| Monograph : Agency Law |
Contents |
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| (7)
Position of principal with regard to third parties |
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1. |
Disclosed principal |
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| a. |
Where an agent makes a contract with
a third party on behalf of an existing disclosed
principal pursuant to the agent's actual authority
or where the agent's unauthorised act is validly
ratified by the principal, the principal alone can
sue and be sued by the third party on that contract.
If the principal is bound by the acts of his agent
under the doctrine of apparent authority or agency
of necessity, the principal is contractually liable
to the third party. |
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| b. |
A disclosed principal may be liable
for money paid to his agent in respect of transactions
conducted by the agent within his authority. Even
though the agent has absconded with the money and
the principal has not received the money, the principal
is still required to perform his obligations under
the relevant contract. By the same token, where
a principal is required to make a payment to a third
party pursuant to a contract effected by his agent
within the agent's authority, payment to his
agent with instruction that the money is to be paid
over to the third party will not, as a general rule,
discharge the principal's liability to the third
party if the agent absconds with the money and no
payment is received by the third party. |
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| c. |
Pursuant to the law on apparent or
ostensible authority (as discussed in section 4(2)),
a principal who represents to a third party that
the agent has authority to act for him in certain
matters when in fact the agent has not, will be
estopped from denying such agent's authority
if that third party has relied and acted on such
agent's authority. |
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2. |
Undisclosed principal |
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(Please see section 10(2)
below.) |
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3. |
Vicarious liability for torts of an
agent |
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| a. |
If the agent is the employee of
the principal, the principal will be liable for
loss or injury caused by the negligence or other
torts (civil wrong) of the agent when acting in
the course of his employment. This is the doctrine
of vicarious liability. This doctrine states that
where the agent is an employee of the principal
and if the employee commits a tort against a third
party in the course of his employment, the principal
is said to be vicariously liable for his agent's
tort. |
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| b. |
Generally, a principal is liable
for the tort committed by his agent acting within
the scope of his actual or apparent authority. In
particular, a principal is liable: |
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| i. |
if the wrongful act was authorised
or ratified by the principal; |
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| ii. |
if the wrongful act amounts
to a breach by the principal of a duty personal
to himself and which cannot be delegated to
his agent; and |
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| iii. |
in the case of a misstatement
made by the agent within the actual or apparent
authority given by the principal, for example,
a negligent misstatement regarding the physical
condition of the property which induces a
purchaser to enter into a contract for the
purchase of the property. |
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