Law for New Zealand

Business
LECTURE 5
 Complete the overview of torts
 Overview of the law relating to
agency

Law for New Zealand Business session 4-agency 1

Agency:- what are you
talking about?

Law for New Zealand Business session 4-agency 2

Agency:- what are you
talking about?

Relationship that arises where one person (the AGENT)

Acts on behalf of another (the PRINCIPAL) which may
affect others (THIRD PERSON)

Law for New Zealand Business session 4-agency 3

Principal Agent

Third person

Law for New Zealand Business session 4-agency 4

 note
 NOT employee
 MAY NOT BE an independent
contractor
 NOT normally bailee

Law for New Zealand Business session 4-agency 5

How is an agency formed?

Law for New Zealand Business session 4-agency 6

How is an agency formed?

expressly

Law for New Zealand Business session 4-agency 7

How is an agency formed?

expressly

estoppel

Law for New Zealand Business session 4-agency 8

How is an agency formed?

expressly

estoppel

Operation
Of law

Law for New Zealand Business session 4-agency 9

How is an agency formed?

expressly

estoppel ratification

Operation
Of law

Law for New Zealand Business session 4-agency 10

How is an agency formed?

expressly implication

estoppel ratification

Operation
Of law

Law for New Zealand Business session 4-agency 11

 How is an agency formed?

expressly implication

estoppel ratification

Operation
oral
Of law

Law for New Zealand Business session 4-agency 12

 How is an agency formed?

expressly implication

estoppel ratification

Operation
oral
Of law
writing

Law for New Zealand Business session 4-agency 13

 How is an agency formed?

expressly implication

estoppel ratification

Operation
oral deed
Of law
writing

Law for New Zealand Business session 4-agency 14

 What are the most likely
situations?
 Real estate agent
 Power of attorney
 Travel agent
 Auctioneer
 Broker
 Insurance agent
 Mercantile agent

Law for New Zealand Business session 4-agency 15

What is the scope of their
authority?
 It depends- agents can have:

Law for New Zealand Business session 4-agency 16

What is the scope of their
authority?
 It depends- agents can have:
 Universal authority

Law for New Zealand Business session 4-agency 17

What is the scope of their
authority?
 It depends- agents can have:
 Universal authority
 General authority

Law for New Zealand Business session 4-agency 18

What is the scope of their
authority?
 It depends- agents can have:
 Universal authority
 General authority
 Special authority

Law for New Zealand Business session 4-agency 19

 So you have an agency
arrangement- what are
the parties required to do?

Law for New Zealand Business session 4-agency 20

 So you have an agency
arrangement- what are
the parties required to do?

agent

Law for New Zealand Business session 4-agency 21

 So you have an agency
arrangement- what are
the parties required to do?

agent

Follow
instructions
Law for New Zealand Business session 4-agency 22
 So you have an agency
arrangement- what are
the parties required to do?

agent

Follow
instructions
Law for New Zealand Business session 4-agency 23
 So you have an agency
arrangement- what are
the parties required to do?

agent

Use diligence
Follow And skill
instructions
Law for New Zealand Business session 4-agency 24
 So you have an agency
arrangement- what are
the parties required to do?

agent

Personal
action
Use diligence
Follow And skill
instructions
Law for New Zealand Business session 4-agency 25
 So you have an agency
arrangement- what are
the parties required to do?

agent

Keep secrets
Personal
action
Use diligence
Follow And skill
instructions
Law for New Zealand Business session 4-agency 26
 So you have an agency
arrangement- what are
the parties required to do?

agent
Keep accounts

Keep secrets
Personal
action
Use diligence
Follow And skill
instructions
Law for New Zealand Business session 4-agency 27
 So you have an agency
arrangement- what are
the parties required to do?
Act in principal’s interests
agent
Keep accounts

Keep secrets
Personal
action
Use diligence
Follow And skill
instructions
Law for New Zealand Business session 4-agency 28
 So you have an agency
arrangement- what are
the parties required to do?
Act in principal’s interests
agent principal
Keep accounts

Keep secrets
Personal
action
Use diligence
Follow And skill
instructions
Law for New Zealand Business session 4-agency 29
 So you have an agency
arrangement- what are
the parties required to do?
Act in principal’s interests
agent principal
Keep accounts
Pay fees
Keep secrets
Personal
action
Use diligence
Follow And skill
instructions
Law for New Zealand Business session 4-agency 30
 So you have an agency
arrangement- what are
the parties required to do?
Act in principal’s interests
agent principal
Keep accounts
Pay fees
Keep secrets
Personal
Indemnify
action
Use diligence
Follow And skill
instructions
Law for New Zealand Business session 4-agency 31
What happens if the agent
acts outside his or her
authority?
 Action is unauthorised- breach of
warranty
 Principal may elect not to be
bound
 Agent may be personally liable
 Agent can be sued by the third
party
Law for New Zealand Business session 4-agency 32
 Also, what are the
consequences for the
relationship between the
principal and agent?
 Relate to breach of contract- can
result in actions in:
 Contract
 Tort

Law for New Zealand Business session 4-agency 33

 What about the third
party?
 Consequences may depend on
what the agent has said

Law for New Zealand Business session 4-agency 34

 What about the third
party?
 Consequences may depend on
what the agent has said

I am an agent for A
= named principal

Law for New Zealand Business session 4-agency 35

 What about the third
party?
 Consequences may depend on
what the agent has said

I am an agent for A
= named principal

3rd party sues A

Law for New Zealand Business session 4-agency 36

 What about the third
party?
 Consequences may depend on
what the agent has said

I am an agent for A I am an agent

= named principal =unnamed principal

3rd party sues A

Law for New Zealand Business session 4-agency 37

 What about the third
party?
 Consequences may depend on
what the agent has said

I am an agent for A I am an agent

= named principal =unnamed principal

3rd party sues A Normally sues A

Law for New Zealand Business session 4-agency 38

 What about the third
party?
 Consequences may depend on
what the agent has said

I am an agent for A I am an agent No mention

= named principal =unnamed principal =undisclosed
principal

3rd party sues A Normally sues A

Law for New Zealand Business session 4-agency 39

 What about the third
party?
 Consequences may depend on
what the agent has said

I am an agent for A I am an agent No mention

= named principal =unnamed principal =undisclosed
principal

3rd party sues A Normally sues A Sue either

Law for New Zealand Business session 4-agency 40

 How does an agency
contract come to an end?
 Can be:

Law for New Zealand Business session 4-agency 41

 How does an agency
contract come to an end?
 Can be:
 Under contract (so according to
contract law) or

Law for New Zealand Business session 4-agency 42

 How does an agency
contract come to an end?
 Can be:
 Under contract (so according to
contract law) or
 By operation of law
 Illegality
 Frustration

 Death or insanity

Law for New Zealand Business session 4-agency 43

 summary
 Agency law is specialist because:
 It normally involves a contract (but not
always)
 Responsibilities of the agent may be limited
(but not always)
 The agent has responsibilities under
contract (and otherwise)
 A second party who did not participate in
the agreement may be bound (but not
always)
Law for New Zealand Business session 4-agency 44