Creation and Confirmation of Contract of Agency and Principal Duties to Agent

Issue 1: Creation of Agency Contract

Question 1

A appointed B as his agent to buy a lap top not exceeding RM 4000. On 5th November 2021, B went to X Sdn. Bhd. and bought a RM 5000 lap top. 

B informed X Sdn. Bhd.’s salesman that he was buying the lap top on A’s behalf. 

On 12th November 2021, A confirmed and adopted the contract on 5th November 2021. whether there is a creation of contract of agency and 

the effect of A’s confirmation of contract entered into on 5th November 2021. 
1st Issue
Law
Application
Conclusion

2nd issue                                        
Law
Application
Conclusion

First Issue- whether there is  a creation of agency contract between A and B 
Law- discussions of the 7 conditions below with one related law for each ( please write in essay form)
1.The act or contract must be unauthorized
2.The agent must, at the time of contract, expressly act as agent for the principal – he must not allow the third party to think that he is the principal Keighley Maxted & Co v Durant
SRM Meyappa Chettiar v Lim Lian Koo 
3.The agent must have a principal, who is in actual existence or capable of being ascertained when the contract is made. No one can ratify a contract if he is not a party competent to the contract at the date of the contract – Kelner v Baxter
4.The principal must have contractual capacity at the time when the contract is being made and at the time of ratification Firth v Staines 
5.The principal must, at the time of ratification, have full knowledge of all material facts, unless it can be shown that he intends to ratify the contract whatever the facts may be and assume responsibility for them
6.The principal must ratify the whole contract
7.The ratification must  not injure a third party i.e. must not subject the third party to damages or terminates his right or interest section 153 of the Contracts Act 1950

Application and Conclusion- Application of the laws to the issue and conclude the answer ( Apply the 7 conditions  to A and B ) ( please write in essay form)

Second issue-
Introduction –The effect of A’s confirmation- could be evaluated by analysing the laws below:
Law- discussions of the two provisions below and one related case law-( please write in essay form)
Section 149 of the Contracts Act 1950
Section 150  of the Contracts Act 1950
Hatman v Hornsby 
Presentasiones Musicales SA v Secunda 
Application and Conclusion- Application of the laws to the issue and conclude the answer  ( please write in essay form)

Question 2

With reference to relevant authorities examine:

(a)The meaning of agency and two (2) types of agents. 

(b)Four (4) duties of a principal to his or her agent.  

(a)Meaning of agency- 2 related examples

Law of agency is governed by Part X of the Contracts Act 1950
Agent – person employed to do any act for another or to represent another in a dealing with third persons
Principal – person for whom such act is done, or who is so represented
Therefore agency is the relationship which subsists between the principal and agent
Example 1- A hires B to act on behalf of A with C
A – Principal
B- Agent

In agency – exist TWO contracts:
1st – contract made between the principal and the agent from which the agent derives his authority to act for and on behalf of the principal
2nd – made between the principal and the third party through the work of the agent
Example 2-Contract between
1-A and B
2-A and C through B

2 types of agencies- 
Laws- 2 types with example/elaboration: ie. Insurance agent, stock broker, solicitor

(b)Four (4) duties of a principal to his or her agent.    

Please elaborate your answers:-  

1.To pay the agent the commission or other remuneration as agreed unless the agency relationship is gratuitous
2.Not to willfully prevent or hinder the agent from earning his commission
3.To indemnify the agent for acts done in the exercise of his authority
4.To respect any lien the agent has over the property of the principal in the actual or constructive possession of the agent