Monograph : Agency Law Contents   (9) Unauthorised acts of agents     a. Unauthorised acts by an agent will usually be acts which exceed his actual authority. For example, an estate agent authorised to agree with a purchaser to a price specified by the vendor will be committing an unauthorised act if he agrees to a price which is lower than the specified price. Hence, an agent should comply strictly with the terms of the agency agreement in order to avoid unauthorised acts.         b. The general rule is that an unauthorised act by the agent will render the agent in breach of the agreement with the principal. The principal will be entitled to claim against the agent for any loss or damage which the principal may suffer in consequence of the agent's unauthorised act (which is a breach of contract). The principal may be entitled to withhold any remuneration or commission payable to the agent and, if the same has been paid, to recover the same from the agent.         c. An unauthorised act may, however, be ratified by the principal and if it is validly ratified, the principal cannot sue the agent for exceeding his authority and is not entitled to withhold remuneration or commission agreed to be payable to the agent.         d. An unauthorised act (if within the agent's apparent authority) will not discharge the principal from obligations to the third party, unless the third party has notice of the fact that the agent's act is not authorised. For example, if the third party is provided with a copy of the agency agreement, he will have notice of the agent's authority or any restriction on the agent's authority, as set out in the agreement, and may not hold the principal liable for an act by the agent outside such authority.     <<Back Next>>