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  • 4 Marks

BL – May 2015 – L1 – SB – Q6b – Agency Law

Explain the role of a Del Credere agent in commercial transactions.

There are different types of special agents.

Required:
Explain who a “Del Credere” agent is. (4 Marks)

A Del Credere agent is a type of mercantile agent who, in consideration of an extra commission, guarantees the principal that the third party with whom the agent contracts on behalf of the principal will fulfill their financial obligations. This agent assumes responsibility if the third party fails to pay, acting as a surety for the contract.

  • 6 Marks

BCL – Nov 2016 – L1 – Q2a – Sale of Goods/Hire Purchase

Explain the relationship between the parties under the Sale of Goods Act.

Mr. Bossman bought a Nissan diesel vehicle from Trans Africa Engineering and Motor Co. Ltd. However, when the vehicle broke down, Mr. Bossman did not go to the dealers for spare parts, but rather went to Messrs Jones Williams & Co., and through one of its directors, placed an order for the spare parts from Japan. The order was placed for the spare parts with TSS Co. Ltd, and by Telex, headed “we quote for Japan,” TSS Co Ltd, supplied Jones Williams & Co. with the requisite quotation, and that the spare parts would be delivered in three (3) months’ time. Mr. Bossman then got his foreign bankers to transfer the amount, being the cost of the spare parts to the bankers of Messrs Jones Williams & Co. Ltd, who in turn, paid the amount to the suppliers. When the spare parts were not forthcoming, Mr. Bossman sued Messrs Jones Williams & Co. for the return of his money, interest, and damages. Before the court case started, Mr. Bossman received the spare parts, and therefore had to abandon his claims.

Required:
a) Explain the following in terms of the provisions of the Sale of Goods Act, 1962 (Act 137):
i) The relationship between Mr. Bossman and Messrs Jones Williams & Co. Ltd.
ii) The relationship between TSS Co. Ltd and Messrs Jones Williams & Co. Ltd.

i) The relationship between Mr. Bossman and Messrs Jones Williams & Co. Ltd:

  • The relationship is one of agency and not of sale of goods.
  • Messrs Jones Williams & Co. Ltd never delivered to Mr. Bossman a pro-forma invoice of its own stating the price at which it would sell the spare parts to Mr. Bossman or the time it would deliver the goods.
  • All that Messrs Jones Williams & Co., Ltd did was to give Mr. Bossman a copy of the telex from the suppliers and asked him to pay for the cost of the spare parts calculated from the unit prices.
  • The obligation that Messrs Jones Williams & Co Ltd assumed towards Mr. Bossman was that of using its best endeavors to procure the goods for him on the most favorable terms, and they were not responsible for the delay.
    (3 marks)

ii) The relationship between TSS Co. Ltd and Messrs Jones Williams & Co. Ltd:

  • When the TSS Co. Ltd agreed to procure the goods for Messrs Jones Williams & Co. Ltd, TSS Co. Ltd did that as the agent of Messrs Jones Williams & Co. Ltd, or as a principal party standing towards Messrs Jones Williams & Co. Ltd in the relationship of a seller.
  • The contract between the supplier TSS Co. Ltd and Jones Williams & Co. Ltd was of the type in commercial circles known as Free on Board (FOB) contract. By the rules of FOB Contracts, the supplier assumed the responsibility for shipping the goods to the buyer.
  • The seller TSS Co. Ltd assumed no responsibility for insurance or freight, nor did it give guarantees as to the time of the arrival of the ship at its destination.
  • The only representation which TSS Co. Ltd made was that it was ready, willing, and able to deliver the goods (spare parts) within three (3) months to any port in Japan nominated by Jones Williams & Co. Ltd and load them at their own expense on the ship designated by them (Messrs Jones Williams & Co. Ltd).
    (3 marks)
  • 10 Marks

BCL – May 2021 – L1 – Q2b – Agency

Explanation of ratification in agency and the concept of agency of necessity.

Adzoe acting for and on behalf of Maclean, was authorized to purchase corn worth Two Thousand Ghana Cedis (GH¢2,000) for Makafui. Adzoe bought the corn in Makafui’s name at Two Thousand Five Hundred Ghana Cedis (GH¢2,500), which was clearly beyond his authority. Maclean was to ratify. Makafui then failed to take delivery of the corn.

Required:
i) Explain whether Maclean would be justified in ratifying the transaction entered by Adzoe and Makafui. (6 marks)

ii) Explain the concept of “Agency of necessity”. (4 marks)

i) The question is on the law of agency. Therefore, a brief definition of who an agent is in the eyes of the law is very appropriate.

  • An agent is a person who is authorized to act for another (principal) in the making of legal relations with third parties. If the Agent acts with authority, the contract will be valid and binding on the Principal. (1 mark)
  • An agency relationship can be created by express agreement where the Agent is usually appointed to carry out a particular task, by appointment which is generally a contract between the Agent and the Principal, by the donation of a Power of Attorney to the person and other appointments must be made by a deed, this means that the Agent is being given the authority to deal with all the Principal’s property as defined in the Power of Attorney. (1 mark)
  • Ratification is a very important aspect of any agency relationship. Suppose a properly appointed agent exceeds his authority or a person having no authority purports to act as an agent. In that case, the Principal incurs no liability on the contract purportedly made on his behalf unless the Principal ratifies the contract. (1 mark)
  • By ratification, the Principal becomes liable under the contract. Ratification appears retroactively, meaning that the Principal is bound by the contract from the date on which it was originally made; the Agent is relieved from any liability to the Principal as to a third party.
  • In the circumstance of this case, Adzo, the Agent was authorized by the third party, Makafui, to purchase the corn at (GH¢ 2,000.00), but he bought the same at a price far beyond his authority.
  • Besides, Adzoe bought the corn in his name.
  • As an Agent, Adzo was expected to work within the scope of his authority ie Adzo was authorized to buy corn at a certain price, but he bought the corn at a price far beyond his authority in buying the corn in his name, Adzo acted fraudulently as an agent of Maclean. (2 marks)
  • Maclean will, therefore, not be justified to ratify the action taken by Adzoe.

In the instant case, Maclean may be justified in not ratifying the contract between Adzoe and Makafui because Adzoe’s intention when claiming to contract for Maclean was, in fact, fraudulent because he took the benefit for himself by buying the corn in his name, Adzoe acted fraudulently as an agent of Maclean. (1 mark)

ii) Agency of necessity:

Agency of necessity is an umbrella expression which two (2) quite distinct types of case may be found:

  • The first type of case raises the central issue of agency of whether A is acting with P’s authority.
  • The second type of case arises in similar circumstances of necessary emergency action but raises no agency issue.
  • The only question is; Is a person who acted to preserve another person’s endangered property entitled to an indemnity for the cost to him of so acting?
  • Indeed the agency of necessity originated in the needs and practices of the shipping business. Therefore, it was essential for the best interest of all concerned that the ship’s Master be empowered to react to all emergencies of the voyage without incurring personal liability.

From the above, the requirements that ought to arise are as follows:

  • There is a pre-existing legal relationship between the parties.
  • There is an emergency.
  • The Agent can’t communicate with the Principal.
  • The Agent is acting in the best interest of the Principal. (4 marks)
  • 10 Marks

BCL – May 2020 – L2 – Q2a – Agency

Advise on whether a firm should bear the cost of an expenditure incurred by a partner during an assignment.

Jabi is a partner of an Accounting Firm. The firm’s office is located in Accra. In May 2019, Jabi was assigned an approved accounting duty outside Accra with the use of the Firm’s car. During the journey, the car had a burst tyre. The driver of the car, for unexplained reasons, had no spare tyre on the car. He therefore recommended the purchase of a brand new tyre, which Jabi bought with his personal money. He obtained a receipt in the name of the Firm.

Jabi sought for a refund of his money amounting to GH¢1,280 for the tyres bought. The Managing Partner refused the refund, saying it was the sole responsibility of Jabi to bear the expenditure.

Required:

i) Advise the Manager as to why the Firm should bear the full or part of the cost and not only Jabi.
(4 marks)

ii) Advise Jabi why it is not the sole responsibility of the firm to bear the cost.
(6 marks)

i) Advise the Manager:

  • Sections 4, 10, and 14 of the Incorporated Private Partnerships Act, 1962, Act 152 provide the relevant legal framework.
  • Section 4: Upon registration, a firm becomes a corporate entity, and the certificate states that the partners’ liability is not limited.
  • Section 10: A registered firm has the powers of a natural person and full capacity. While the firm is a corporate entity, each partner is liable for the firm’s debts and obligations, with an entitlement to indemnity from the firm.
  • Section 14: Partners are jointly and severally liable with the firm and other partners for the firm’s debts and obligations incurred while they remain partners.
  • Therefore, the firm, being a corporate entity with shared responsibilities, should bear the full or part of the cost.

(4 marks)

ii) Advise Jabi:

  • Section 10: The firm has a corporate nature and full capacity, making it responsible for the reimbursement of the expenditure on the tyres. However, Jabi, as a partner, shares responsibility with the firm and other partners.
  • Under Section 4: Jabi, as a partner, has liability towards the firm’s obligations and is entitled to indemnity from the firm.
  • Section 14: Jabi is jointly and severally liable with other partners for the firm’s debts, indicating a shared responsibility for the incurred cost.

(6 marks)

  • 20 Marks

BCL – Nov 2017 – L1 – Q4 – Agency, Sale of Goods, Hire Purchase

Discuss the effect of a sale by a general agent under necessity and explain the concept of protected goods in hire purchase.

a) Who is a general agent? (2 marks)

b) Who is a special agent? (2 marks)

c) Kaku had been a driver of a cargo vehicle. He loaded his vehicle with goods at Tamale for an owner resident in Takoradi. The cargo was a mix of tubers of yam, bags of charcoal, watermelon, and tomatoes. In the course of the journey and while still far away from Takoradi, the vehicle broke down in the vicinity of a small town. The driver did all that he could to reach the owner of the goods by telephone and other means. He was, however, not successful. He therefore disposed of all the goods by sale on the third day.

Required:

i) Explain the effect of the sale of the watermelon, tomatoes, the yams, and the bags of charcoal on the agency relationship. (10 marks)

ii) What are protected goods in the sense of hire purchase? (6 marks)

(Total: 20 marks)

a) When an agent is employed to act for their principal in all matters concerning a particular trade or business, they are termed a general agent. For example, a managing director of a company is a general agent of the company. (2 marks)

b) A special agent is one who is employed to make only a particular contract or series of contracts. For example, if a person sends a friend to bid for them at an auction, the friend is acting as a special agent. (2 marks)

c)

i) This situation falls under Agency of Necessity. The conditions applicable for this are:

  • It must be impossible to get the principal’s instructions. (2 marks)
  • There must be actual and commercial necessity to preserve or to avoid the physical destruction of the principal’s goods. (2 marks)
  • The agent acted bona fide in the best interests of the principal. (2 marks)
  • In the present case, the items disposed of by sale are subject to physical destruction. It was appropriate to apply an emergency reaction to preserve the goods and make a profit for the principal. (2 marks)
  • There was no need to dispose of the charcoal early, as it is not subject to deterioration or physical damage within three days or immediately. (2 marks)

(Total: 10 marks)

ii) Protected goods are goods that:

  • Have been let under a hire-purchase agreement or sold under a conditional sale agreement.
  • One-half the price or total of which has been paid, whether in pursuance of a judgment or otherwise, or tendered by or on behalf of the hirer or buyer or a guarantor.
  • In relation to which the hirer or buyer has not terminated the hire-purchase agreement or conditional sale agreement, or, in the case of a hire-purchase agreement, the bailment, by virtue of a right vested in the hirer.
    (Section 8 of Hire-Purchase Act, 1974 N.R.C.D. 292)
    (3 points @ 2 marks each = 6 marks)

(Total: 20 marks)

  • 5 Marks

BCL – Mar 2023 – L1 – Q3a – Agency

Advise on the breach of contractual relationship between Joe Ocran and Tawiah, the estate agent.

Joe Ocran intended to sell two storey buildings. He agreed with Tawiah, an estate agent, that he would pay commission ‘on completion of sale’. Tawiah introduced a third party who wanted to buy both storey buildings, but Joe Ocran changed his mind and refused to sell. Tawiah is your neighbor who has heard you are reading a professional programme that contains business law. He is contemplating suing Joe for the commission and has approached you for advice.

Required:
Advise the parties whether there was a contracted relationship.
(5 marks)

Joe Ocran should be told that Tawiah did not complete the sale of the house because of Joe’s unilateral decision not to sell the house any longer to the third party. This indicates a breach of the contractual relationship with Tawiah.

In the case of Tawiah, he could be advised to sue Joe Ocran for breach of contract.

The remedy available to Tawiah is quantum meruit for introducing a third party.
(5 marks)

  • 10 Marks

BCL – July 2023 – L1 – Q2b – Agency

Discuss the concept of actual authority in an agency relationship and determine liability for the cost of goods.

Kwei Aglote is an agent of Batis Brown, the principal. Kwei Aglote has actual authority to contract for his principal Batis Brown on specific items. Kwei Aglote enters into contractual relations with Ogyeene Baby for the supply of cassava flour (kokonte powder) worth GH¢20,000. Aglote disclosed his agency relationship with Batis Brown to Ogyeene Baby. The principal has failed to pay for the cost of the goods supplied. Despite the explanation, Ogyeene Baby says he knows no one else but Kwei Aglote who must pay for the cost of the goods.

Required:

i) Explain actual authority under the agency relationship. (5 marks)

ii) In the above scenario, who bears liability for the cost of the goods? (5 marks)

i) Actual authority is created by words, either written or oral. It often derives from a contract between the principal and agent, although an agent may act gratuitously. This is the level of authority for which the agent is entitled to receive his remuneration or commission. The agent does not have to act in excess of his authority, lest he may be liable to the principal for breach of the agency.

Actual authority may be either express or implied. Where the agency has been created by a written contract of agency, the scope of the express authority can be determined from the construction or wording of the document. In an oral agency agreement, it will depend on what the parties agreed the agent should have the authority to do.

Implied authority is sometimes divided into Usual Authority and Customary Authority. Usual authority is a more specific form of implied authority which relates to agents of a certain type acting in the “usual” way of such agents.

Customary Authority derives from the locality, market, or business usage.

(5 marks)

ii) An agent is a person who is authorized to act for another (the principal) in making legal relations with third parties. If the agent acts within the scope of his actual authority, the contract will be valid and binding on the principal.

In the current scenario, Kwei Aglote acted within the scope of his actual authority in his contract with Ogyeene Baby. The contract is that of Batis Brown and is binding on him.

(5 marks)

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