LAW 303- Agency Law

The law of agency is an essential part of commercial law because companies can only conduct business through agents. The function of the law of agency is to enable agents to bring commercial parties into contractual relations in such a way as to render the parties, not the agents, liable on, and able to enforce, the contract. The principal, on whose behalf the agent bargains, must be able to place complete confidence in the agent. This has led the law of agency to make the agent a fiduciary. 16 This imposes strict obligations. However, there are interests other than the protection of the principal against misuse of power by the agent, the protection of the third party with whom the agent has dealt, the protection of the agent against an y liability incurred on behalf of the principal, and the rights an agent may have against the principal. 2.0 OBJECTIVES The main objective of this unit is to define the concept of agency as an essential part of commercial law. At the end of this unit the learner understands the meaning, origin and theory of agency. 3.0 Main Content 3.1 Meaning of Agency Every day, in various parts of the world, there are persons acting for and on behalf of others, in different capacities and under different circumstances. During one’s business career or private life, one may be involved in the selling of goods or services to the general public. As a customer, one may have to be involved with persons representing others. The question may therefore arise as to whether all such representatives are necessarily agents of the person they claim to represent. A person may be a representative of another or a dealer in the products manufactured by that other person and may in consequence attach to himself the title of ‘agent’. The issue is, when can it be said that an agency relationship has come to existence?. These and other problems have made it difficult to arrive at what one might consider as a concise definition of the term ‘agent’ or ‘agency’.