SS2 Commerce Lesson Note on Law of Agency

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LAW OF AGENCY

What is an agency? An agency is a legal relationship that exists between an agent, his principal and the third party.

Who is an agent? An agent is an individual who is employed by his principal to act on his behalf in terms of his business.

TYPES OF AGENTS

1. Broker

He is an agent who acts on behalf of his principal. A broker does not have the possession of the goods he canvasses for and cannot sell in his own made. He is paid commission known as brokerage for his services.

Features of a broker

1. 1. He has no possession of the goods
   2. He cannot sell the goods in his own name
   3. He is not liable to the principal if the buyer defaults in paying for the goods
   4. His commission is called brokerage
   5. He has no power to pledge the goods.

2. Jobber

He buys goods from the principal and sells at his own prices. He does not have possession of the goods and he is paid commission known as ‘Jobbers Turn’

3. Factor

He is a mercantile agent with the authority to sell goods on behalf of his principal. He may sell goods and issue receipt in his own name and has the possession of the goods he deals on. He is paid commission known as ‘factorage’.

4. Del Credere Agent

He is an agent that sells goods on behalf of his principal with the promise that all the people he introduces to his principal, will pay for the goods bought and sold. He has the possession of the goods he sells and he sells in his own name. he is paid commission known as ‘del credere commission’

5. Auctioneer

An auctioneer is a person employed to sell goods or properties by auction to the public. He must be licensed and may or may not have the possession of the gods or the properties he sells. The highest bidder purchases the goods or properties.

6. Forwarding and clearing agent

Forwarding and clearing agent is a specialized agent in the delivery and receiving of goods at the airport or harbor on behalf of the principal.

The forwarding and clearing agent takes possession of the goods and organizes for the delivery to a particular destination through an appropriate means of transport.

7. Universal agent

He is an agent with unlimited power to act on behalf of the principal. He can go into any types of business contract in honesty and sincerity. He is paid commission for his service. He is appointed by a deed called power of attorney.

8. General agent

He is an agent who acts on behalf of his principal in relation to a particular type of business e.g. a person who sales a supermarket and acts on  all matters concerning sale as it concerns the supermarket on behalf of his principal or master that has other forms of business.

9. Estate agent

An estate agent is an agent that specializes in the sales of land and buildings on behalf of his principal.

DUTIES OF AN AGENT

1. He should exercise care and diligence in performing his duties on behalf of his principal
2. He must give all vital information concerning the business to the principal.
3. He must keep adequate records of all the transactions he entered into and give account when called upon.
4. He must not make any secret gain or profit. He discloses any extra gain or profit made that does not include his commission.
5. He should not delegate his functions to other people unless in some special cases due to commercial necessity.

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