Agency Relationships in Contracts

AGENCY RELATIONSHIPS IN CONTRACTS 3

AgencyRelationships in Contracts

AgencyRelationships in Contracts

Agencyis the area of law that allows a person, called the agent, to act onbehalf of another, called the principal. There are those acts thatwhen done by an agent, they bind the principal. There are alsocontracts that an agent would enter into and they fail to bind theprincipal but they bind the agent making him personally liable. Thelatter happens when agents act without the authority of theprincipal.

Thereare different sources of authority for an agent and the agent shouldact within the scope of his authority. In the first case, theprincipal is bound by the contract between Delilah and Evon. This isa case of apparent authority where a third party infers from theconduct of the principal, that the agent has authority to act.

Inthe second case, Felipe knew that Delilah was not acting for herself,but that she was acting for someone else, with the consent of thatperson. A principal is bound by contracts made by his agent with hisauthority and in this case, Felipe knows that Delilah is an agent ofanother and this binds the principal. This is for purposes ofprotecting the interest of Felipe, who acts with the belief thatDelilah is an agent.

Inthe third scenario, Delilah did not tell Giorgia that she was actingfor the principal. This is a case of an undisclosed principal. Insuch cases, the principal or his agent may be liable for contracts.However, Giorgia can only sue either the principal or Delilah and notboth of them for breach of contract. The principle of an undisclosedprincipal seems to interfere with the doctrine of privity ofcontract, but it has been used to protect third parties.

References

Munday,R. (2010). Agency:Law and principles.Oxford [England: New York.

Bowstead,W. (2006). ADigest of the Law of Agency.The lawbook Exchange limited. Clark: New Jersey.