Law of agency - terminated agency PDF

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Explain the circumstances under which an agency relationship may be terminated.There are few circumstances under which an agency relationship may be terminated. Firstly is by the act of the parties, under the act have three principal/ agent to terminated agency relationship which is by mutual consen...

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Explain the circumstances under which an agency relationship may be terminated. There are few circumstances under which an agency relationship may be terminated. Firstly is by the act of the parties, under the act have three principal/ agent to terminated agency relationship which is by mutual consent, unilateral revocation/ termination by the principal and unilateral renunciation by the agent. Secondly is by the operation of law. Firstly is by mutual consent which is meant both parties may terminate their agency relationship by mutual consent between them and once they agreed to terminate the agency, the agent has no longer any authority to act on behalf of principal. Also the principal would not liable to any contract made by agent after termination. Secondly is unilateral revocation or termination by principal which is in (section 154) that the agency terminated by the act of principal of revoking the agent’s authority. Meanwhile in (section 156) principal may revoke the agent’s authority at any time before the agent has exercised the authority. For the (section 160), revocation may be done either expressly or implied from the conduct of the principal. An illustration under (section 160) were the A empowers B to let A’s house, the afterwards A lets himself, so this implied revocation of B’s authority. In (section 159) in order to revoke the agent’s authority, the principal must give a reasonable notice to the agent. Otherwise, the agent is entitled to damages. In cases of SOHRABJI v ORIENTAL SECURITY ASSURANCE CO, the court held was 3 ½ months noticed was not adequate to properly terminate an agency which had lasted nearly 50 years. In this circumstances, two 2 years notice would have been reasonable notice. If the principal failed to give a reasonable notice of termination to the agent, the measure of damages that the agent would be entitled is the amount that the might have earned under the contract of agency had he not be prevented from continuing his duty as an agent. Under (section 158), if the agency is for a fixed term, earlier termination might be entitle the agent to claim for damages. There are three section of exception for unilateral revocation or termination by the principal is in certain situation, the principal is prevented from revoking the agent’s authority. First section is under (section 155), states when the agent himself has an interest in the property, which is the subject matter of the agency. Under (section 155), the illustration (a), the A gives authority to B to sell A’s land and to pay himself, out of the proceeds, the debts due to him from A. So A cannot revoke this authority. We can take the cases from SMART v SANDERS, which is an agent was sent with goods to be sold on behalf of the principal. The factor made advance to the principal for the security of the goods. So in court held, the agency cannot be terminated by the principal because the factor (agent) has an interest in the goods by paying the security of the goods. For the second cases is from FIRTH v FIRTH, which is in court held the general authority of a factor in whose hands goods were placed for sale is to sell for the best price which could reasonably obtained. This authority could revoked after the factor had me advances for the security of the good to the owner and while these advances remained unpaid. Second section exception of revocation is under (section 157), were the authority has been partly exercised by the agent. A case that can related under the section is READ v ADERSON, which is a principal instructed a turf commission agent to place bets on his behalf. The agent placed the bets and lost. By custom, a turf commission agents always bets in his own name and becomes solely responsible to person with whom the bet is made. If he failed to pay a lost bet, he is subject to certain disqualification, which will have a serious impact on his business. So in court held, the principal could revoke the turf

commission agent’s authority after losing the bet. The principal would have to indemnify the agent for the amount, which the agent had paid to the person with whom he made the bet. The last section of exception in termination of agency is under (section 161), which is the notice of termination by the principal would only effective when it comes to the knowledge of the agent and the third party. If the agent and the third party does not know about the notice of termination, so the revocation is not effective and the agency is not be terminated. We can see under this section, first court held from the cases of PICHAPPA CHITTY v HJ. JAH, were the plaintiff (third party) who advance money to an agent appointed, but whose authority had been revoked without the agent’s and the plaintiff’s knowledge was entitled to recover the money from the principal. For second court held, we also can see the cases from TRUEMAN v LODER, were the third party who dealt with an agent whose authority had been revoked was able to claim from principal, the goods supplied because the third party had no knowledge about revocation. The last act of parties is by unilateral renunciation by the agent. There is four unilateral renunciation by agent, the first section is under (section 154), were the agency is also terminated by the act of agent renouncing the business of the relationship of the agency. Second section is in (section 160), were the renunciation may be expressed or implied to conduct the termination of agent. Third section is under (section 159), were the agent must give a reasonable notice to the principal or otherwise the principal is entitled to be damaged. The last section is in (section 158), if the agency is for a fixed term, the agent liable to compensate the principal for premature renunciation without sufficient cause. In the operation of law, there are also few principal and agency that may be terminated under law. Firstly is by the performance of the contract of agency, which under (section 154) “were an agency is terminated... by the business of agency being completed… ”. Secondly, is by the expiration of the period fixed or implied in the contract of agency. Were it is once the agency is expired, the agency is terminated even though the business has not been completed. Third, the operation of law is by the death of either the principal or the agent. Where in (section 154) “an agency is terminated… by either the principal or agent dying… ”. There are have exception under the death of either the principal or the agent. The first exception in (section 155) states the death of the principal would not terminate the agency if the agent has an interest in the property, were is the subject matter of the agency. Under this section, there has illustration (b) were A consigns 1000 bales of cotton to B, who has made advance to him on such cotton and desired B to sell the cotton, also to repay himself out of the price the amount of his own advances. The A cannot revoke this authority nor is it terminated by his unsoundness of mind of death. Second exception is in (section 161), states the termination by death of the principal is only effective upon the agent and the third party having notice of the principal’s death. The last exception is under (section 162), when the principal died, the agent must take the reasonable steps to protect and preserve the interest of the principal. The next operation of law is by the subsequent insanity of either the principal or the agent. In (section 154) states in cases of YONGE v TOYNBEE, the court held is the agents liable to the third party because he acted without the authority due to the fact that the principal become insane.

The fifth operation of the law is by the bankruptcy or insolvency of the principal. In (section 154) states, “an agency is terminated… by the principal being adjudicated or declared a bankrupt or an insolvent.” Lastly of the operation of law is by the happening of an event which renders agency unlawful. This falls within the doctrine of frustration in contract. As an example, the principal becomes enemy due to outbreak of war or as another example, a change in law will make the agency business become unlawful. As a conclusion, termination of agency have two which is by the act of parties and also by operation of law. In agency, it does not only have a contractual relationship between parties but it also can be terminated because of some issues that occurs between the parties....