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AGENCY

The law of agency is governed by Part X of the Contracts Act 1950. Section 135 of the C A 1950 defines an agent as a person employed to do any act for another or to represent another in dealings with third persons . The person for whom such act is done, or who is represented, is called the principal . What is the definition of an agency? 1. Lee Mei Pheng agency is relationship which subsists between the principal and the agent who has been authorised to act for him or represent him in dealings with others .

AGENCY

The law of agency is governed by Part X of the Contracts Act 1950. What is the definition of an agency? - it may be referred to as the relationship between a principal and an agent whereby the principal, expressly or impliedly, authorizes the agent to work under his control and on his behalf.

AGENCY

Why we need to understand some basic principles relating to agency? - It is something that we do/have done e.g. placing money in the Bank Who is/are the agent(s)? i. ii. iii. What is your role? What is the role of the Bank? Is staff involves how?

What is your right if you put money in the Bank?

AGENCY

Who may be an agent/principal? Section 136 any person who is of age of a majority according to the law, may appoint an agent.

Section 137 any person may become an agent sound mind.

..age of majority and

AGENCY

How is contract involves in agency? 1. A contract made between the principal and the agent whereby the agent will be given the authority and functions to act on behalf of the principal. A contract made between the principal and the third party through the work of an authorised agent.

2.

Eg. Ah Fong employs Timmy who is sixteen years old to buy some goods from Samy on his behalf and Samy supplies the goods, Ah Fong cannot allege that he is not liable to pay for the goods just because Timmy is not of the age of majority. Ah Fong is still liable to pay for the goods. However, if Timmy had taken the goods and sold them for his own benefit, Timmy is not liable to pay Ah Fong for those goods.

AGENCY

How is agency being created in Malaysia? Section 139 of the C A 1950 states that The authority of an agent may be expressed or implied .

Express Implied

through words spoken or written indication from things spoken or written or from ordinary course of dealings

Case: KGN Jaya Sdn Bhd v. Pan Reliance Sdn Bhd The Court of Appeal held that the law does not require that an agency or sub-agency agreement must be in writing.

AGENCY

How is agency being created in Malaysia? Section 138 of the Contracts Act 1950 provides that no consideration is necessary to create an agency. In Malaysia, an agency may arise in the following ways: i. By express appointment by the principal. - may be in written or oral form. Eg. An execution Power of Attorney By implied appointment by the principal. - by law provides that creation by implication can bind the parties if by virtue of words spoken or conduct holds out a person as having authority to act for him

ii.

AGENCY

How is agency being created in Malaysia? Case: Chan Yin Tee v. William Jacks & Co. (Malaysia) Ltd 1940 Facts: 0n 15 Nov 1961, appellant (Chan) and Yong, a minor registered as partners. At a meeting with representative of the respondent company, the appellant held himself to out to be Yong s partner. Goods were supplied to Yong but were not paid for. The respondent company obtained judgement against the appellant and Yong. Court held: Since the appellant had held Yong out as his agent who had the authority to do things on his behalf, the appellant was liable for Yong s acts.

AGENCY

How is agency being created in Malaysia? iii. By ratification - this method of creation of agency can exist in two ways:i. An agent who was appointed has exceeded his authority, or ii. A person who has no authority to act for the principal has acted as if he has the authority. 153 of the C A 1950

Section 149 S 149

Where acts are done by one person on behalf of another but without his knowledge or authority, he may elect to ratify or to disown the acts . A person ratifying any unauthorised act done on his behalf ratifes the whole of the transaction of which the act formed a part .

S 152

AGENCY

How is agency being created in Malaysia? Effect of ratification is retrospective, i.e. back to the time when the original contract was made. A contract can be ratified under the following circumstances; 1. The act/contract must be unauthorised. 2. The agent must expressly as agent for the principal. 3. The agent must have a principal, who is in actual existence or capable of being certained. 4. The principal must have contractual capacity. 5. The principal must, at the time of ratification, have full knowlegde of material facts. 6. The principal must ratify the whole act or contract. 7. Ratification must not injure third party.

AGENCY

How is agency being created in Malaysia? iv. By Necessity By necessity means the agent is acting due to circumstances of which the action is for the best interest of the principal. The three following conditions must be met for the creation of an agency by necessity: i. It is impossible for the agent to get the principal s instruction S 142 of the C A 1950 ii. In order to prevent loss to the principal with respect to the interest committed to his charge, eg, when an agent sells persishable goods belonging to his principal to prevent them from rioting iii. The agent of necessity must have acted in good faith.

AGENCY

How is agency being created in Malaysia? v. By Estopple A person cannot be bound by a contract made on his behalf without his Authority If it is perceived by the laws through his words and conduct allows the 3rd party to believe that that particular person is his agent even/when he is not, and the 3rd party relies on it to the detriment of the 3rd party he will be estopped or precluded from denying the existence of that s person authority to act on his behalf.

AGENCY
How is agency being created in Malaysia? Eg. Mahmud tells Samy in the presence of Ahmad that Mahmud is Ahmad s agent and Ahmad does not object this statement, Ahmad cannot later deny that Mahmud is his agent if Samy sells goods to Mahmud, believing him to Ahmad s agent and later sues Ahmad for the price.

Section 190 of the C A 1950 When an agent has, without authority, does acts or incurred obligations to third persons on behalf of his principal, the principal is bound by those acts or obligations if he has by his words or conduct induced such third persons to believe that those acts and obligations were within the scope of the agent s authority . Case : Cheng Keng Hong v. Government of the Federation of Malaya. - all ostensible authority involves a representation by the principal as to the extend of the agent s authority

AGENCY
How is agency being created in Malaysia? This is sometimes termed "agency by estoppel" or the "doctrine of holding out", where the principal will be estopped from denying the grant of authority if third parties have changed their positions to their detriment in reliance on the representations made.

AGENCY
Agency in relation to Banking Relation between a banker and a customer is based on agency. Bank employees are agents of the bank. Sometimes customers agents act on the customer s behalf when transacting with the bank. Banking as an agent for customer Banker debtor / creditor Customer creditor / debtor When check are drawn, the banker is an agent for collection and payment of the Customer s money. When a customer hires a safe-deposit box, the bank is the customer s agent.

AGENCY
Bank employees as agents for the bank Employees of the bank are agents for the bank. The employees who are so authorised may act on behalf of the bank. The employer is the bank, is liable for torts(negligence) committed by its employees in the course of their employment.

AGENCY
Revocation/termination of an agency. i. ii. iii. iv. v. vi. vii. Termination by act of the parties Revocation by principal Revocation by agent Termination by performance Termination upon expiry of the period fixed in the Contract of Agency Termination by Operation of Law Termination by Frustration

AGENCY
Revocation/termination of an agency. Sections 154 163 of the Contracts Act 1950 deal with the manner in which an agent s authority may be terminated. 154 An agency is terminated by principal revoking his authority, or renouncing the business of the agency, the business of the agency being completed, principal or agent dying or unsound mind, by the principal being adjudicated or declared a bankrupt or insolvent. In short, agency may be terminated by: 1. the act of the parties, or 2. by operation of law

AGENCY
Revocation/termination of an agency. i. Termination by act of the parties - authority of an agent may be terminated by the act of the parties, by mutual agreement or mutual consent or revocation by the principal. - the agency may be terminated by renunciation of the agency by the agent. - where both parties desire and agree that the agency shall be terminated, the agency is terminated

AGENCY
Revocation/termination of an agency. ii. Revocation by principal - the principal may revoke the authority of the agent at any time before it has been exercised to bind the principal.

AGENCY
Revocation/termination of an agency. iii. Revocation by agent - Where the agency is for indefinite duration, the agent can terminate the agency by giving reasonable notice of termination to the principal - if the reasonable notice is given and accepted, the agent will no longer be liable to the principal and he can claim reimbursement for all services and expenses up to the date of the termination of his agency. - Section 159 of the C A reasonable notice of revocation or renunciation must be given - otherwise damage thereby resulting to either party, as the case may be, must be made good to the one by the other.

AGENCY
Revocation/termination of an agency. iii. Revocation by agent - revocation or renunciation of the agency mat be expressed or implied by conduct of the principal or agent as the case may be.

AGENCY
Revocation/termination of an agency. iv. Termination by performance - the contract of the agency is brought to an end when the agent has performed the contract. - this happen when an agency is created for a single specific transaction and the transaction is completed - Section 154 of the C A 1950 completed by the business of the agency being

AGENCY
Revocation/termination of an agency. v. Termination upon expiry of the period fixed in the Contract of Agency - if the Contract of Agency is created for a fixed period of time (certain period), the agency is terminated at the expiry of that period whether or not the business or transaction has been completed.

AGENCY
Revocation/termination of an agency. vi. Termination by operation of law - an agency may be revoked by operation of law in any of the following circumstances:1. Upon death of the principal or the agent - general rule, agency comes to an end when the principal or the agent dies. - termination by death of principal is only effective only when the agent has notice of the principal s death Exception: - is where the agent has an interest in the property which forms the subject-matter of agency. - when the principal dies, the agent must take all reasonable steps to protect and preserve the interests entrusted to him Section 162

AGENCY
Revocation/termination of an agency. vii. Termination by frustration - upon happening of an event which renders the agency unlawful, the agency may be terminated - this is amounting to discharge by frustration - Eg. War break out

AGENCY
Revocation/termination of an agency. vi. Termination by operation of law in not capable to enter into a valid contract - agency is terminated by insanity - when a principal becomes insane, the agent is bound to take all reasonable steps to protect and preserve the principals interests. 3. When the principal or agent becomes insolvent or made bankrupt.

AGENCY
Revocation/termination of an agency. Duties of principal and agent Depend on the express or implied terms of the contract of agency No such contract the rights and duties are laid down in Sections 164 to 178 of the C A 1950 Section 164 - Agent s duty in conducting principal s business Section 165 - Skill and diligence required from agent Section 166 - Agent s account

AGENCY
Revocation/termination of an agency. Duties of principal and agent Section 167 - Agent s duty to communicate with principal Section 168 - Right of principal when agent deals, on his own, in business of agency without principal s consent Section 169 - Principal s right to benefit gained by agent dealing on his account in business of agency

AGENCY
Revocation/termination of an agency. Duties of principal and agent Section 170 - Agent s right of retainer out of sums received on principal s account Section 171 - Agent s duty to pay sums received for principal Section 172 - When agent s remuneration becomes due Section 173 - Agent not entitle to remuneration for business misconducted

AGENCY
Revocation/termination of an agency. Duties of principal and agent Section 174 - Agent s lien on principal s property Section 175 - Agent to be indemnified against consequences of lawful acts Section 176 - Agent to be indemnified against consequences of acts done in good faith Section 177 - Non-liability of employer of agent to do a criminal act Section 178 - Compensation to agent for injury caused by principal s neglect

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