Commerce, SS 2, Week 4
Topic: Law of Agency
Contents:
- Definition of Agency
- Definition of Agent
- Types of Agents
- Duties of an agent
A. Definition of Agency
Agency can be defined as a legal relationship that exist between two parties, where one called an agent employed by a one called the principal to bring the principal into a legal relationship with the third party.
B. An Agent
An agent is a person who is given the authority by the principal to enter into a contract on hid behalf. The agent has the power to make a binding contract between his principal and a third party without himself becoming a party the contract.
C. Types of Agents
- Special Agent: This is agent appointed for a particular purpose, normally not part of his normal business activities and is therefore given limited powers.
- Commission Agent: This a merchant who buys and sell goods based on commission. This agent exercises physical control over and negotiates the sale of the goods handled by him
- General Agent: This is an agent who has the authority to act in all matters of a particular business, he can perform any duties within the scope of a particular business entrusted into his hands.
- Factor: This is an agent who is employed to sell goods delivered to him by the principal for a commission. He has possession of the goods and can sell in his own name.
- Broker: A broker is an agent who brings the principal into a contractual relationship to buy or sell goods or services with the third party, he links the principal with the third party. He receives a commission called brokerage.
- Shipping and forwarding agents: These are agents that act on behalf of the principal to clear and receive goods from the seaports or airports. They arrange for the delivery of the goods to a particular place through the air, sea or land.
- Advertising agents: This is an agent who help in assisting a firm in planning and executing their advertising programmes.
- Universal agent: This is an agent who is not restricted to enter into a contract on behalf of the principal. He may even act or perform as the principal. This kind of agent is appointed by a deed known as power of attorney.
- Del Credere Agent: This is an agent who undertakes to indemnify the principal against any loss arising from failures of the people to pay for goods sold. He receives in return an extra remuneration which is higher than all other agents. The additional commission is called del credere commission
- Auctioneers: These are agents authorized or empowered by the law to sell goods for their principal at a public auction to their highest bidder.
D. Duties of an Agent
- An agent must follow the terms of agreement of the agency
- He must obey or carry out all lawful instructions by the principal
- He has to exercise reasonable care, skill and diligence in performing his duties
- He must act in good faith and honesty by not engaging in any competing business to the detriment of the principal.
- He must not take any secret gain beyond the authorized commission and any other remuneration
- He must render an account i.e stewardship to the principal whenever required
- He must not delegate his duties to another party
- He must not misuse the confidential information in respect to the affairs of the principal
- He must carry obey or carry out all lawful instructions by the principal
