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    Authority & Creation of Agency

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    Dhanushka Madhushanka
    The document discusses different types of authority in agency relationships and how agencies are created. There are three main types of authority: actual authority which is expressly granted, implied authority which is incidental to job duties, and apparent authority where the principal creates an impression of authority even if it does not truly exist. Agencies can be created through express or implied agreement between parties or by operation of law, such as in cases of necessity. The key requirement for agency is mutual assent between the principal and agent.

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    Authority & Creation of Agency

    Uploaded by

    Dhanushka Madhushanka
    37 views3 pages
    The document discusses different types of authority in agency relationships and how agencies are created. There are three main types of authority: actual authority which is expressly granted, implied authority which is incidental to job duties, and apparent authority where the principal creates an impression of authority even if it does not truly exist. Agencies can be created through express or implied agreement between parties or by operation of law, such as in cases of necessity. The key requirement for agency is mutual assent between the principal and agent.

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    The document discusses different types of authority in agency relationships and how agencies are created. There are three main types of authority: actual authority which is expressly granted, implied authority which is incidental to job duties, and apparent authority where the principal creates an impression of authority even if it does not truly exist. Agencies can be created through express or implied agreement between parties or by operation of law, such as in cases of necessity. The key requirement for agency is mutual assent between the principal and agent.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    37 views3 pages

    Authority & Creation of Agency

    Uploaded by

    Dhanushka Madhushanka
    The document discusses different types of authority in agency relationships and how agencies are created. There are three main types of authority: actual authority which is expressly granted, implied authority which is incidental to job duties, and apparent authority where the principal creates an impression of authority even if it does not truly exist. Agencies can be created through express or implied agreement between parties or by operation of law, such as in cases of necessity. The key requirement for agency is mutual assent between the principal and agent.

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    Authority of Agency

    Generally, agency is the legal relationship between principal and the agent. Though the agent acts
    within his scope of authority to contract with third party, principal also obligate to the third party to
    perform as the contract. Mainly there are three types of authorities can be identified.

    I. Actual Authority
    II. Implied Authority
    III. Apparent or Ostensible Authority

    Actual Authority

    Actual Authority is the authority which expressly conferred by the principal. This authority can be
    conferred by writing or verbally. If it is a verbal, third party must clarify about the authority and
    powers of principal and the agent. At that situation, making the records are important. If it is a
    written instrument, third party has an ability to ask about the written authorization and ascertain the
    authority of parities.

    Implied Authority

    This also described as usual authority. Implied authority is the authority which requires for the
    agent to perform his acts and those are incidental or necessary to effective performance of the
    duties. The content of the implied authority depends on business, profession or actual authority
    which is empowered to do.

    Apparent/ Ostensible Authority

    Apparent or ostensible authority is the situation where the agent has no real authority but there is an
    appearance of authority. In this case, the principal or agent indicates by his conduct or words that he
    has the authority or he has been given this authority. This authority will be a caused to arise the
    agency by estoppel.

    Jensen Vs. South Trail Mobile Ltd. (1972)- A third party contracted with an agent for the
    purchase of a mobile house and he knew that the principal’s approval was required for such a
    sale. But the agent had wrongfully told the third party that he had received such authority even
    though principal had not by his conduct created such an impression. On those facts, the Court
    held that the agent had no apparent or ostensible authority to effect such a sale.

    However, in the case of senior officers of a company, the judicial trend is to imply that they have
    apparent or ostensible authority to perform reasonable acts for the company.
    Creation of Agency
    Manifestation of assent of principal and the agent is the main requirement which necessary to create
    an agency. Agency relationship can be created mainly in three situations.

    I. By express agreement
    II. By implied agreement
    III. By operation of law
     Agent of Necessity
     Creation of agency by Marriage
     Creation of agency by Ratification
     Agency by Estoppel

    I. Creation of Agency by Express Agreement

    This is the main way of creating an agency. In this case, the appointment of the agent is made in
    writing or verbally. In formal cases, the written authorization between the principal and the agent is
    called as Power of Attorney. But, verbal appointment of an agent is sufficient unless the third party
    request a formal written appointment.

    II. Creation of Agency by Implied Agreement

    Even though there is no legal written authorization or verbal appointment, there are some facts and
    circumstances that can identified and show that an agency has been created. That means, agency is
    implied from the special circumstances of the case.

    III. Creation of Agency by Operation of Law

    Agent of Necessity

    There are some requirements should be fulfilled in order to become an agent of necessity.

     There is an emergency situation


     Inability of the agent to communicate with the principal
     Act in good faith in the interest of principal, but the principal does not allow to do so.
     Nature of the goods (e.g.: The goods like fish which can easily deteriorate)
    Lapraik v Burrows (1859)- There was a ship and the captain of the ship found that the ship was
    unseaworthy. At that time, they were in the harbour. Therefore, he decided to sold the ship for save
    further loss. Though the owners of the ship were held liable for the act of the captain, the court
    regarded the captain as their agent of necessity.

    Creation of Agency by Marriage

    A wife is presumed to have authority to pledge the husband’s credit for necessaries like foods,
    clothes, medical facilities in keeping with their social status.

    Creation of Agency by Ratification

    Ratification is the principal confirms an earlier act done by the agent which was not allow by the
    principal. There are some requirements should be fulfilled in order to create agency by Ratification.

     The third party with whom the agent contracted must have been aware that the agent was
    acting on behalf of the principal.
     The ratification must be based on full knowledge of the material facts.
     The ratification must take place within a reasonable time.
     A forgery cannot be ratified.

    Creation of Agency by Estoppel

    The agency by estoppel means that a person let another person (third party) to believe that a certain
    state of affairs exists and that state of affairs later permitted to deny. There are three main
    requirements for agency by Estoppel.

     A representation by the principal.


     A reliance of the third party on that representation.
     The connection between reliance and the third party’s loss.

    References
    Discuss a relationship between principal and an agent? (n.d.). Retrieved from The Lawyers &
    Jurists: https://www.lawyersnjurists.com

    Law of Agency. (n.d.). Retrieved from https://www.casrilanka.com

    Types of Authority. (2016). Retrieved from Estate Agents Authority: http://www.eaa.org

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