Dec 25, 2007

Business Law Tutorial 11

1. [ Refer notes - creation of agency ]

2. [ Refer notes - Duties of Agent to Principal ]

3. [ Refer notes - Duties of Principal to his Agent ]

4. 4 remedies available:
  • Principal may repudiate the contract - Section 168 Contracts Act, 1950
  • Principal may recover the bribe from agent - Section 169 Contracts Act, 1950
  • Principal may refuse to pay commission to Agent
  • Principal may dismiss agent for breach of duty

5. [ Refer notes - Termination of Agency ]

6. (a) 3 conditions:

  • It is impossible for the agent to get principal's instruction
  • Agent's act is necessary to prevent loss to the principal with respect to the goods, for example, perishable goods
  • Agent's necessity must have acted in good faith

6. (b) 9 conditions:

  • the act must be unauthorised
  • agent must expressly act as agent for principal. He must not allow the third party to think that he is principal.
  • Agent must have a principal in actual existence when the contract is made
  • principal has the contractual capacity to enter into the contract when the contract is made and at the time of ratification
  • principal must have full knowledge of all material facts at the time of ratification - Section 151 Contracts Act, 1950
  • principal must ratify the whole contract - Section 152 Contracts Act, 1950
  • the ratification does not injure a third party - Section 153 & Illustration Contracts Act, 1950
  • ratification must done within a reasonable time, which is decided by the judges
  • the unauthorised act must be legal.

7. Agency is defined in Section 135 Contracts Act, 1950 as a relationship which exists between s principal and the agent authorised to act for him or represent him in dealings with third parties.

(i) How can an agency be created? In this case, it is an express appointment by the Principal - Section 140 Contracts Act, 1950 because Abu appointed Batu as his agent. Therefore,Batu has actual authority to act on behalf of Abu.

To terminate an agency, it can be done by mutual consent of both parties, or by revocation by principal - Section 154 Contracts Act, 1950, or renunciation by agent - Section 154 Contracts Act, 1950. Where the agency is for a fixed period of time, the agency cannot be terminated before expiry of that period without a good reasonable cause, otherwise the another party can sue for damages - Section 158 Contracts Act, 1950. In this case, the agency is for six months, can Abu terminate it before six months? Abu cannot do so unless he has a very good reason, which will be the breach of one of the duties by agent, under Section 164 Contracts Act, 1950 to Section 178 Contracts Act, 1950.

(ii) Under the duties of agent to principal, an agent has to obey the principal's lawful instruction - Section 164 Contracts Act, 1950. Batu has to obey Abu's instruction. If the instruction is not clear, Batu can act according to the customs - Section 164 Contracts Act, 1950.

When Batu act, he must exercise care and diligence -Section 165 Contracts Act, 1950. Batu must be able to render proper account - Section 166 Contracts Act, 1950. An agent must communicate with the principal with all reasonable diligence - Section 167 Contracts Act, 1950. Batu must communicate with Abu and get his consent before he can buy one of the lots for himself in the name of his mother. Under Section 169 Contracts Act, 1950, an agent cannot let his own interest conflict with his duty. If Abu consents it, Batu can buy. If Abu does not allow Batu to do so, he cannot buy.

8. Agency is defined in Section 135 Contracts Act, 1950 as a relationship which exists between a principal and the agent authorised to act for him or represent him in dealings with third parties.

When Paul asks Tom to sell his two computers for him for not less than RM1500 each, he has appointed TOm as agent by express appointment. Therefore Tom has actual authority in carrying out his duties.

Under Section 164 Contracts Act, 1950, agent must obey principal's instructions. Here, Tom has to obey Paul's instruction to sell two computers for not less than RM1500. He also does his job properly and exercises care and diligence - Section 165 Contracts Act, 1950. Under Section 167 Contracts Act, 1950, agent must communicate with principal with all reasonable diligence. Agent must not allow his own interest conflict with his duty - Section 169 Contracts Act, 1950. Here, Tom has not communicated with Paul before buying one of the computers for himself. Therefore Paul does not consent it. There is a breach of duty.

Under Section 166 Contracts Act, 1950, agenc must render proper account. Here, Tom does not provide proper account as he sold the computer to Janet for RM 2000 but he only reported RM1500. Under Section 171 Contracts Act, 1950, agent must pay all sums received on his behalf. Tom does not pay RM 2000 for selling the computer to Janet. There is a secret profit of RM500. Therefore, there is a breach of Section 168 COntracts Act, 1950.

Paul can repudiate the contract - Section 168 COntracts Act, 1950, or recover the bribe from Tom - Section 169 Contracts Act, 1950, or refuse to pay commission to Tom, or dismiss Tom as an agent for breach of duty.

9. (a) [ Refer notes-Authority of An Agent ]

9. (b) [ Same with question 5 ]

16 comments:

  1. Meg Meg3:15 PM

    quite admire u that u r willing to spend ur time to write out all those business law tutorial answer and share with everybody and help them, u r a smart student rite?

    somemore u willing to share ur story,ur life n ur everything with everybody even those stranger..
    But...

    ReplyDelete
  2. but what??

    lately just too busy to blog...
    just manage to spare some time for business law only.

    ReplyDelete
  3. FIONA :)3:28 PM

    just saw your blog when searching for principal of business law.

    ReplyDelete
  4. haha...you are welcome fiona...
    may i know you are from which batch? and which course?

    ReplyDelete
  5. while i was searching for some topics regarding law,i inserted Sect 164 of contract act 1950. Entered, it came out the first is your blog. When I look through your sections and your own examples,i found out that it did helps to remember. Good job here i have to compliment you. Really hope more from you. XD nice to add you too. Now i will forever remember sect 164-169 agency.

    ReplyDelete
  6. To: Mr GS Lim

    You are welcome. My pleasure. Of course I would like to thank the great teacher behind it - Ms Parimala.

    she is good law teacher although most of the students dislike her. But I love her way of teaching.

    Simply works well for memorizing.

    I doubt will you forever remember section 164-169 agency...beause I myself have forgotten them LOL

    ReplyDelete
  7. Anonymous10:13 PM

    hie, can I get your view for the following question :
    The rights and duties of an agent towards his principal depend on the express or the implied terms of the contract agency. In the absence of any contract agency, not only the duties of the agent and his principal would not be secured, the law will regards that the agent was legally appointed by the principal. How far is this statement true?

    ReplyDelete
  8. This comment has been removed by the author.

    ReplyDelete
  9. @ anonymous :
    Hi there, I would appreciate if you would address your name in your comment.

    Anyway I would like to clarify that I have pretty much forgotten my knowledge on Contracts Act 1950.

    From what I recalled after reading of the Act, no doubt an agent can be appointed through express or implied terms. If an agency is said to be established between the principal and agent, the relationship is said to be legal and therefore, the agent has to act diligently and responsibly - Section 165 Contracts Act, 1950.

    If the duties of agent is not expressly written, then it should be assumed to be those written in the Act itself, which serves as the guidance on how an agent should be acting.

    So long the principal's instruction is legal, the agent must carry out according to the principal's wishes - Section 164 Contracts Act, 1950.

    Hope it helps.

    ReplyDelete
  10. Hie, sorry the question is suppost to be as follows :
    The rights and duties of an agent towards his principal depend on the express or the implied terms of the contract of agency. In the absence of any contract of agency, not only the duties of the agent and his principal would not be secured, the law will regard that the agent was not legally appointed by the principal.

    I've missed out the word NOT legally appointed.......

    ReplyDelete
  11. @ Isha :
    With regards to that, I am not really sure about it as I am not a law student.

    However, I would say if the Agent has carried out any transaction on the name of the Principal and Principal has given order to the agent, it would construe as Agent-Principal relationship.

    I would advise you to seek professional opinions from your tutor if possible because I am not in the best position to advise you on this.

    Thank you for asking :)

    ReplyDelete
  12. hie can I have your view for this?

    Case :

    Mr Pity bought from Mr Kaya a BMW car bearing the registration No. KK
    8888 at the purchase of RM32,0000. A sum of RM9,990 was paid as a
    deposit and a loan for the sum of RM22,100 was granted to MR pity by
    MR Kaya and the repayment was by 35 monthyly installments. Mr Pity had
    enquired about the amount of loan outstanding with a view to settle it
    in full as he had found a purchaser who was intrested to buy the car
    from him. He was told that the transfer of the said car could not be
    effecteed as the registration card of the same had been detained by
    the JPJ because the vihicle NO KK8888 belonged to a motorcycle model
    FR80 and not the BMW car bought by MR Pity. Mr Pity therefore,
    requested Mr Kaya to take back thecar and the same time asked for the
    return of his deposit of RM9,900 and further sum of RM17,192 being
    amount of 28 monthly installments paid to MR Kaya. Mr pity also
    claimed damages arising out of the expenses incurred to hire a car for
    his use and damages for anxiety caused as a result of being
    blacklisted by financial institution.

    Discuss whether Mr Kaya had a good title to the BMW cr No.KK8888 when
    the hire purchase agreement was entered into in 1991 and whether the
    same could give good title to MR Pity?

    ReplyDelete
  13. @ ishagal :
    I cant quite rmb the law in detail but i am sure there is a good title to Mr Pity for he does not know the problem regarding the transfer of title(bona fide)

    ReplyDelete
  14. Anonymous12:25 PM

    THx u for ur tutorial but can u help me with this question?

    “HALT
    Parking at Owner’s Risk. Take Ticket from Machine.
    Pay when Leaving.”


    Howard put the ticket in his pocket without looking at it and the barrier went up automatically. Howard drove into the car park and parked his car. When he returned to go home, he found it flattened beneath a large concrete pipe, which had fallen from a crane owned by the parking station proprietors working on an adjacent building.

    The parking ticket had the following notice printed on it.

    “CONDITIONS OF PARKING
    It is a condition of the issue of this ticket that vehicles are parked on these premises at the owner’s risk and responsibility. The proprietors of this car park accept no responsibility for loss or damage to vehicles in the parking area whether caused by negligence or in any manner whatsoever.”

    Discuss the law relating to liability for damage to the car in these circumstances, stating fully the principles involved. Give the strengths of the cases for the plaintiff car owner and the defendant proprietors. Does the Australian Consumer Law apply to it?

    ReplyDelete
  15. tq your blog post realy help me in completing my asignment in business law.. really appreciate it..=)

    ReplyDelete

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