Agency
Definitions
•	An agent is someone you authorise to make decisions on your behalf such as entering contracts
•	An agent is engaged by a principal
•	A principal gives the agent the authority to act on behalf of the principal
•	A principal may authorise an agent to enter into contracts on behalf of the principal
•	The agent will negotiate and execute the agreement but is not a party to the agreement because they act on behalf of the principal
•	It is the principal that will be bound by the agreement, not the agent
Indicators of Agency
An agent is more likely than an independent contractor to:
•	Pay across monies to a principal
•	Be paid on a commission basis
•	Have to report back and account to the principal on all matters connected to their business
(International Harvester Co of Australia v Carrigan Hazeldene Pastoral Co)
Creation of Agency
An agency relationship can be created by:
•	Express agreement
actual authority given orally or in writing
•	Implied agreement
from actions or relationships such as cohabitation or partnership
•	Estoppel
principal terminates agent but does not notify third parties (Pole v Leask)	
Agent’s Authority
•	A principal will be liable for the actions of their agent if those actions were performed within the scope of the agent’s authority
•	There a 3 types of Authority
•	Express Actual Authority
Actual authority can be given to an agent expressly either verbally or in writing
•	Implied Actual Authority can also be implied in the following ways:
o	Custom or trade usage
o	Course of past dealings
o	Conduct of the principal, such as appointing the agent to a position within a business (Snowy Mountains Hydro case)
•	Ostensible Authority
o	There has been a representation that the person is an agent;
o	By someone with actual authority of the principal; and
o	A third party has relied on the representation (Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd)
Actions Beyond the Scope of Authority
•	Where an agent acts beyond the scope of their authority their actions are not binding on the principal
•	The contracting third party may sue the agent for misrepresentation or breach of warranty of authority
•	A contracting third party can enforce a contract against the principal where the agent has acted within their actual or ostensible authority
•	But a principal can only enforce a contract against a contracting third party where the agent has acted within their actual authority
•	But a principal can ratify an agent’s act without authority and then will be bound
Agent’s duties
•	The agency relationship is based on contract and is a fiduciary relationship
•	The duties owed by the agent are to:
o	Follow the principal’s instructions
o	Use reasonable diligence, care and skill
o	Act in person
o	Act in the principal’s interests
o	Not disclose confidential information
o	Feep the principal’s money separate
Termination of agency
An agency agreement can be ended by:
•	Agreement
•	Revocation of agent’s authority
•	Death, incapacity, bankruptcy of agent or principal 
•	Illegality of subject matter
•	Frustration of contract
•	Dissolution of company