The Law of Agency & Elements of The Law of E-Commerce
The Law of Agency & Elements of The Law of E-Commerce
The Law of Agency & Elements of The Law of E-Commerce
U N I T 8 P R E S E N TAT I O N
WELCOME TO UNIT 8
OVERVIEW OF PRESENTATION
This presentation covers the law of agency and the elements of the law of E-
commerce:
• Keppel v Wheeler (1927) and Chaudry v Prabakar (1988) are illustrative of the importance of
competence and skill in the agency relationship.
CREATION AND
T YPES OF
AGENCY
CREATION OF AGENCY
1. Agency by Express Agreement
3. Agency by Ratification
AGENCY BY EXPRESS AGREEMENT
• Express agreement or express appointment can be by deed, in writing or orally.
• Whether oral or written, agency by express agreement is subject to the ordinary rules
of contract law.
• If done by deed, the agent is normally conferred a power of attorney which is a signed
document, witnessed in a special way, under seal, conferred by the Principal on someone
who he wishes to act on his behalf to carry out his business or personal affairs.
• It is important that the agent does not exceed the authority granted to him or to her
under express agreement.
• The Principal will only be bound if the agent acts within the scope of the authority
conferred.
• If the agent acts outside of this scope, only through ratification will the Principal be
bound.
AGENCY BY IMPLIED AGREEMENT
• Some agencies are created due to the conduct of the parties or the course of dealings
between the parties or the situation of a particular case.
• Usually, these relationships arise from the conduct of the parties or in relation to the
surrounding circumstances.
• Agencies by an implied agreement include:
(1) Agency by estoppel
(2) Agency by holding out
(3) Agency by necessity
AGENCY BY ESTOPPEL
• Where a person by his words or conduct has wilfully led another to believe that certain set
of circumstances or facts exist, and the other person has acted on that belief, he or she is
estopped from denying the truth of such statements although such a state of things did not
in fact exist.
• Agency by estoppel occurs in situations where the agent does not have actual
authority.
• During agency by estoppel, the Principal gives the impression that the agent has
authority.
• When this situation occurs, the Principal is estopped or prevented from denying the
existence of the agency relationship. The Principal will therefore be held to account
for any contracts incurred on his behalf by the agent.
AGENCY BY HOLDING OUT
(a) General Agent – is one employed to do all the acts connected with a particular business or
employment. Eg. Manager of a firm.
(b) Special Agent – employed to do some particular act or represent his or her Principal in some
particular transaction. Eg: agent employed to sell a motor car.
Mercantile Agent
- An agent dealing in the buying and selling of the goods.
- An agent who has the authority either to sell the goods, or to consign the goods for the
purpose of sale, or to buy the goods or to raise the money on the security of the goods on
behalf of the Principal.
KINDS OF AGENTS (3)
• Types of Mercantile Agents
1. Auctioneers: These are agents whose business is to sell goods or other property by
auction, that is, by open sale. The authority vested in him or her is to sell the goods
only.
2. Factors: A factor is a mercantile agent who is entrusted with possession of goods
for the purpose of sale; factors sell in his or her own name; factors have general lien;
factors cannot barter ; and factors cannot delegate.
3. Commission agent: Buys and sells and receives commission. He or she is not liable
for 3rd party; for particular lien: he or she may or may not have possession.
KINDS OF AGENTS (4)
• Types of Mercantile Agents Con’t
1. Brokers: A broker is an agent ho is appointed with the authority to negotiate and make
contracts for the sale or purchase on behalf of the Principal with the third person; the
broker is not given possession and the broker has no authority in his own name.
2. Del credere agents (a.k.a. Believing/Credit Agents) : Del credere agent constitutes an
exception to the general rule of agents. He or she is a mercantile agent who credit
guarantees that a buyer is trustworthy and in case the buyer defaults, compensates the
Principal (the seller). Del credere agents are also mercantile agents who on the payment of
some extra commission guarantees the performance of the contract by the third person. To
cover such risks, the del credere agents charge higher than normal commission rates.
KINDS OF AGENTS (5)
• Non – Mercantile Agents: Do not usually deal in the buying or selling of the goods. The
include insurance agents, counsels or advocates, wife etc.
Wife as an Agent
• Living together and looking for necessaries
Husband is not Liable
• Expressly forbidden credit
• Not necessary
• Given money
• Trader is told expressly
Note : If they live apart: -
(a) No fault of wife, liable to pay for her maintenance OR (b) under No justifiable
circumstances, she is NOT her Husband’s agent.
DUTIES & RIGHTS
OF THE
P R I N C I PA L A N D
AGENT
GENERAL DUTIES OF AN AGENT
1. Duty to follow the instructions of the Principal.
2. Duty to carry out the work with care and skill.
3. Duty to render accounts to the Principal.
4. Duty to communicate with Principal – if no time
5. Duty not to deal on his own accounts.
6. Duty not to make secret profits from agency.
7. Duty to pay the amount received from the Principal.
8. Duty not to use the information received in the course of agency, against the Principal.
9. Duty to protect the interest of the Principal in case of his death or insanity.
10. Duty not to delegate authority.
AGENT’S SPECIFIC DUTIES TO THE
PRINCIPAL
Performance Notification
Accountability Loyalty
DUTY OF PERFORMANCE
An agent’s duty to a Principal that includes:
1. Performing the lawful duties expressed in the contract. This following of lawful duties is called
the duty of obedience. However, some agents may be granted the leeway to use their
discretion based on the circumstances. Bertram Armstrong and Company v Godfray (1830) is
a key case that illustrated the consequences of not following the Principal’s instructions.
2. Meeting the standards of reasonable care, skill, and diligence implicit in all contracts.
3. An agent who does not perform his or her express duties or fails to use the standard degree
of care, skill, or diligence is liable to the principal for breach of contract.
4. An agent who has negligently (or intentionally) failed to perform properly is also liable in tort.
DUTY OF NOTIFICATION
• An agent’s duty to notify the Principal of information he or she learns from a third party or
other source that is important to the Principal.
• The agent is liable to the Principal for any injuries resulting from a breach of this duty.
DUTY OF LOYALTY
• The agency relationship is based on trust and confidence.
• An agent owes a fiduciary duty not to act adversely to the interests of the Principal. Mahesan v
Malaysian Government Cooperative Housing Society Ltd (1979) and Boardman v
Phipps (1967) illustrate that the agent can become liable for losses suffered by the
Principal for breach of fiduciary duties.
• If this duty is breached, the agent is liable to the Principal.
• The most common types of breaches of loyalty by an agent are:
– Self-dealing
– Usurping an opportunity
– Competing with the Principal
– Misuse of confidential information
– Dual agency
.
DUTY OF ACCOUNTABILITY
• A duty that an agent owes to maintain an accurate accounting of all transactions undertaken
on the Principal’s behalf.
AGENT’S AUTHORITY
Power or capacity to bind the Principal with the 3rd party
• The suing is possible UNLESS the Principal RATIFIES the unauthorized actions of the agent.
• If there is NO ratification, the 3rd party may sue for any losses suffered as in the case of Hadley v
Baxendale (1854).
• In situations where the 3rd party is aware that the agent lacks authority, he or she cannot hold
the Principal liable as the contract is with the agent as in the case of Watteau v Fenwick (1983).
RELATIONSHIP BETWEEN PRINCIPAL
& SUB-AGENT (1)
Discussed under two heads:
1. Where the sub-agent is properly appointed.
2. Where the sub-agent is improperly appointed.
• Both the principal and the agent are liable to the third party if the principal fails to perform
the contract.
TORT LIABILITY TO THIRD PARTIES
• The Principal and the agent are each personally liable for their own tortious conduct.
• The Principal is liable for the tortious conduct of an agent who is acting within the scope of
his or her authority. Thus, in cases where an agent is acting fraudulently or fostering their
personal interests, the Principal is also bound. This situation occurred in the case of Lloyd v
Grade, Smith & Company (1912).
• The agent only is liable for the tortious conduct of the Principal if he or she directly or
indirectly participates in or aids and abets the Principal’s conduct.
TERMINATION
OF AGENCY
TERMINATION OF AGENCY
End the relationship of a Principal and his Agent.
Studied under:
(1) Termination of agency by act of the Parties.
(2) Termination of agency by operation of law.
Irrevocable Agency
(1). Where the agency is coupled with interest: where the agent has some interest over the
subject-matter.
(2) When the revocation would cause the agent personal loss.
(3) When the authority has been partly exercised by the agent.
WRONGFUL TERMINATION OF AN
AGENCY OR EMPLOYMENT
CONTRACT
• The termination of an agency contract in violation of the terms of the agency contract.
• The nonbreaching party may recover damages from the breaching party.
• The distinction between the power and the right to terminate an agency is critical.
E-COMMERCE &
ELECTRONIC
CONTRACTS
ELEMENTS OF THE LAW OF E-COMMERCE
LEARNING OBJECTIVES:
ELEMENTS OF THE LAW OF E-COMMERCE
2. Electronic/online contracts must provide visual cues for the user when they visit a
website; the 4 criteria are:
a) Awareness of the existence of a contract
b) Must have opportunities to review the agreement
c) Must understand the method to execute or decline the contract
d) The website must have a mechanism to prove the user executed or declined the contract
ELECTRONIC CONTRACT TERMS
• Must be easily understood
• Must implement a mechanism for user assent OR acceptance of the electronic contract.
• User assent or acceptance is achieved using a green button with the words ‘I agree’.
• Users should know that the green button represents the user assent OR acceptance of the
electronic contract.
• Users must have alternative actions such as leaving the website if the choose OR decide
not to fulfill user assent OR acceptance OR decide to execute the electronic contract or
not.
3 TYPES OF ELECTRONIC CONTRACT
FORMATION
• “Browse Wrap” Contracts
Some websites use licenses which is part of an online agreement.
• “ Click-Wrap” Contracts
License terms must be agreed to before software is installed.
• “ Shrink-Wrap” Contracts
Place License terms OUTSIDE the box. Opening the packaging is an “ acceptance” of the
offer.
CONTRACTS & E-COMMERCE
• Law of contracts
• Issues for e-commerce
PRACTICAL CONCERNS FOR
E-COMMERCE BUSINESS DEALS (1)
• Identity and capacity of seller or buyer
• Authenticity of offer and acceptance (digital signatures)
• When and where contract formed
• Governing law
• Terms and conditions (click through)
PRACTICAL CONCERNS FOR
E-COMMERCE BUSINESS DEALS (2)
• Agreement on electronic payment system
• Consequences on breach
• Cybercriminals jurisdiction issues are settled by courts in some countries by deciding the
relevant law to use will be the law where the material was downloaded or accessed. See the
cases of Gutnick v Dow Jones & Co Inc (2001) and Dow Jones and Company v
Gutnick (2002) : both these cases are examples of internet defamation cases
P R E PA R E D B Y :
N ATA S H A G O M E S - G E O R G E
JUNE 2018
THE END
T H A N K YO U F O R YO U R T I M E