Chapter 6. The Law of Agency

• Pages: 374-416

1 See Djieufack, R, ‘The Nature of Agency Relationship under the OHADA Uniform Act on General Commer-

cial Law and Common Law: AComparative Study’, 2004, Post-Graduate Thesis, University of Dschang, p15.

2 Per Sexton, JA in Canada v Glengarry Bingo Assn. (1999–0305) FCA A-502–95 at para32.

CHAPTER6

THE LAW OF AGENCY

WHAT IS AGENCY?

The law of agency is particularly important to allow for the smooth flow of commercial trans-

actions, some of which require specialised knowledge. It would be near impossible to expect

a single person to carry out all his business single-handedly. For this reason, principals employ

the services of agents to act on their behalf to enter into contracts or dispose of their property.

These actions are traditionally considered to encompass the law of agency. One author cor-

rectly notes, however, that agency should not be so strictly construed as agents are sometimes

delegated the legal powers of the principal without performing either of these two tasks.1 One

case in point is the real estate agent who, assuming the legal power of the principal, may show

a property but not necessarily have the authority to dispose of it or enter into a contract for

that purpose.

Agency is, of necessity and inherently, a legal relationship between the principal (P), the

agent (A) and one or more third parties (T). This relationship is governed by three main fac-

tors, it is argued: consent of both P and A, the authority of Ato aect P’s legal position and P’s

control of A’s action.2 There are, of course, instances when Aacts without the consent of P but

Reproduced with the permission of Stu’sViews

375Chapter6: The Law of Agency

3 Bowstead and Reynolds on Agency, §1–001 quoted in Markesinis, B and Munday, R, An Outline of the Law of Agency,

1998, London: Butterworths, p5.

4 Per Lord Wilberforce in Branwhite v Worcester Works Finance Ltd [1969] 1 AC 522 at587.

his actions are still held to be legal. This occurs under peculiar circumstances, for example, in

cases of emergency, such as those where P’s property or interests are in imminent danger and

immediate action must be taken to safeguard them; or where, after the fact, P approves of or

ratifies the action taken. Similarly, while Amay have the authority to act and bind P, he may

exceed his authority; nevertheless, his actions may still be deemed to be of legal eect. One

particular instance, inter alia, is when the action carried out is considered by P to be in excess of

the authority given but, in general and actual practice, is deemed to be an acknowledged func-

tion of an agent in such circumstances.

According to Bowstead, agency is ‘the fiduciary relationship which exists between two per-

sons, one of whom expressly or impliedly consents that the other should so act as to aect his

relations with third parties, and the other of whom similarly consents so to act or so acts on

his behalf ’.3 It should be noted that while consent is certainly an important aspect of agency,

it happens that actions can take place without it, as in the examples in the previous paragraph.

Moreover, when a case is to be determined by a court of law, while it must take into account

the facts, it ultimately decides the issue of agency as a question oflaw:

[W]hile agency must derive from consent, the consent need not necessarily be to the relationship

of principal and agency itself (indeed the existence of it may be denied) but may be to a state of

facts on which the law imposes the consequences which results from Agency. It is consensual not

contractual.4

Gloria Wilson (Appellant/Opposer) v Wigvon Cadogan and Selby Renetta Ross (Respondents/Petitioners)

(2010) Appeal No.3 of 2008 (GY)

Facts: This appeal is against an award of title by prescription in favour of the Respond-

ents by the Commissioner of Title sitting in the Land Court ... The subject matter of this

appeal is described as ‘Area “Z” being a portion of Lot numbered 20 Beau Voisin, Canal

No.1, West Bank Demarara’ ... In summary they contendedthat:

a) From 1966 they occupied and exercised possession and dominion over the saidland.

b) They have since that time been cultivating it with sugar cane and cash crops.

c) They have now completely occupied the saidland.

d) They by themselves have beneficially occupied theland.

e) Their occupation has been undisturbed and they have been in continuous possession.

f) For over 38years they have exercised all acts of ownership upon the said land to the

exclusion of all other per sons.

Held: Roy, Cummings-Edwards, JJA; Singh, Chancellor (Ag)

However, the learned Commissioner went further. He had earlier misconstrued and result-

ingly misled himself about the nature of the Petitioner[s’] case. In a brief outline of the

Petitioner[s’] case in his written decision, he noted that ‘the Petitioners by themselves and

through their agents claim to have been in occupation of the aforesaid farm land from 1966

...’. This was a startling statement coming from the Court. Nowhere in their Petition did

the Petitioners claim occupation ‘through their agents’. The Petition makes absolutely no

376 Commonwealth Caribbean BusinessLaw

5 Emerson, R, Business Law, 2003, Hauppauge, NY: Barron’s Educational Series, Inc, p278.

6 See Markesinis, B, and Munday, R, An Outline of the Law of Agency, 1998, London: Butterworths, p 18. Never-

theless, Astill has rights against P where Aperforms a task gratuitously.

7 See Markesinis and Munday, An Outline of the Law of Agency, p19.

reference to the acts of agents. The use of the pronouns ‘I ’ and ‘we’ in the evidence of

Wigvon Cadogan was referable to the alleged acts of herself and her sister ...

It appears that the learned Commissioner was influenced by the evidence of Wigvon

Cadogan that ‘my brother cultivated the land for me and sold the cane to Guysuco’ to

support the course he adopted of a finding that the Petitioners had proved their case by

showing that they were in possession through their agents ...

It permits of no dispute that if a person takes control of land as an agent, the agent’s

possession is thereby regarded as the possession of the principal. In Williams v Pott (1871)

L R 12 Eq. 149 at page 154, Lord Romilly, M R explained: ‘the possession of the agent is

the possession of the principal’. To have found that the Petitioners had possession through

their agents, those agents had to be identified and there should have been evidence of the

creation of the agency. The learned authors of Bowstead& Reynolds on Agency (18th ed. at

para- 1–001) define an agency as ‘the fiduciary relationship which exists between two per-

sons one of whom expressly or impliedly manifests assent that the other should act on his

behalf so as to aect his relations with third parties, and the other of whom similarly mani-

fests assent so to act or so acts pursuant to the manifestation’. The only bit of evidence which

came close to the hint of an agency is the evidence of Wigvon, who referring to Walter

Helwig said that ‘he marketed cane for us’. Given the definition cited above, the evidence

of the existence of an agency was absent or, at the barest minimum, woefully inadequate.

AUTHORITY OF ANAGENT

Express actual authority

P may explicitly state to Athe authority he may exercise when conducting transactions on P’s

behalf. This may be reduced in writing in the form of a contract and courts will determine

A’s authority on the basis of the true construction of the words of appointment. Where A’s

appointment is oral, courts will make determinations on the basis of evidence presented. In

some cases, an agency arrangement can be purely consensual – the agency relationship is gen-

erally inherently consensual – as opposed to contractual. One example of this is the power of

attorney which creates a consensual, but often non-contractual, agency.5 The attorney in fact

makes no promise to act, nor does the power granted necessarily provide for his payment or

compensation; yet, he agrees to act. The main dierence between contractual and consensual

agency, therefore, is the presence or absence of consideration and the fact that, where a con-

tract is involved, there is a legal obligation on the part of Ato perform his duties with a recipro-

cal obligation on the part of P to remunerate A.6

While courts will be prepared to make a determination that A’s actions bind P on the basis

of a contract, express actual authority may be determined on the basis of either form (contrac-

tual or consensual). The scope of the agency agreement is ascertained by applying ordinary

principles of construction of contracts, including oer and acceptance, consideration, intention

to create a legal relationship, any proper implications from the express words used, the usages

of the trade, or the course of business between the parties.7