Business & Corporate Law - Agency Law DOCX

Title	Business & Corporate Law - Agency Law
Author	Dr Seow Hock Peng
Pages	7
File Size	33.6 KB
File Type	DOCX
Total Downloads	163
Total Views	277

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MASTER OF CORPORATE GOVERNANCE – TUNKU ABDUL RAHMAN UNIVERSITY COLLEGE Business and Corporate Law (MBBL 5014) CHAPTER 3: AGENCY LAW Definition of agency An agency is a triangular legal relationship that exists between a principal, an agent (who represents the principal) and a third party. The agent is empowered to enter into contracts with the third party on behalf of the principal. The law of agency in Malaysia is mainly found in Part 2C (sections 135 to 191) of the Contracts Act 1950. Parties to an agency The creation of agency involves three (3) parties – (a) Principal; (b) Agent; and (c) Third Party. Section 135 Contracts Act 1950 provides that: "An "agent" is a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the "principal". Contractual relationship in an agency In an agency, there are two contracts – (a) The first contract, made between the principal and the agent; (b) The second contract, made between the principal and the third party, through the work of the agent. Capacity of principals and agents Any person who is eighteen (18) years old or above and who is sound mind may be a principal. Section 136 Contracts Act 1950: "Any person who is of the age of majority according to the law to which he is subject, and who is of sound mind, may employ an agent". Any person may become an agent, but persons of unsound mind and who are below eighteen (18) years of age are not liable towards their principles for acts done by them as agents. Section 137 Contracts Act 1950: "As between the principal and third persons, any person may become an agent; but no person who is not of the age of majority and of sound mind can become an agent, so as to be responsible to his principal according to the provision in that behalf herein contained". 1. Creation of an agency A contract of agency can be expressed or implied from the circumstances and the conduct of the parties. Section 139 Contracts Act 1950 provides that: "The authority of an agent may be expressed or implied". Section 140 Contracts Act 1950 states that: "An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, may be accounted circumstances of the case". Consideration is not necessary. Section 138 Contracts Act 1950 states that: "No consideration is necessary to create an agency". Generally, an agency may arise in the following ways – (a) Express appointment; (b) Implied appointment; (c) Ratification; (d) Necessity; (e) Doctrine of estoppel or "holding out". 1.1 Express appointment Express appointment may be in a written or oral form. Section 140 Contracts Act 1950 states that: "An authority is said to be express when it is given by words spoken or written ..." 1.2 Implied appointment...