Topic: Agency

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  • 5 Marks

BCL – May 2016 – L1 – Q2c – Agency

State five ways by which an agency may be terminated.

State FIVE ways by which an agency may be terminated. (5 marks)

  • By mutual agreement: Both the principal and the agent may agree to terminate the agency at any time they wish.
  • By revocation of the agent’s authority: The principal may revoke the authority given to the agent and prevent them from making binding contracts with third parties. The agent may have the right of action for breach of contract against the principal if the revocation is unjustified.
  • By death of the principal or agent: The agency is terminated upon the death of either the principal or the agent, except in some exceptional cases.
  • By bankruptcy or insanity of the principal or agent: The agency may be terminated if either party becomes bankrupt or insane, except in some exceptional cases.
  • By frustration: The agency may be terminated due to unforeseen events that make the fulfillment of the contract impossible.
  • By intervening illegality: Legislation passed to nullify such types of agency may terminate the agency.
  • By completion of the performance of the agency: The agency terminates when the agent completes the tasks assigned under the agency.
  • By the expiration of time: If the agency was created for a limited time, it ends when that time expires.
  • By the principal becoming an alien enemy: The agency may be terminated if the principal becomes an enemy of the state.
  • By renunciation: The agent may renounce the agency.

[Any 5 points at 1 mark each for a total of 5 marks]

  • 10 Marks

BCL – May 2016 – L1 – Q2b – Agency

State and explain five exceptions to the rule that an agent has no right or obligation on a contract unless acting on behalf of the principal.

An agent has no right or obligation on a contract unless he/she enters into it on behalf of his/her principal. State and explain FIVE exceptions to this statement. (10 marks)

  • Where the agent agrees to accept personal liability: The agent may personally assume liability under the contract.
  • When the agent is not appointed by deed and signs the deed: The agent becomes personally liable if they sign a deed without clear indication they are acting as an agent.
  • Where the agent signs a bill of exchange in his own name: If the agent signs without indicating their agency status, they may be personally liable.
  • Where trade custom makes the agent personally liable: In some trades, agents are customarily held liable regardless of the principal.
  • Where the supposed agent is actually the principal: If the agent is the principal but purports to contract as an agent, they are personally liable.
  • Where an agent acts for an undisclosed principal: If the agent does not disclose that they are acting for a principal, they may be personally liable.

[Any 5 points at 2 marks each for a total of 10 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 – May 2019 – L1 – Q5 – Agency, Sale of goods/hire purchase

Discusses the object of a sale of goods, legal advice for parties in a sale involving stolen property, and the duties of an agent.

Yaa Konadu purchased a car from Kofi Apenteng. Two months later, it was discovered that the car was stolen property before it was acquired by Apenteng, and both parties were innocent. Konadu had to give back the car through the police. Apenteng had no title to pass on, so Konadu sued him for the refund of the whole of her money despite the fact that she had used the car for two months.

Required: a) Explain if the object of the sale of the car was met for either Yaa Konadu or Kofi Apenteng.
(4 marks)

b) Advise the parties.
(6 marks)

c) Explain FOUR (4) duties of an agent to his principal.
(10 marks)

a) Object of the Sale:

  • The object of a sale of goods is to transfer the property from the seller to the buyer. In this case, no property was legally transferred to any of the parties because the car was stolen.
  • Legal Reference: Section 1(1) of the Sale of Goods Act, 1962 (Act 137) states that a contract of sale of goods is a contract whereby the seller agrees to transfer the property in goods to the buyer for a consideration called the price, consisting wholly or partly of money.
  • Conclusion: The object of the sale was not met, as Kofi Apenteng did not have the title to pass on to Yaa Konadu.

(4 marks)

b) Advice to the Parties:

  • Advice to Yaa Konadu: Under Section 8 of the Sale of Goods Act, 1962 (Act 137), the fundamental obligation of the seller is to deliver goods to the buyer after the sale. Since Apenteng had no title to the car, Konadu is entitled to a refund of her money. She is also entitled to damages for breach of condition.

    (3 marks)

  • Advice to Kofi Apenteng: The legal maxim “nemo dat quod non habet” applies, meaning no one can transfer a better title than they possess. Apenteng failed to confirm the legal ownership of the car and must repay Konadu her entitlements. He may then sue the person from whom he acquired the vehicle to recover his money.

    (3 marks)

c) Duties of an Agent: The duties of an agent to their principal include:

  • Acting on behalf of and being subject to the control of the principal.
  • Acting in good faith and not making undisclosed profits.
  • Acting within the scope of authority or power delegated by the principal.
  • Discharging duties with appropriate care and diligence.
  • Avoiding conflicts between personal interests and those of the principal.
  • Promptly handing over to the principal all monies collected on the principal’s behalf.

(4 points @ 2.5 marks each = 10 marks)

  • 7 Marks

BCL – Nov 2018 – L1 – Q2b – Agency Law

Determine if a principal has the right to step into a contract between an agent and a third party.

Fiko in Cape Coast appointed Pinfa at Takoradi (Cape Coast and Takoradi all in the Republic of Ghana) as his agent. Pinfa had the authority to contract with farmers for the cultivation and supply of tiger nuts on his behalf. While the agency relationship exists, Pinfa contracted with Agya Anto for the supply of 10 bags of tiger nuts without disclosing the existence of the agency relationship with Agya Anto.

Required:
i) Has Fiko any right to step in the contract between Pinfa and Agya Anto? (4 marks)

ii) Has Agya Anto any available right in his contract with Pinfa while he (Pinfa’s) agency with Fiko exists? (3 marks)

 

ci)

  • This is a case of an undisclosed principal.
  • Fiko, as the principal of Pinfa, has the right to intervene in the contract between Pinfa and Agya Anto while the authority given to Pinfa lasts.
  • Fiko may make any claim on the contract and, if necessary, sue Agya Anto directly.
  • If Fiko makes use of this right, he will be personally liable to Agya Anto.

cii

Agya Anto has the option to either sue Fiko or Pinfa if he discovers that Fiko is the principal.

 

 

  • 4 Marks

BCL – May 2018 – L1 – Q3a – Agency

Explain the fiduciary duty of an agent in a scenario involving a secret profit.

a) Cho instructs his agent Duu to sell his car. Cho decided to pay GH¢5,000 as commission to Duu on completion of the sale. Duu sold the car and was accordingly paid the commission of GH¢5,000. Cho then immediately found that the purchaser of the car had also paid a bribe of GH¢2,500, which Duu did not disclose.

The law of agency provides for the rights and duties between the principal and agent. An agent owes various duties to his principal, and the foremost is fiduciary duty. This means that the agent must act in utmost good faith and be sincere and honest in his dealings with his principal. The agent does not have to make secret profit beyond the commission or other remuneration paid by his principal. Thus, the agent is accountable for every profit which he makes without the principal’s consent.

As the purchaser of the car had paid Duu a commission, Duu is in breach of his fiduciary duty that he owes to Cho. Cho stands to recover the GH¢5,000 he paid to Duu and the GH¢2,500 received as a bribe paid by the purchaser. (4 marks)

  • 20 Marks

BCL – Nov 2015 – L1 – Q2 – Agency

Analyze Bertha's liability to Crunch Ltd and Drinkit Ltd due to Eddie's actions as an agent.

Eddie is the manager of A-LIFE shopping mall owned by Bertha. In January he is told by Bertha not to buy biscuit from a new company called Crunch Ltd, because she has heard that their products are of poor quality.

On 18th February, Christa, a representative of Crunch Ltd, visits the A-LIFE shopping mall, and as a result, Eddie orders 10,000 cedis worth of biscuits. Christa is unaware of Bertha’s instructions.

When later in the day Bertha discovers what Eddie has done, they have arguments, and Eddie resigns. The following day Eddie goes to Drinkit Ltd, Bertha’s regular supplier of wine and spirit, and purchases 10 cases of whisky on credit in Bertha’s name. He then absconds with the whisky.

Bertha comes to seek your advice as to her liability to:
a. Crunch Ltd; (10 marks)
b. Drinkit Ltd. (10 marks)
(Total=20 marks)

a. Liability to Crunch Ltd:
i) The relationship between Eddie and Bertha is an Agency Relationship. (3 Marks)
ii) Eddie has authority to buy goods for the shop as his normal course of duty. (2 Marks)
iii) The instruction to Eddie not to buy from Crunch Ltd is not known to Crunch. (2 Marks)
iv) Therefore, Bertha is liable for the payment of the goods to Crunch Ltd. (3 Marks)

b. Liability to Drinkit Ltd:
i) The relationship between Eddie and Bertha is an Agency Relationship. (2 Marks)
ii) Eddie has authority to buy goods for the shop as his normal course of duty. (2 Marks)
iii) Being a regular supplier, Drinkit knows Eddie as the Manager of the shop. (2 Marks)
iv) The fact of Eddie’s resignation is not known to Drinkit or they were unaware. (2 Marks)
v) Bertha is therefore liable for the cost of the whisky. (2 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)

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