Page images

reasonable remuneration for the work done. This is, of course, in the absence of definite terms in relation thereto in the agreement for the agency.

It is customary in some lines of business, and even in others it is often agreed, that commission shall be payable on repeat orders from customers originally introduced by the agent, e.g., a commercial traveller; in which case the agent is entitled to the commission on such orders even though he may not personally have obtained them; and sometimes, depending of course on the agreement, such commission may be payable after the dismissal or death of the agent. But, apart from express agreement, the usual rule is that commission on repeat orders is not payable after the agent has ceased to represent the principal.

The agent may be entitled to be indemnified by the principal even if he has done a wrongful act against a third party, provided he did it at the principal's command and was himself not aware of the wrongful nature of the act. He is not entitled to be indemnified, however, against the consequences of all acts done; if the loss be caused by his own default he cannot recover, or if it be incurred by adherence to a particular custom or usage of a market, and such custom or usage is not reasonable, he cannot recover unless his principal has express knowledge of it. For instance, in Perry v. Barnett (1885), A bought some bank shares through a broker and before settling day he repudiated the contract; and the broker, who had to pay to avoid being declared a defaulter, sued A to recover the amount of his loss. The purchase was void under LEEMAN'S ACT (h), but it was shown that a custom existed amongst members of the Stock Exchange of disregarding its provisions. It was held that, as the custom was unreasonable and A was not aware of it, the broker could not recover. But in Seymour v. Bridge (1885), where, in similar circumstances, knowledge of the custom was shown to exist, a contrary decision was given.

Where an agent is employed to make bets he cannot recover for his principal any moneys paid away in respect thereof, but should he have received moneys on behalf of his principal he cannot retain the sums but must pay them over to his principal.

Third Parties as against Principal and Agent.

The rights and liabilities under a contract, so far as regards third parties, depend on whether the principal was disclosed or not by the agent, and also whether a principal did actually exist at the time of making the contract. In this connection there are important rules to consider:

(h) See ante, p. 44, and post, p. 234.

(1) Disclosure of Principal.-If the principal is disclosed at the time the contract is entered into, and he actually exists, the contract is with the principal and not with the agent, in the absence of an express statement of a contrary intention, or unless in accordance with a particular custom. But to this rule there are the following exceptions


(a) Where the contract is made under seal the agent is always the party entitled to the rights and amenable to the liabilities under the contract, if made in his name. (b) Where an agent purchases goods for a merchant resident abroad, prima facie the contract is with the agent (Del credere agent), unless the contrary intention is clearly shown, as in the case of Thomson v. Davenport (1829). But this rule has been considerably weakened by the decision in Miller, Gibb and Co. v. Smith and Tyner (1917), where it was held that if the contract is made by an agent who has authority to pledge the credit of the foreign principal, then if the contract is in terms made on behalf of the foreign principal, even though his name is not disclosed, the agent will not be liable but the principal will be. (c) Where an agent signs a Bill of Exchange as drawer or endorser or acceptor and adds words to his signature indicating that he signs for and on behalf of his principal, or in a representative capacity, he is not personally liable thereon"-but, where he does so in his own name, with or without words that merely describe him as an agent, then he is liable and not the principal except that he cannot be liable as acceptor unless he is the person to whom the bill has been addressed. In any event, the principal is not bound by the acceptance of his agent acting without authority except in some cases where authority is implied, e.g., partners. (d) Where the agent undertakes personal liability, or the third party agrees to look exclusively to the agent, as was held in the cases of Paterson v. Gandasequi (1812) and Addison v. Gandasequi (1812), the principal has no liability to the third party.

(e) Where the agent has an interest in the proceeds, e.g., a lien, he may sue on the contract even though he has disclosed the principal.

(f) Where the agent is liable by the custom of trade.

(2) Undisclosed Principal. It was held in Sims v. Bond (1833) that " where a contract not under seal is made by an agent in his own name for an undisclosed principal, either the agent or the principal may sue on it." on it." Provided it is clear

from the contract that the agent did not pledge his personal credit, if the principal is not disclosed at the time of making the contract, but it is known that the agent is acting as agent, the agent is not liable on the contract; but if the fact of agency is not expressed, either may be sued by the third party as he may elect, and evidence may always be given of some usage or custom to show that the agent and not the principal is the person to be charged.

(3) Uncertainty as to whether there is a Principal apart from the Agent. When the principal is not disclosed, and it is not known at the time of making the contract that the agent is acting as such, then the third party may, on learning the facts, sue either the principal or the agent. He must, however, make his election. within a reasonable time of discovering the real principal, for the liability of the principal and agent is not joint, but several (alternative), and when he has obtained judgment against one party he cannot afterwards proceed against the other. He can, as decided in Paterson v. Gandasequi, cited above, be held to have elected by any act showing an unequivocal intention of holding the one party liable. If, before he discovers the fact that the supposed principal is merely an agent, as was laid down in Thomson v. Davenport, cited above," although he may in the meantime have debited the agent with it, he may afterwards recover the amount from the real principal," as, necessarily, he cannot make his election until he knows the true facts. When the third party wishes to sue the principal, oral evidence may be admitted to show that a written contract made by a person was in fact made by him as agent and not as principal.

On default, the principal or the agent may sue the third party; but the principal cannot sue if the agent has in the contract described himself as principal, and evidence is not, in that event, admitted to show the contrary to enable the principal to sue. When the principal sues he must allow any right of set-off that the third party may have against the agent, provided it was acquired before the former knew that the latter was an agent and not a principal. But, if the agent sues, the third party could not set-off any debt due by the principal.

(4) Non-existent Principal.-It was laid down in Kelner v. Baxter (1867) that where a person has entered into a contract purporting to be on behalf of a non-existent principal, he is personally liable on the contract; but, ordinarily, if he had expressly contracted as agent he could not sue in his own name unless the other party had been informed of the non-existence of the principal and there had afterwards been part-performance of the contract.

As previously mentioned, if an agent contracts as such with

out authority, or in excess of his authority, his acts may, usually, be ratified by the principal; but, if they are not ratified, although he cannot be sued as principal, he can be sued ex contractu (arising out of contract) for damages for a breach of an implied warranty of authority, even if, as in Polhill v. Walter (1832), he bona fide believed himself to have authority, and as held in Yonge v. Toynbee (1910), if he had no knowledge of the fact that the agency had been terminated; provided that the third party was not aware of the absence of authority. If his act was fraudulent, he can, of course, be sued ex delicto (arising out of a wrong), in an action for deceit. Where the agent had borrowed money, either without authority or in excess of authority, the principal is not liable, but the lender would have an equitable right against him to the extent of any of the moneys applied in paying the legal debts of the principal. Any person who suffers damage by acting on the untrue statement of a person that he had authority may sue for damages for breach of the implied warranty of authority even though the supposed agent does not purport to contract on behalf of the alleged principal. In the case of Starkey v. Bank of England (1903), one of two trustees forged his cotrustee's signature to a power of attorney and sold certain stock standing in their joint names in the books of the Bank of England. An innocent stockbroker, acting under the power, was allowed by the Bank to transfer the stock to other persons, and the Bank had to make good the loss. It was held that the Bank could be indemnified by the stockbroker on the ground that he had impliedly warranted his authority.


Contracts of agency may be terminated in several ways: Termination by act of the parties.-This will arise on revocation by the principal, renunciation by the agent, or by mutual agree


The principal will, as a rule, remain liable on any contracts entered into on his behalf up to the time he notified third parties who have previously, on express or implied authority, dealt with the agent. For example, in the case of a servant who had left his master's employment, in the course of which he had had authority, inter alia, to borrow money, and who borrowed a sum of money after the termination of his employment, the lender could recover from the employer, as he had not been informed of the revocation of authority.

The principal has no power to revoke the agency if the authority is coupled with an interest, as for instance, a factor who, having been given authority to sell goods, has made advances

to the principal as a condition of being allowed to retain the moneys so advanced from the proceeds of sale. Whether an agent, employed for a stated time, can recover for loss of prospective commission where the agency is terminated by the principal before the expiration of the agreed time, is a matter depending on the particular contract; and, usually, revocation by the principal would entitle the agent to compensation where part of the remuneration had been a salary of a stated sum per week.

Termination by expiration of the time agreed upon.-If an agency is created for a definite period, then on the expiration of that period the agency will terminate. There may, of course, be questions of settlement of account to be effected immediately afterwards.

Termination by performance of the contract or destruction of the subject matter. If an agent is employed to sell a house, the contract of agency is at an end when the house is sold; and if, before sale, the house is burned down the contract is also at an end.

Termination by death or insanity of principal or agent.—Death of the principal, unless otherwise agreed, puts an immediate end to the authority of the agent as where, in the case of Smout v. Ilbery (1842) a woman bought from a butcher supposing that her husband was alive, but he was dead at the time. The butcher could not recover from the husband's estate, as the wife had no authority to buy after the date of his death. But he could recover from the woman for breach of warranty of authority, as in Yonge v. Toynbee, cited above.

Similarly, the insanity, whether of the principal or the agent, will terminate the agency. If third parties who had previously dealt with the agent, as such, continue to deal with him without notice of the insanity of the principal, the principal will be liable if the decision in Drew v. Nunn (1879) is followed, but in all probability Yonge v. Toynbee would prevail and damages for breach of warranty could alone be obtained.

Termination by the bankruptcy of the principal. As a rule, the agent's authority will terminate on the bankruptcy of the principal; but it is not necessarily terminated if the agent himself becomes bankrupt.

During the Great War it was held in Marshall v. Glanvill (1917) that a contract of agency which involved personal service was terminated, and not merely suspended, on the agent being compelled to join the army under the Military Service Act, 1916.

In some cases an agency may be irrevocable, e.g., where entered into by deed, or where authority is given for valuable consideration. Where the agent is authorized to enter into contracts, or to do any lawful act involving personal liability,

« EelmineJätka »