The definition of an agent is a person who has the authority or capacity from the principal to represent him or act on his behalf. The agent who has the authority to act “in the name of the principal” can legally bind him in relation to third parties which gives rise to a “double capacity situation”. An agents authority may be actual, implied, usual or customary. Actual authority occurs where both agent and principal enter into an agreement and it is consensual.
Implied, usual or customary authorisation occurrs “when it is inferred from the conduct of the parties and the circumstances of the case, such as when the board of directors appoint one of their number to be managing director. They thereby impliedly authorise him to do all such things as fall within the usual scope of that office”/
Also, the principal may retroactively ratify the act of an agent where the agent is said to have exceeded their authority and concluded an agreement on behalf of the principal without the principals prior knowledge. “ratification relates back and is deemed equivalent to an antecedent authority”.
Direct agency does not include Ostensible (Apparent) authority, liquidator in bankruptcy or agency of necessity. “Ostensible or apparent authority is the authority of an agent as it appears to others” and which “operates as an estoppel, preventing the principal from asserting that he is not bound by the contract.” It often coincides with actual authority. There are three requirments for there to exist ostensible (apparent) authority: 1) represenation by the principal 2) reliance on the representation 3) alteration of position resulting from reliance. Art. 3:201 of PECL describes apparent authority as :”A person is to be treated as having granted authority to an apparent agent if the person’s statements or conduct induce the third party reasonably and in good faith to believe that the apparent agent has been granted authority for the act performed by it.” Agency of necessity arises by operation of law where the agent exceeds his authority and subsequently binds his principal due to an emergency so as to protect the principal’s interest. The action which is taken by the agent in such a situation must be reasonable and there must be a commercial necessity for the agent to take such an action. Thirdly, the agent cannot communicate with the principal before disposing of the goods.
An agency relationship may also arise where the principal consents to the agent that the agent may act on his behalf and the agent consents to act, without there being an outright agreement.
Who is considered a Principal? Someone would be considered as a principal in indirect agency when “acting as the principal” himself rather than “acting in
the name of the principal”, where the latter applies only to direct agency. The doctrine of indirect agency includes the doctrine on “Undisclosed principal” whereby the agent enters into a contract with the third party on behalf of the principal, yet where the principal may not have known that a contract has been concluded. The difference between the Doctrine of the undisclosed principal and the PECL is that Undisclosed Principal is bound by contract and is a contract to the party whereas that is not the case under the PECL. Under the PECL, Art. 3:302 PECL states that “the principal may exercise against the third party the rights acquired on the principal's behalf by the intermediary, subject to any defences”
Can an Agent be held responsible for a principals actions? Yes, they can be held responsible as principal for the reasons being that under Pluto’s bill of lading it is stated that Mills is a “Merchant” which includes “anyone acting on behalf of a shipper, consignor, consignee owner and receiver of the Goods”. Mills was responsible for receiving the goods i.e. he was a consignee. Where the forwarder contracts with the principal he will be entering into a contract with the customer. If a carriage is governed by a single contract and is performed by successive carriers then each of them will be responsible for the performance of the whole operation. It is a question of construction of the contract and facts whether one is a principal or not; “At the end of the day it was very much a matter for the trial judge whether forwarding agents were in fact acting as principals or agents.” Therefore, as it seems from the current facts, Mills is a principal.
Who can sue in a contract of carriage?
Thos who are a party to the contract
have a right to sue as per Carriage of Goods Act by Sea 1992 s 2(1). Following the judgement in The Pioneer Container an exoneration clause could be relied against the owner where the owner gave his consent to the carrier to sub-contract the carriage of goods on any terms. The sub-bailee would in turn rely on its incorporation which would be in accordance with reasonable commercial expectations.
Comments