2. Creation of Agency.pptx3eeeeeeeeeeeee

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1. 2 CLASS CREATION OF AGENCY: An agency may arise in the following ways: 1. Appointment (Contract) or agreement This can be done in any way: orally, in writing or partly orally and partly in writing. However , when the agent is required to execute a deed on behalf of the principal, he must be appointed using a deed called power of attorney. Such instances include sale or lease of land.

2. 2.Estoppel The law aids the vigilant not the indolent. In the context of the law of agency, a person who is under a legal duty to inform a third party that the person purporting to act for him as his agent is in fact not his agent but fails to do so may be "stopped" from denying that the apparent agent is actually his agent.

3. Watteu Vs Fenwick In Watteu Vs Fenwick a firm of brewers who owned a beer house appointed a manager to run it and they always took out the licence in the manager’s name . They had an agreement with the manager where certain commodities were supplied solely by the brewers. However the manager ordered those commodities from the plaintiff who later filed a case for recovery of the costs from the defendants.

4. The court held that the principal is liable for all acts of the agent which are within the usual authority of the agent regardless of any limitations put on that authority between the principal and the agent. In addition an undisclosed principal is liable for the acts of the agents even those in excess of the agent’s authority.

5. For estoppel to apply: i . The third party must have relied on the presentation ii . Change in the legal position as a result of the reliance iii . It would be inequitable to a 3rd party if the agency is not presumed.

6. Dealt with the firm without being made aware Another example of agency by estoppel is the liability of a partner for the debts incurred by the firm after leaving the firm if the parties who knew him to be a partner dealt with the firm without being made aware that he had left it.

7. 3.Ratification This occurs when someone adopts a transaction which someone had concluded for him as his agent but without his express authority. The person who adopts the transaction becomes a principal as if he had initially authorised it (i.e. the ratification is said to be retrospective).

8. Agency by ratification can only arise if ; 1 . The agent purported to act for a principal 2 . The alleged principal was in existence at the time of contracting. 3 . The principal had capacity to enter into the contract. 4 . The contract to be ratified is lawful.

9. 5. The agent must have disclosed the principal and the disclosed principal is the same one adopting the contract. 6 . The alleged principal must have been made aware of all the material facts of the relevant transaction before he decided to adopt the contract. If the apparent ratification is obtained by a partial disclosure of relevant facts then it has no legal effect. 7 . The contract must be ratified within a reasonable time.

10. 4.Necessity An agency of necessity may be either commercial or domestic. Commercial agency of necessity : At common law, a person who is entrusted with "perishable" goods of another is entitled, in certain circumstances, to do certain things in relation to the goods as if he had been expressly authorised to do so by the owner.

11. This will be so if: a) A genuine emergency arises and the goods are in danger of perishing or being destroyed completely unless the contemplated action is taken. b) It is impossible to communicate with the owner of the goods. c) It was actually necessary to do what was done and the action taken was prompted by a genuine desire to prevent the owner of the goods from incurring a financial loss as a consequence of an imminent perishing or deterioration of the goods.

12. Domestic agency of necessity: A married woman who has been for all intents and purposes been deserted by her husband can take necessities on credit for her personal use but as her husband's agent. The husband will have to pay for the goods as if he had expressly told her to take them on credit. This was established under common law.

13. She also has authority in equity to borrow money for the purchase of necessaries. Her husband will be ordered to pay the loan. However , she can only take necessaries on credit or borrow money for that purpose if she does not have adequate means of her own.

14. 5.Presumed Agency or from Cohabitation A woman who is living with a man is deemed to be his agent for purposes of obtaining necessaries for the family. It should be noted that marriage is not essential for presumed agency to exist as it is practically impossible for a businessman to differentiate a wife from a mistress.

15. Nanyuki General Stores v. Mrs Peterson "Necessaries" will depend on the standard of living set by the husband and not on the family's actual income. An example is Nanyuki General Stores v. Mrs Peterson in which the plaintiffs failed to recover the price of the goods they had sold to the defendant. They thought that she was contracting with them personally but the court held that she was, in law, contracting for her husband even though she did not tell them so expressly. They should have implied this from the fact that she was a " Mrs ".

16. The authority will cease if: ( i ) The husband has expressly forbidden the wife to take goods on credit. It does not matter that the seller was not aware of the prohibition. ( ii) The husband had expressly told the supplier not to supply goods on credit to the wife. ( iii) The wife had been given adequate allowance for necessaries or clothing. ( iv) The goods fall outside the technical definition of "necessaries" and are legally regarded as luxuries.