2. Nature of
Agency
Agent and principal
Creation of
agency
Classification of
agency
Classification of
agent’s authority
Categories of
principal
Right and duties
bet. Principal
and agent
Termination of
agency
3. Nature of
Agency
Relationship arising when a Principal appoint an
Agent to ACT on his or her behalf in dealing
with 3rd party
Agent has the authority to transact
With 3rd party to form a contract bet. The
Principle n 3rd party.
Basically there a 2 type of contract involve under
The agency relationship:
Contract bet.agent n the principal
(agent obtain authority 2 act on the
Principal’s behalf.
Contract bet.the principal n The 3rd party
arrange by the agent appointed
4. Person employed by the
principal to do an act or
specific task or to represent
the other in dealing with 3rd
party(s.137)
Eg: lawyer, broker,travel
agent
Capacity-anyone can be an
agent(if he is not capable,
principal will liable towards the
act done by him)
CHAN YIN TEE V WILLIAM
JACK
AGENT- sec 135,137 of CA
PRINCIPAL
person who employed
the agent or the person
who authorized the agent
to act on is behalf (s.135)
The principal must be of
the age of majority and
sound mind(s.136)
5. CHAN YIN TEE V WILLIAM
JACK
+
Chan Yong
= partners in a business n Yong was a minor
Chan told WJ that Yong is his partner n has authority to act on behalf
Of Chan.
WJ supplied goods to Yong but no payment was made.
WJ brought an action against Chan as the partner of Yong
HELD: Chan is liable for the act done by his agent bcoz Yong is minor.
William jack (WJ)
6. No formalities required
May be appoint in writing or orally
Or by deed known as power of attorney
Sec 138-no consideration is necessary to
create an agency
Formalities of Agency
7. • A Contract of agency can be expressed or implied
from the circumstances and the conduct of the
parties.
• KGN Jaya Sdn Bhd v Pan Reliance Sdn Bhd & EMS
Bowe(M) Sdn Bhd v KFC Holding
HELD : Agency agreement need not to be in writing.
The court can meet the intentions of the parties from
the facts and circumstances of a case and from the
conduct of the parties.
• Agency may arise in 5 ways.
Creation of Agency
9. Sec.139 & 140(CA 1950)
This happens when the principal
expressly appoint a person to be his
agent
This can be done in two ways i.e:
a) Oral
b) Writing
Eg: Rani says: Yanie, I want you to be
my agent
Expressed
Appointment
10. Implied
Appointment
(exist in 3 situation)
1. When a person by his
words or conduct
holds out another
person as having
authority to act for
him
Case: Chan Yin Tee v
William JAck
2. Relationship bet. Husband
and wife.
•General Rule/Presumption
•wife has authority to pledge
her Husband's credit for a
HOUSEHOLD NECESSARY
• must be suitable to their
living style n his H is liable
to pay the debt.
3. Relationship bet.partners
sec.7 of Partnership Act
1961
• Partners are each other’s
agents when contracting in
The course of the partnrshp
Business.
11. Whether the presumption
can be rebutted by the
Husband??
H forbid W to pledge his credit
H warned the salesman not to
supply his wife with goods on credit
The goods- whether it has been
supplied sufficiently
Sufficient allowance given to wife
for buying the goods
12. Ratification
Certification/acceptance/confirmation by the
principal for an act done without authority or
exceeding the authority given.
Agency by ratification arises in 2 situations:
An agent who was duly appointed
has exceeded his authority
A person who has no authority
to act for the principal has acted
as if he has the authority
when any one of the abovementiones situation arise, the
principal can either reject the contract or accept the
contract so made. (s.149 CA)
13. When the principal accepts or confirms such
contract, the acceptance is called ratification .
It can be made expressed or implied. (S. 150
CA)
The effect of ratification :
To render the contract as
binding on the principal as if
the agent had been properly
authorized before.
Ratification is retrospective.
i.e: the contract is effective
from the date when it was
made, not form the date it
Was ratified by the principal.
14. a contract
can only be
ratified if:
The act/ contract must be
unauthorized
The unauthorized act must
be recognized by law.
•BROOK V HOOK
The agent must expressly
act as agent for the
principal as the time of the
contract.
•KEIGHLEY, MAXTED & CO
V DURANT
The principal must have
contractual capacity at the
time when the contract is
being made and at the time
of ratification
The principal must, at
the time of ratification
have full knowledge of
all material facts at
the time of
ratification.(name of
the parties,s/m,terms
n condition )
The principal must
ratify the whole act
or contract. (S.152)
The agent must have a
principal who is actual
existence or capable of being
ascertained when the
contract is made.
•KELNER V BAXTER
•COSMIC INSURANCE V KHO
CHENG POHS
Must be made within a reasonable
time.
•METROPOLITAN ASYLUM V
KINGHAM & SONS
•GROVER & GROVER V MATTHEWS
Ratification-must not injure or
affect the interest of 3rd party
(s.153)
15. 1. The act/ contract must be unauthorized
2. The unauthorized act must be recognized by law.
BROOK V HOOK
- the principal may not ratify a contract in which his signature had
been forged by unauthorized agent.
3. The agent must expressly act as agent for the principal as the time
of the contract.
KEIGHLEY, MAXTED & CO V DURANT
- agent was authorized to buy wheat at a certain price from 3rd party
by the principal. Agent bought it at a higher price without disclosing
he was acting as an A for P. Held: A lacked the authority to enter into
the contract for P and could not later ratify the contract because he
was undisclosed to 3rd parties.
4. The principal must be in actual existence when the agent makes the
contract.
KELNER V. BAXTER
- Court held that the company (principal) could not ratify the contract
to buy goods (cigar) on his behalf since it did not exist at the time.
The agent in this case made a contract before the company was
formed. It had no contractual capacity to make the contract and the
agent was liable for the contract.
16. • In Malaysia, if there is a contract which has been
entered into by a company, or its agent prior to its
formation, the contract may be ratified by the company
after its formation.
• Section 35 of the Companies Act 1965- “ A contract
entered into by a company or its agent prior to
formation may be ratified by the company after its
formation.
Section 35 of Companies Act can be invoked, 3 things
must be proved:-
1. There must be a contract or transaction purported to
have been entered by a person on behalf of the
company prior to its formation.
2. The contract may be ratified by the company after is
ratification.
3. That upon ratification, the contract is ante dated to
the date it was made
17. 5. The principal must have contractual capacity at the
time when the contract is being made and at the time
of ratification
6. The principal must, at the time of ratification have full
knowledge of all material facts at the time of
ratification.(name of the parties, subject matter,terms
n condition )
Sec.151: no valid ratification can be made by a person
whose knowledge of the facts of the case is materially
defective.
MARSH V JOSEPH
- a principal had ratified a contract without full
knowledge of all material facts. The court held that
the principal was not bound by such act.
18. 7. The principal must ratify the whole act or contract.
(S.152)
8. Must be made within a reasonable time.
METROPOLITAN ASYLUM V KINGHAM & SONS
- the agent contracted to buy eggs without authority.
The principal tried to ratify the 1 week after it was
made. Held: the ratification was too late.
GROVER & GROVER V MATTHEWS
- a contract of insurance policy which had been
ratified by the principal after the occurrence of the
insured event was not effective.
9. Ratification-must not injure or affect the interest of
3rd party (s.153)
- illustration: A holds lease from B terminable on three
months notice. C, an unauthorized person gives notice
termination to A. The notice cannot be ratified by B,
so as to be binding A.
19. A person cannot be bound by a contract made on his behalf
without his authority. However, if he by his words and conduct
allows a third party to believe that that particular person is his
agent even when he is not, and the 3rd party relies on it to the loss
of the 3rd party, he will be estopped or precluded from denying the
existence of that person’s authority to act on his behalf.
Section 190- This agency arises where the principal holds out a
person as his agent to a third party and the third party relies on that
act.
Example: A) First situation
• Mr. Ali dealt with a third party and it is within principal’s knowledge.
However, the principal did not/failed to inform the third party that
Mr. Ali is not his agent
Agency by estoppel (Agensi
secara Estoppel)
20. Another example : B) Second Situation
• Mr.Ali who dealt with a third party as
principal’s authorised agent, on which later
was being terminated. Nonetheless, the third
party is unaware of it.
Therefore, in both situation, the principal is
estopped from denying the fact that Mr.Ali is
not his agent and not having the authority.
This can be seen from the conduct of the
principal.
21. EHSAN (Principal)
(UPIN) 3rd party
Mail told Upin in the presence of Ehsan that
he is Ehsan’s agent. Ehsan later cannot
deny/refuse to accept Mail as an agent if
Upin sell goods to Mail and believe that Mail
is an agent and later claim the price from
Ehsan.
MAIL (agent)
Hai Upin, I’m
Ehsan’s agent.
22. Agency by Necessity /Emergency
• Recognized in law in urgent situations which requires prompt
action to preserve life or property.
• Generally, masters of ships who deal with perishable goods in
the cargo to preserve or sell them are the original agents by
necessity with the owners of the cargo as principal.
• Sec.142 CA
• The following requirements need to be satisfied for an agency
by necessity to arise:
1) It is impossible for the A to get timely instructions from the P
2) It is in emergency circumstances where the A had to do all
such acts for the purpose of protecting the P from the loss.
3) A acted in good faith
23. Two situation:
1. When a wife is deserted or is justified in leaving her husband
and has no means of support, pledge husband’s credit for
necessities provide the husband has not provided sufficient
allowances
2. when a person is entrusted with another’s property and
becomes necessary for him due to emergency to do
something in order to preserve and to protect the property
although he has no authority to do so (commercial agency)
CASE:
1. Great Northern Railway V Swaffield
2. Springer v Great Western Railway Company.
3. Sach v micklos
24. The railway company (P) had been entrusted
to deliver a horse of the D to a destination.
However when it reached the destination,
nobody came to take the horse.
The P had to look after the horse and took several actions in order
To preserve the safety of the horse.
P then claimed from the D the extra expenses in order to
preserve the safety of the ground that P was not authorized to do so
HELD: the P was an agent by necessity and therefore entitled to claim.
Great Northern Railway V Swaffield
25. Springer v. Great
Western Railway Co
The D agreed to carry P’s tomatoes from jersey to Covent Garden.
Owing to bad weather, the ship arrived late at Weymouth. Meanwhile, the D’s
Workers were on strike
Therefore the tomatoes were found to be bad. The D decided to sell the tomatoes at
Weymouth bcoz the D felt that the tomatoes could not arrived at Covent Garden market
In saleable condition. However, the D did not communicate this to the P. P claimed for
Damages.
HELD: the P was entitled to damages bcoz the D were not agents
by necessity bcoz they have failed to communicate with the P
when they could have done so.
26. Sach v. Miklos
• M agreed to store furniture, which belonged to S.
After certain period of time, M needed the storage
space. M tried to reach S to get the furniture
removed nonetheless, he cannot locate S.
• M later sold the furniture and M pleaded agency by
necessity in making the sale.
• Court held there was no agency by necessity as no
emergency arisen. This is because the sale made by
M was for his convenience. If M’s house had been
destroyed by fire and the furniture left in open M
would then have been justified in selling it.
27. Effect of agency by necessity
The agent will be protected by any
claim from P
The agent will be entitled to
additional payment for his effort
to protect and to preserve the
safety and interest of the P
A contract existed between the P
and the 3rd party.
29. Universal Agent – General agent with
extensive power
General Agent – Agent who is employed on
behalf of his principal generally in transactions
relating to trade or business.
Special Agent – An agent appointed to do a
specific act for a specific purpose – authority is
quite limited/specific
According to the extent of authority
30. Classification according to functions
1. Del credere agent- Agent who is in consideration of extra commission,
undertakes that 3rd party with whom he enters into a contract on his
principal’s behalf, will perform his obligations.
( basically types of broker, mediator, middleman, between vendor and
vendee. The agent take a fee from the principle for ensuring that the
goods is sold & paid in full. If the buyer default in payment, the agent will
pay the amount which the buyer failed to pay.
2. Factors – A commercial agent, who is in the ordinary course of business is
entrusted with the goods of his principal for sale. Usually sells the goods
in his own name and without disclosing his principal
3. Auctioneers – An agent who is employed to sell goods by auction. He has
discretion as to the price of the goods should be sold unless the seller has
fixed minimum/preserve the price.
4. Brokers- A commercial agent who is employed to make contracts between
principal and third parties for a commission called a brokerage
5. Bankers – Two roles of bankers
• -agents for customer
• -agents for the banks
31. THE AUTHORITY OF AGENT
An agent’s act is binding on the principal if it is
done within his authority.
An agent’s act is not binding on the principal if it
is done in excess of his authority.
LIABILITY IF THERE IS FRAUD OR
MISREPRESENTATION??
In this instances the principal is liable of the
agent was acting within his actual or apparent
authority even if such misrepresentation or fraud
was committed for the benefit of the principal or
the agent himself.
Sect.191- Agent personally liable for
misrepresentation or fraud.
33. 1. Actual Authority
This is expressly given to Agent by the principal it can be
either orally or given in writing ( Section 140-141)
Sec.141:
i ) an agent having authority to do and act has authority
to do every lawful thing which is necessary in order to
do an act
ii) an agent having authority to carry on a business has
authority to do every lawful thing necessary for the
purpose or usually done in the course of the business.
• E.g.: P appoint C as an agent to sell his car for not less
than RM 20,000. if A acted in accordance with this
express authority, P is bound by the act.
34. This can also be implied from the following:-
a. All such powers are proper or necessary to execute the
express authority
b. The circumstances of the case
c. The custom or trade usage
d. The situation and conduct of the parties
Refer case: CHAN YIN TEE V WILLIAM JACKS
Certain authority is implied if it is the type that someone
dealing with the agent may expect him to have it. It is the
agent’s usual authority which can be implied by the 3rd party.
Normally, the title/position/designation of the agent may
give a measure of implied usual authority.
Illustration (b) to sec.141 :
A constitutes B his agent to carry on business of a
shipbuilder. B may purchase timber and other material and
hire workmen for the purpose of carrying on the business.
35. Case: PANORAMA DEV (GUILFORD) LTD. V FIDELIS
FURNISHING FABRICS
A company secretary exceeded his usual authority in hiring
motor vehicle from the P for the company.
The issue was whether the D company
could be taken to have authorized the transaction.
Held : the D was liable bcoz in appointing a company
secretary the D was representing that the secretary had
authority to enter into those transaction which company
secretaries were usually concerned.
36. 2) Apparent/ Ostensible Authority – Section 190
• It can arise in 2 situations:-
a) Where the Principal by his words or conducts, leads a 3rd party
to believe that A has authority to make contracts for him
(Section 190). The representation of the [principal makes it
apparent to the 3rd party that the agent has authority.
- the condition is that it must be the principal himself who
makes the representation to the 3rd party and not by the agent.
• Effects from the situation – ESTOPPEL
• Principal is precluded from denying that the agent has authority
• Nonetheless, if a 3rd party knew or ought to have known that
the agent did not have the apparent authority, he cannot rely
on the authority in question.
37. Graphic Lines Pte. Ltd
v.
Cahl Chee Mein & Ors
The G.M who was a partner of the nightclub had represented
to the P that advertisement should be done through the
assistant manager.
The issue was whether the defendant who were partners of the nightclub bound
By the acts of their A.M. who had placed advertisement for the nightclub with the
plaintiff.
Held: since the G.M had actual authority to delegate the authority to
the A.M,
therefore the D were bound by the acts of the A.M who had apparent
authority thru the Representation of the G.M to the P.
38. b) Where the Agent previously has authority to act, but that
authority was terminated by principal without notice to 3rd
parties
E.G. the principal gave the authority to his agent to purchase
stationary goods for the company annually from a 3rd party
supplier. However to cut down the budget of the company for
that particular year the P instructed the agent not to purchase
any stationary goods but this was not conveyed to the 3rd
party who continued to supply the stationary goods at the
request of the agent. The principal is bound to pay the 3rd
party for the good supplied.
3rd party cannot rely on apparent authority if he knew or
ought to have known that the agent did not have authority in
question.
39. THE AUTHORITY OF AGENT AND
LIABILITY FOR UNAUTHORISED ACTS
What if breach of warranty of
authority occur?
Breach of warranty of authority
occur/ arises when:-
a) An agent acts outside/ beyond
his authority OR
b) A person without authority
claims to act as agent for another
EFFECTS: The agent is personally
liable, if he has misled the 3rd
party.
40. T, the principal,
instructed the
solicitors to defend
an action for libel
brought
against him but
before trial started,
the defendant
became insane.
The solicitors not being
aware of this fact,
proceeded to deliver a
defence before learning of
their client’s insanity.
The plaintiffs applied for
the defence to be struck
out and
for solicitors to pay cost.
HELD: The solicitors, by acting for the defendant, were held liable
for damages even though they had acted in good faith in the
mistaken belief that they had authority.
This is because they had impliedly that they had authority to do so.
YONGE v. TOYNBEE
**If the 3rd party knows about the agent’s lack of authority?
The agent will not be liable for the contract
41. A named principal
Section 183, Section 174
A disclosed principal
Section 183
Undisclosed principal
Section 184- 186
CATEGORIES OF
PRINCIPAL
42. 1) A named principal –
Section 183, Section 174
The agent has disclosed the
principal’s name or identity to
the 3rd party
Exceptions: Where the agent
agrees to accept personal
liability or contracts in such a
way as to make himself
personally liable
If the agent signs i.e cheque
in his own name without
making it clear that he is
signing only as an agent
Hai, saya
UPIN ..ini
Principal saya
IPIN
43. 2) A disclosed principal – Section 183
Principal’s existence is disclosed to the
3rd party by the agent but his identity is
unknown
Under sect.183, if the agent does not
disclose his principal’s name, the agent is
presumed to be personally liable. This
would remain unless the agent is
released by the 3rd party or even after
the discovery of the principal.
In the case the principal cannot be sued,
the agent will be personally liable. Ex:
principal is not having sound mind.
Section 186- if the agent’s personally
liable, 3rd party may take action against
the agent or the principal or both.
44. 3) Undisclosed principal- Section 184- 186
Principal’s existence and identity is unknown to the
3rd party at the time of the contract
3rd party has the right to sue the agent/ principal
or both of them- Liabilities are joint and several
(Section 186).
Principal on the other hand has the rights to insists
performance of the contract (Section 185)
Rights of agent in such cases is that he can sue the
contract because the contract is his.
Section 189- if a person falsely contract with
another as agent, when in reality he is acting on is
own account, he is not entitled to enforce the
contract.
45. RIGHTS AND DUTIES BETWEENPRINCIPAL
AND AGENT
DUTIES OF
PRINCIPAL TO HIS
AGENT
To pay the commission or
remuneration to the agent
unless the relationship is
gratuitous
Not to willfully prevent or
hinder the agent from
earning his commission
To indemnify and
reimburse the agent for
acts done in the exercise
of his duties
46. Amount payable depends on the terms of the
contract, if not on quantum merits basis
Payable upon completion of all that an agent is
contracted to perform
If the agent is guilty of misconduct in the business
of the agency, he loses his right to remuneration
(Section 173)
If the agency is for fixed period, the agent is
entitled for damages should the contract being
terminated prematurely.
a) To pay the commission or remuneration
to the agent unless the relationship is
gratuitous
47. b) Not to willfully prevent or hinder the agent
from earning his commission
Principal should not employ another agent
(2nd agent) in the midst of negotiations to
deprive the original agent of his commission.
Except for estate agents who is appointed for
the sale of real property where there is no
express terms in the agreement that principal
will not sell the property himself.
48. c) To indemnify and reimburse the agent for
acts done in the exercise of his duties
Situations where agent can be indemnified
and reimbursed:-
I ) where the agent has incurred losses or
liabilities in performance of the contract of
agency
ii) where the agent suffers injury to 3rd persons
in execution of the authority of agency
iii) where the agent causes injury during the
cause of his duty due to the principal’s neglect
or want of skill
49. However, the agent will loose his right to
indemnify when he acts beyond his duty or
performs his duty in a negligent manner
CASE: SOLLOWAY AND ANOR. v. McLAUGHLIN
(1938)
- It was held that the agents, who engaged in a
fraudulent scheme to defraud their principals
would forfeit their right to an indemnity in
respect of transactions, which formed part of
the fraud
50. DUTIES
OF AGENT
To obey
principal’s
instruction
– Section
164
To use or
exercise
reasonable
care, skill and
diligence –
Section 165
To render proper
accounts when it
is required by the
principal (Section
166)
To pay the
principal all
sums received
on his behalf
(Section 171)
To
communicate
with the
principal –
Section 167
Not to let his
own interest
conflict with
his duty-
Section 168
Not to make
secret profit out
of the
performance of
his duty
To pay to his
principal all
sums received
on his behalf
(Sect.171 )
Not to disclose
confidential
information or
documents
entrusted to him
by his principal
51. 1)To obey principal’s instruction
Section 164
The agent is bound to follow
P’s instruction provided it is a
lawful instruction.
Agent is liable for any loss
suffered by the principal if he
fails to do so.
In the absence of instruction,
the agent is required to act
according to the custom of the
particular trade or transaction
52. 2) To use or exercise reasonable care, skill and
diligence – Section 165
Agent must act with reasonable diligence and use the
skill he has
He must act or perform according to his best
knowledge/ skills
CASE: KEPPEL v. WHEELER (1927)
- D (agent) was employed to sell the P’s house. An offer
was received and accepted by the P subject to the
contract. A few days later, a higher offer for the same
house was made by X, but the D did not communicate
this offer to the P. then, a written contract bet. The P
and the 1st offer was signed.
- HELD: the D was liable to the P for the difference bet.
The 2 offers.
53. ANDREW V RAMSAY
- P instructed the D to sell property and
agreed to pay him £50 commission. The D
received £100 from the purchaser as deposit
for the property. The D paid £50 to P and kept
the balance in payment of his commission
with the P’s consent. P learn later that the D
had also received £20 as commission from the
purchaser. He sued to recover the £20 and
also the £50 paid D.
- HELD: P entitled to recover both sums as the
D breached his duty as agent.
54. 3) To render proper accounts when it is required
by the principal (Section 166)
Agent must produce account for all money and
property if requested by the principal.
This is to include money received by him from
illegal and void transactions provided the
agency contract itself is not illegal
4) To pay the principal all sums received on his
behalf (Section 171)
Agent must pay his principal all sums received
on the principal’s behalf
55. Nonetheless, agent may retain or deduct the
sum of money he received on behalf of his
principal for the following reasons:(Section 170)
a) advances made or expenses incurred by him in
performing his duties
b) his commission
c) other remuneration payable to him for acting
as agent
Section 174- agent has the right to retain
principal’s property in his possession until his
remuneration is paid but has no right to sell the
goods without consent of the principal
56. 5) To communicate with the principal–
Section 167
In case of emergency/difficulty, the agent
must use his reasonable diligence to
communicate with and seeking instructions
from principal
However, Sect.142 allows the agent to use his
discretion to safeguard principal’s interests
especially if it is impossible to reach principal,
communication is impracticable or any delay
that may cause loss to principal
57. 6) Not to let his own interest conflict with his duty-
Section 168
The agent must act for the benefit of his principal
and he must not allow his own interest to conflict
with his duties. What is mean as acting in good faith
is that:
i. The agent cannot become a party to the
transaction with the principal
ii. The agent cannot act on behalf of both parties to a
transaction at one time without their consent.
iii. The agent must disclose everything that he knows
to the principal to all material facts of the contract
iv. All monies & profit should be put in the principal’s
account.
58. Example:- An agent who is employed to buy
land, cannot sell his own land to the principal
without the principal prior knowledge and
consent OR acting for both parties
-without consent, the principal can repudiate
the transaction even if the agent sell the land
according to market price.
59. CASE: WONG MUN WAI v. WONG THAM FATT
AND ANOR. (1987)
In this case, the court held that the 1st defendant
failed in his duty as agent of the plaintiff on two
reasons:-
i) He sold the plaintiff’s half share of the land
below the market price/value
ii) He failed to inform the plaintiff that he had
sold it t the 2nd defendant who was his wife
Thus, 1st defendant was held to breach his duty
to act in good faith and protecting the principal’s
interests.
He could not use his position as agent to make
profit on the account of principal
60. FULWOOD V HURLEY
the agent had acted on behalf of the parties,
the plaintiff and the 3rd party, by claiming
commission from both parties without their
knowledge and consent. Held: the agent has
breached his duty toward the principal or not
acting in good faith
Principal has the right to recover from the
agent any benefit which he may have
obtained from the conduct even though there
is no loss on the part of the principal.
61. 7) Not to make secret profit out of the performance of
his duty
Secret profit means bribe/ any
payment of a secret commission
received by the agent over and
Above the commission or other
remuneration agreed by the
principal and the agent
However, if the principal knows
of the profit gained by the agent,
and the principal consent to it, it is
no longer “secret”.
62. The remedies available for the principal
who did not consent to the secret
profit:
i. Repudiate the contract esp. in
the case of disadvantageous
ii. Principal may recover the
amount of the bribe from the agent –
Section 169 CA 1950
CASE : TAN KIONG HWA V. ANDREW S.H. CHONG (1974)
The plaintiff authorized the defendant as his agent to sell the flat for RM45,000 and
the defendant sold it for RM54,000 and the difference of RM9,000 was credited to the
company. Court held that the plaintiff was entitled to recover RM9,000 from the
defendant as the defendant had breached his duty as an agent.
63. iii. The principal may refuse
to pay the agent his commission
or other remuneration
CASE: ANDREWS V. RAMSAY AND CO (1903)
In this case, the plaintiff (i.e the principal could recover both sums that is the
commission paid to the agent and the secret commission received by the defendant
from the third party. IV. The principal may dismiss/
TERMINATE the agent for breach of
duty
v. The principal may sue the agent
and the 3rdparty giving the bribe for
damages for any loss he may have sustained
through entering into the contract.
CASE : MAHESAN V. MALAYSIAN GOVT. OFFICERS CO-OPERATIVE HOUSING SOCIETY LTD
The appellant (agent) had bought a piece of land for RM944,000 from the vendor for the
respondent and the vendor previously received pay of RM456,000 for the land.
Court held that respondent could recover either the bribe or the amount of actual loss
suffered by it as a consequence of entering into the contract.
vi. Principal may also bring criminal
charges for bribery under the Prevention of
Corruption Act 1961.
64. 8) To pay to his principal all sums received on his
behalf (Sect.171 CA 1950)
Agent must pay his principal all sums received on the
principal’s behalf
However, agent may retain or deduct out of sum money
received on behalf of the principal in the following matters:
Advances made or expenses incurred by him in carrying out
his duty
His commission
Other remuneration payable to him for acting as agent
9) Not to disclose confidential information or
documents entrusted to him by his principal
Agent may not disclose any information obtained during
his employment as an agent to outsiders/third party
65. 10)Not to delegate his authority
MAXIM :Delegatus non potest delegare (a
delegate cannot delegate) i.e an agent cannot
employ another person to do his duty. He must
perform the duty by himself.
GENERAL RULE: An agent cannot simply
shift/delegate his authority as agent by
employing others to act to a 3rdparty
IS THERE ANY EXCEPTION TO THIS
RULE??
66. i. Where the
principal approves the
delegation of authority
Case: DE BUSSCHE V ALT
The P appointed an agent in China to sell a
ship at a certain price. The agent was unable
to sell the ship. Therefore The agent sought
the principal’s Approval to appoint sub-agent
to sell the Ship in Japan. HELD: there was
no breach of the agent’s duty in appointing
The sub-agent because there was express
Consent from the principal to the delegation.
ii. Where it is presumed
from the conduct of the parties
that the agent would have
power to delegate his authority.
iii. It is the customs
or trade usage permits
such delegation
iv. It is necessary
to complete the business
v. In the case of emergency
or necessity. For example, the agent
is sick or ill.
67. vi. When the act
was done it is purely
ministerial or clerical and
does not involve exercise
of discretion.
CASE : ALLAM & CO. V. EUROPA
POSTAL SERVICES LTD (1968)
Court held that there was no
unauthorized delegation of duty to
the solicitors as it was purely
ministerial and not involving
confidence or discretion.
IN CONTRAST WITH
CASE : JOHN McCAMM & Co. V. POW
Court held that the sub-delegated the
sale of the principal’s house to sub-
agent was not a purely ministerial act.
It requires personal abilities to obtain
the best possible price.
68.
69. TERMINATION OF AGENCY
(Sect.154 – Sect.165 CA 1950)
AN AGENCY MAY BE
TERMINATED IN
TWO WAYS
BY ACT OF THE
PARTIES
BY OPERATION
OF LAW
70. BY OPERATION OF LAW
a)By the performance of the contract of agency (Section 154)
b) By the expiration of the period fixed or implied in the contract
of agency
c)By death of either principal or the agent
This is due to the personal and confidential relationship
between agent and principal
But if the agent has interest in the property which forms the
subject matter of the agency, agent’s or principal’s death will
not terminate the contract. This is because the personal
representatives of the deceased will exercise the authority.
Under Sect.161, the termination of agency based on the
death of the principal is only effective when the agent has
notice of the principal’s death, and in respect of third parties,
when it comes to their notice.
71. If the agent not known, then he may claim against the
personal representatives of the principal
Section 162 also mentioning that the agent must on
behalf of the personal representatives of the deceased
principal take all reasonable steps to protect and
preserve the interest entrusted to him.
d) Insanity of the agent or principal (Sect.151)
e) Bankruptcy or insolvency of the principal(Sect.154)
f) By the happening of an event which renders the
agency unlawful (Doctrine of frustration)
Section 163 mentioning on termination of an agent’s
authority also ends the authority of all sub-agents
appointed by the agents
72. By mutual consent of the agent and the principal
By unilateral revocation by the principal/ unilateral
renunciation by the agent at any time by giving notice (Sect.154)
Reasonable notice should be given or else the liability for
breach is on party in default (Sect.159)
The revocation must be expressed or implied in the conduct of
the parties (Sect.160)
CASE : SOHRABJI v. ORIENTAL SECURITY ASSURANCE CO (1946)
The court held that the 3 1/2 months was inadequate to
terminate the agency relationship which has lasted nearly 50
years. Thus, an agency of a long standing requires a longer period
of notice of termination.
73. However in the CASE : SYARIKAT JAYA v. STAR
PUBLICATION (M) BHD (1990)
Court held that the 6 month notice was reasonable in
terminating a sole agency relationship.
Damages for termination without notice shall be
measured by looking at the amount of what the agent
might have earned under the contract where it includes
agent’s commission or remuneration and/or expenses
and liabilities incurred by him in the course of his duty.
Nonetheless, the power of the principal to revoke
agent’s authority is limited in several circumstances:
In the case of absence of an express contract, the
agency cannot be terminated where the agent himself
has an interest in the property which forms the subject
matter of the contract (Sect.155)
74. CASE : SMART v. SANDERS (1848)
The fact that the factor was sent goods to sell on
behalf of the principal and he made advances to
the principal on the security of these goods, the
agency relationship was irrevocable.
The principal also cannot revoke the agent’s
authority after the agent has already incurred
personal liability as a result of carrying out the
principal’s instructions so as to avoid indemnifying
the agent (Sect.157)
CASE : READ v. ANDERSON (1884)
The court held that the defendant must
indemnify the plaintiff for the amount which the
latter had paid to the person with whom he made
the bet.
75. CASE : FICHAPPA CHITTY v. HAJI JAH (1897)
The court held that the plaintiff who had advanced
the money to an agent appointed by the Power of
Attorney but whose authority has been revoked
without his knowledge was entitled to recover
against the principal.
Knowledge of revocation can be from the principal
or other sources but only effective when it comes
to the knowledge of the agent or third party.
If the revocation of an agency contract for a period
of fixed period without lawful justification then the
principal must make compensation to the agent.
(Sect.158)
76. AGENT’S RENUNCIATION (rejection)
If in the case the agent renunciation, then the
agency for an indefinite duration, the agent
must give reasonable notice or else agent will
be liable for damages suffered by the principal
resulting from the renunciation (Sect.159)
Where in the case of agency for a fixed
period, then the agent is liable to compensate
the principal for the premature renunciation
without sufficient cause (Sect.158)
77. Success in life can never be
an accident. It is the result
of right decisions at the right
time. Champions are not the
people who never fail, but
the people who never quit...
