Nov 8, 2017 in Analysis

Law of Agency: Amber and Ashgan Case Study Analysis

The law of agency applies to both the two individuals in the case given that they possess an agent-principal type of relationship. Thus, the law of agency between the two is narrowed-down to the duties of the agent in respect to their respective principals.  It should be noted Ashgan, the personal assistant, is the agent while Amber, who happens to be the employer, is her immediate Principal,

The first duty of Ashgan, as an agent, is not to become the principal as against her employer’s or principal’s knowledge.  This duty, on the part of the agent, is meant to prevent her from situations in which there will be possible conflict of interest between her duty as an agent and her personal interest. Notwithstanding, a breach against this course of duty renders the contract, entered into by the agent, as voidable at the desire of the true principal. For this case, the contract to purchase the limited edition, sliver Bays-water Tote handbag created the aforementioned type of conflict and thus, it was Amber to decide whether or not the contract was voidable.

Second, the agent has a duty not to engage in business activities and hence making secret profits. It should be noted that secret profits is a phrase taken to mean any form of material or financial benefit that may be accrued on the part of the agent without the immediate knowledge of the principal. In this scenario, the principal is allowed to undertake any of the following measures: first, the principal is entitled to recover the amount of secret profit from the agent. Second, the principal might decide to sue the agent for any damages suffered. In the case provided, if it comes to the principal knowledge that Ashgan needed the bag in order to make secret profit it will lead to either of the aforementioned two consequences.

Third, the agent has a duty not to delegate her authority, unless the delegation takes place for the benefit of the business or in other cases authorized by the principal.  This form of duty is expressed in Latin by the phrase “delegates non protest delegare”. Simply put, the duty limits the agent from creating any form of principal-third party relationship without the consent of the principal given that the level of confidence for this relationship is executed at the expense of the principal. For this case, Ashgan went ahead and created a relationship with a third-party, Mulberry, without the consent of the principal. Thus, Amber, as the principal, is entitled to repudiate the contract entered without her knowledge.

On the other hand, one of the key duties of the principal that may be associated with this case is that which directs them to indemnify their respective agents on any cost incurred while in the course of executing their mandates failing for which the agent can embark on suing them. However, this is not the case in Amber and Ashgan. This is because Ashgan, as an agent, did not incur the cost of purchasing the handbag for the benefit of the principal and the business at large. Thus, she is not entitled to any form of indemnification from her principal: Amber.

An agent is a person who has been appointed to represent another called the principal to conduct specific types of transactions with other persons referred to as third parties. Agents are tasked with the responsibility of representing principals in contractual duties.

Five Instances which a Third-Party Can Hold an Agent Liable for Contracts Made

The first instance is when the agent informs the third-party, either in writing or orally, that they were acting on behalf of the principal and thus executed the contract under seal. This is a law that overlooks both reasoning and argument hence the principal does not possess any rights or obligations in such contracts.  The second instance is when the agent signs a bill of exchange with his names without putting it clear to the third-party that they are acting as mere agents. The third instance is when they perform contracts as agents but they turn-out to be real principals. This is expounded fairly in the preceding case: Schmatz v Averay [1851] for which a charter-party was conducted between the defendant, who happened to be the owner of the ship, and the plaintiff. Contracts entered under such scenarios are considered to have been breached and thus, the agent is held liable for any damage incurred. The fourth scenario is when the custom of the given trade performed makes them liable. For instance, in the case of a “del credere agent” the agent is held liable to the third-party. The fifth instance is when the agent is limited to exercise authority, both in express or implied terms. For this case, they are held liable to third-parties because they have engaged in “breach of warranty of authority”.

Four Ways in which Agency Relationship is Created

The first instance through which the agency relationship is created is by way of express appointment. This is conducted orally, in writing or partly orally and party writing. The legal appointment is considered to be desirable but lacks legal essentiality. An appointment that is considered to be legally essential is the appointment made by the “deed power of an attorney”. The second instance of agency relationship formation is through estoppels.  This type of formation is recognized whenever there is a representation that may induce a certain course of conduct and whether there is an act of omission by the individual for whom the representation was conducted.

The third instance of the formation of agency relationship is through ratification process. This type of relationship is ascertained by the principal whenever it is realized that someone concluded an activity for them as agents without any form of express authority. The fourth formation of the agency relationship arises out of necessity which can either be domestic or commercial. In commercial necessity formation, individuals are tasked with the responsibility of performing certain matter in respect to perishable goods as if they had been tasked expressly to do so by the owner of the goods. Domestic necessity formations are conducted by married women whose husband has left them. These women are allowed to make necessary credits for their personal use as agents of their deserted husbands.

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