The Term Law Of Agency And Relationship Essay

Question:

Discuss about the Term Law Of Agency Relationship Among The Agent And The Principle.

Answer:

Introduction

The term law of agency is used in commercial law that deals with the set of fiduciary relationships, contractual, non- contractual and quasi-contractual in which a person is involved and is called an agent. An agent is required to act on behalf of the principal who creates the legal relation with the third party. The relation between the agent and the principal is equal but the principal has the authority to make the agent work under him in his control or on is behalf wherever required. Thus the work of an agent is to negotiate on behalf of the main person that is the principal and the third party to a contractual relationship. This part of law regulates and separates the relationship among the agent and the principle which is also known as the internal relationship[1].

Facts and Issue

It has been provided through the scenario which is to be analyzed in the given situation that the job of Steve is to breed and care for alpaca. In relation to his job Bianca has provided his alpaca to Steve in order to be taken care of. The alpaca which Steve is taking care of is pregnant. Steve has noticed that the alpaca owned by Bianca has started to ignore food and show signs of respiratory disorder. Through his knowledge a suspicion is created in the mind of Steve that the alpaca is suffering from a disease called Bovine Viral Diarrhea (BVD). In the next morning it has been witnessed by Steve that the condition of alpaca had been further worsen as it has gained fever and become dehydrated. Steve made an attempt to contact Bianca however the attempt was in vain as he got to know that Bianca was out of town and had travelled to Ecuador where she cannot be contacted for 3 weeks. Steve also made an attempt to explain the matter to the housemate of Bianca however she Hung Up the Phone. Realising the criticality of the situation he again called Bianca but she was not reachable so he called a veterinarian who advised him of immediate surgery in order to save the alpaca. Having no other option available to save the alpaca Steve authorized the surgery which made him incur an overall cost of $3,500. However when Bianca return to take the delivery of her alpaca she refused to pay Steve the $3,500 claiming that the act was not authorized by her. After going through the facts provided in the case study the issue which has been derived is whether an agency was created between Bianca and Steve through the application of agency law.

Rule

In case of emergency or requirements, an agency may arise. The term agency of necessity means an individual can be an agent of any person if he is not appointed under some circumstances. As explained in an example that a husband has left his wife and as the wife does not work, she can claim for some necessities that she needs from her husband but due to the position of his income, he cannot fulfill her needs. However, if she is allowed to make money on her own then there is no question of arise of agency by necessity according to the case of Biberfield v. Berens [1952] 2 All ER 237[2].

An agency of necessity is created in situation where a person who does not have any express or implied authority, and is in possession of a property belonging to a principal has to take necessary steps in case of emergency to protect the property and besides that there must be a contract made between the principal and his agent who acts on his behalf. For example, the relationship between the master of the ship and the owner, and the relationship between the carrier of the goods and the owner explains the contractual relationship between the agent and the principal[3].

According to the case of Stamp and Heacock Ltd [1924] 1 KB 566, it states that there must be a proper necessity and it the duty of the agent to act in good faith. After the First World War, the plaintiff from Romania had a contract with the defendant from London to purchase a number of furs. The plaintiff had to wait for the delivery of the furs that were highly paid as the war got over. During the war, Romania got occupied by Germany and the communication got stopped between both the plaintiff and the defendant and because of this situation, the price of the stored fur was increasing. As the war was ending, the defendant started to sell the fur to the locals of Romania thinking that occupation of Germany will still be continued[4]. As the war got over, the plaintiff contacted the defendant to deliver is fur, but under the agency of necessity, the defendant had to sell the furs. The judgment held by the court was that there was no agency of necessity as the plaintiff was waiting for the goods and it made it clear that the defendant acted against the good faith because the defendant sold the fur when the value of the furs was high[5].


In order to establish agency by necessity, there are three conditions that need to be followed:

It is impossible for the agent to contact the principal.

According to the case Springer v Great Western Railway Company [1921] 1 KB 257, the defendant Great Western Railway Company had agreed to carry the tomatoes of the plaintiff to London from Channel Island, by the train to London or by a ship to Weymouth. At Channel Island, the ship was stopped because of the bad weather. Suddenly, the employees of the defendant went on strike when the ship reached Weymouth and the tomatoes were unloaded by the normal laborers, but it got delayed for two days. At that moment, some tomatoes were found bad. Therefore the defendant had to sell the tomatoes because he was assured that the tomatoes will not be able to reach in a good condition to the Convent Garden market. As the plaintiff got to know about this then he wanted to claim damages from the defendant. The decision of the court held that the defendant must have contracted with the plaintiff before selling those tomatoes as the ship arrived late. Thus there was no agency of necessity as the defendant failed to communicate with the plaintiff[6].


The action of the agent is necessary

It can be said that the action of the agent is to prevent the loss with respect of such perishable goods to the principal. When the goods are sold as per the inconvenience then the agency of necessity does not arise. According to the case of Great Northern Railway Co. vs. Swaffield (1874) LR 9 Exch 132, the railway company is the plaintiff who had delivered a horse to the station on the behalf of the defendant. As the horse arrived, no one was there to collect it[7]. Therefore, the plaintiff decided to send it to a stable. After some months, the plaintiff paid the charges of the stable and then he went to the defendant to recover the payment. Then the court held the judgment that the claim of the plaintiff got succeeded as he is involved in the agency of necessity's extension of doctrine that includes carriers of goods by the land. It was also found that there was an agency of necessity as the plaintiff had no choice rather than arranging a proper place for the horse so that he can be taken care of.

The goods can be sold if no such emergency is seen as it seems to be inconvenient to the agent as the agency of necessity does not arise. If the agent sells the goods then he is responsible in tort for conversion as these goods do not belong to him. According to the case of Sachs v. Miklos [1948] 2 KB 23[8], a furniture was sold by an agent without any urgency before it was sent to its destination. According to another case of Munro v. Willmott and Co. [1948] 1 KB 295, a car was sold by the agent but there was no urgent thing happened[9].

Agent of necessity acted in bona fide

As per the estoppels, the agent might arise. Without any authority, no person can be found in a contract that is made on his behalf only if he allows the third party to trust that X is the agent while he is not an agent but the third party depends on it. Then he will be stopped from rejecting that X has the authority. As per the example, it is explained that if B is told by X that he is C's agent and C agrees with the statement, the later on C cannot deny the fact that x is his agent only if the B sells the goods to X and trusting him to be C's agent and can be sued for the price later. According to the case, Povey v. Taylor (1966) 116 NLJ 1656[10] agency of estoppels can be illustrated. The defendant, in this case, had let a room to B on his premises and holds the same business from it. B had some business leaflets had been printed by the plaintiffs and then B acknowledged the defendant for this. There were some invoices which were sent to the defendant and was not challenged. After that, the plaintiff had sued the defendant for the payment. The judgment of the court of appeal held that it was practical for the plaintiff to assume that the work was ordered by B with the authority of the defendant so that he cannot stop from rejecting that authority

Application

It has been provided through the scenario which is to be analyzed in the given situation that the job of Steve is to breed and care for alpaca and has a contract with Bianca under which he is paid $100 dollars to take care her Alpaca and his authority is only limited to giving shelter and food to the animal. In order to establishing agency through necessity between Steve and Bianca all three conditions discussed above in the light of various cases laws have to be considered. According the initial requirements the agent must be able to show that where a legal relationship exists between him and the principal that a situation of necessity has taken place. The provisions have been discussed through the case of Great Northern Railway Co. vs. Swaffield. It has been provided by the facts that alpaca owned by Bianca has started to ignore food and show signs of respiratory disorder. The condition of alpaca had been further worsen as it has gained fever and become dehydrated. This is a clear situation of emergency.

In relation to the second requirement the agent must contact the principal and the contact should not be possible. The rule had been discussed in the case of Springer v. Great Western Railway Company. As per the case study Steve made an attempt to contact Binaca however the attempt was in vain as he got to know that Bianca was out of town and had travelled to Ecuador where she cannot be contacted for 3 weeks. Steve also made an attempt to explain the matter to the housemate of Bianca however she Hung Up the Phone. Therefore the attempt as per the requirement was made

The third requirement suggests that the actions have to be Bona fide. The facts provides that no material interest was present in the transaction with the veterinarian personally for Steve. Thus his actions were evidently in good faith. It has been provided that all three requirements for creation of agency by necessity have been met by Steve. Thus Bianca would have to pay him according to the above discussed law.

Conclusion

Bianca would have to pay Steve according to the analysis of law and facts done above.

Bibliography

Allen, William T., and Reinier Kraakman. Commentaries and cases on the law of business organization. Wolters Kluwer law & business, 2016.

Biberfield v. Berens [1952] 2 All ER 237.

Fridman, Gerald Henry Louis. Canadian agency law. LexisNexis Canada Incorporated, 2017.

Great Northern Railway Co. vs. Swaffield (1874) LR 9 Exch 132

Loewenstein, Mark. "Agency Law and the New Economy." (2017).

Munro v. Willmott and Co. [1948] 1 KB 295

Povey v. Taylor (1966) 116 NLJ 1656

Sachs v. Miklos [1948] 2 KB 23

Springer v. Great Western Railway Company [1921] 1 KB 257

Stamp and Heacock Ltd [1924] 1 KB 566

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