on the termination of the stipulated period. Thus, A employs B to construct a building and C, to supervise the construction for 3 months. The agency of B will terminate after the construction of the building is over and that of C at the end of 3 months. Performance of the Object Where the agency is for a particular object, it terminates when the object is accomplished or when the accomplishment becomes impossible.

By an agreement between the Principal and the Agent Sometimes the contract of agency expressly or impliedly provides for the termination of the contract. The Principal becoming an Alien Enemy If the principal and the agent belong to different countries and war breaks out between the two countries, the contract of agency is terminated. Termination of the Sub agents authority The sub agents authority comes to an end when the agents authority terminates.

Manufacturers and suppliers of goods frequently appoint agents to act on their behalf in promoting sales, both in the home country of the manufacturer as well as overseas. A formal agreement is usually signed setting out the commission the agent will receive, the territory, duration and other terms on which the principal and agent will do business together. Within the European Union, there is legislation designed to give some protection to agents, in particular the right to compensation in certain circumstances when an agency is terminated.

The same applies in other parts of the world and in some countries it is necessary for a foreign manufacturer to appoint as agent an individual or company that is a national of the country where the agency will operate. An agent should be distinguished from a distributor in commercial parlance, a distributor will buy stock from the supplier or principal and then sell it on to his customers at a mark-up, whereas an agent will find customers for the principal who then sells direct to the customers and pays commission to the agent.