LGST 101 BUSINESS

LAW
AY 2022-2023 TERM 1
David Koh Boon Tiong
E-Mail: davidkoh@smu.edu.sg
Agency

 Definition of Agency
 A relationship where the agent is conferred the
power to alter the legal position of the principal by
virtue of acts which the agent performs on the
principal’s behalf.
Agency

Agent

Authorises Deals with

Principal Resulting Contract

Third Party
Agency
Types of Agency

Agents may be classified according to the authority

conferred on them.
 A special agent is one who is authorized to make a
particular contract only
 A general agent is one who has authority to make
contracts of a certain class
 A universal agent is one who has authority to act for
the principal on all matters, and is usually appointed by
a power of attorney
Agency
Types of Agency

Examples of different types of agency agreements

 Auctioneers
 Mercantile Agents
 Brokers
 Del Credere Agents
 Confirming Houses
 Freight Forwarders
Agency
Creation of Agency

 By Agreement
 Without Agreement
 By Ratification
 Creation of Agency:
By Agreement
 Typically, agency arises by agreement whereby the principal confers
authority on the agent; Essential factor is consent
 Actual Authority
 Express Authority
 Express conferment of authority
 Implied Authority
 When appointed to a particular post, authority to do all things
necessary for the proper execution of his duties
 Agent with express authority will have implied authority to do
things incidental or necessary
 Agent in a particular trade, to do all things that are ordinarily done
in that trade
 Creation of Agency:
Without Agreement
 Apparent Authority (Ostensible Authority or Agency by Estoppel)
 Authority that the agent appears to have but does not have
 Freeman and Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd
[1964] 2 QB 480
 Requirements (Rama Corporation v Proved Tin and General Investments
Ltd (1952) 2 QB 147)
 A representation…by...
 …the Principal
 Reliance…by…
 …the third party
 Alteration of position…
 …of the third party
 Creation of Agency:
Without Agreement
 Agency of Necessity
 Situation where one is required to act expeditiously to protect the
property or interests of another, e.g., Master of a ship
 Requirements
 Agent unable to obtain instructions in time
 Agent must have acted reasonably and in good faith
 There must have been a necessity or urgency that compelled the
agent to act as he did
 Creation of Agency:
By Ratification
 Agent without authority cannot bind the principal, but the principal
may choose to adopt or ratify the act subsequently
 Ratification may be express, implied or by conduct
 Requirements
 Principal must have been in existence at the time of the act.
 Re pre-incorporation contracts of a company, s 41 Companies Act.
 Ratification must be done within a fixed or reasonable time
 Effects of Ratification
 Retroactive effect due to the doctrine of relation-back
 Agency:
Effect of Agency
Principal – Third Party Relationship
 Disclosed Agency
 When Agent acts within the scope of authority  Principal bound
 Undisclosed Agency
 Contract may be enforced on grounds of commercial convenience
 Siu Yin Kwan v Eastern Insurance Co Ltd [1994] 2 AC 199
 See summary of rules at 20.36 (Principles of Singapore Business
Law)
 Agency:
Effect of Agency
Principal – Third Party Relationship
 Duties of Agent: An agent is a fiduciary 
 Duty to avoid conflict of interests
 Duty not to make a secret profit
 Duty not to delegate
 Rights of Agent
 Right to remuneration
 Right to indemnity
 The Right of lien (i.e., a security interest) on Principal’s
property
 Agency:
Effect of Agency
Principal – Third Party Relationship
 Generally, the agent is not liable to third parties. However, there
are a number of situations where the agent will attract personal
liability: Examples:
 The agent agrees to be liable
 Trade usage
 Non-existent principal
 Undisclosed principal; and
 Breach of warranty of authority.
 Agency:
Termination of Agency
By act of parties:
 Agency contract will generally stipulate when the agency will
terminate.
 Apart from this agency may also be terminated in the following
ways:
 By full performance of the agency contract
 Upon breach of agency agreement amounting to repudiation;
or
 By the principal revoking the agent’s authority
 Agency:
Termination of Agency
By operation of law:
 In certain situations, the law will terminate an agency regardless of
the intention of the parties:
 Where either the principal or agent becomes bankrupt, is dissolved
or dies;
 Where the agency is created with the particular subject-matter in
mind, its destruction will terminate the agency through frustration;
or
 Where the agent or the principal becomes mentally incompetent.