AGENCY BY PRESUMPTION OR COHABITATION
This is another category of agency presumed by law. It is presumed where a man and woman are living together in circumstances which portray them as husband and wife, the woman is presumed to be an agent and can pledge the man’s credit for necessaries.
Marriage is not essential for the agency to arise.
However, the following conditions are necessary:
- Cohabitation: The two persons must be living together as husband and wife. It was so held in Jolly v. Rees.
- Domestic establishment: The persons living together in a domestic establishment in the presumption of agency to arise. In Debenham v. Mennon where the parties were cohabiting in a hotel, it was held that the presumption of agency could not arise and the woman was liable.
- Necessaries: The woman’s authority is restricted to pledging a man’s credit for necessaries.
The agency does not arise if:
- The woman contracts personally.
- The man has expressly/implicitly instructed the woman not to pledge his credit
- The goods pledged are not necessaries
- The parties have stopped cohabiting by divorce.
- The parties have separated by mutual agreement and the woman is provided for.
- The trades’ people extend credit to her personally.
- She’s prohibited from pledging credit.
RIGHTS AND DUTIES OF THE PARTIES
Duties of the agent
Performance: The agent must perform his obligation if the agency is contractual. He is not bound to perform if the agency is not created by agreement or where the undertaking is illegal or void.
Obedience: The agent is bound to obey the principal’s instructions. This means that he must act within the scope of his authority.
Care and skill: The agent must exhibit a degree of care and skill appropriate to the circumstances. In ordinary transactions, the degree of care and skill is that of a reasonable man, if engaged as a professional the degree is that of a reasonably competent professional.
Respect for principal’s title or estoppel: The agent must respect the principal’s title to any property he holds on the principal’s behalf. He cannot deny that the principal has title thereto. However if a 3rd party has a better title and the agent issued, he is entitled to plead jus tertii (the other person has a better title).
Account: The agent is bound to explain to the principal the application of money or goods that come into his hands during the relationship. The account must be complete and honest.
Personal Performance or non-delegation: The agent must perform the undertaking personally as this is consistent with the maxim delagatus non potest delegare “Delegates must not delegate”. If an agent delegates in violation of this principle, the principal is liable for any loss or liability arising. However, this maxim is subject to various exceptions where the delegates can delegate:
-
- Where it is authorized by the contract between the parties.
- Where it is authorized by law.
- Where it is authorized by trade usage or customs.
Where it is effected with the principal‟s knowledge.
Where it is reasonably necessary for performance.
Where special skill is required.
- In case of an emergency.
Bonafide: As a fiduciary, an agent is bound to act in good faith for the benefit of the principal. His actions must be guided by the principle of utmost fairness.
Keep the principal informed: The agent must ensure that the principal is well aware of the transactions entered into.
Secrecy/ Confidentiality: The agent must not disclose his dealings with the principalto 3rd parties without the principal’s consent.
Separate Accounts: The agent must maintain separate accounts of his money or assets and those of his principal. This is necessary for accountancy purposes.
Disclosure: The agent is bound to disclose any personal interest in contracts made on behalf of the principal. He must disclose any secret profit made, failing which he is bound to account the same to the principal. The phrase “secret profit” refers to any financial advantage enjoyed by a fiduciary1 over and above his entitlement by way
of remuneration e.g. bribe, secret commission or a benefit accruing from the use of information obtained in the course of employment. An agent may retain a secret profit if he discloses the same to the principal. If an agent makes a secret profit without disclosure, the principal is entitled to:
- Refuse to remunerate the agent for services rendered.
- Sue for the secret profit under an action for money had and received.
Remuneration: It is the duty of the principal to remunerate the agent for the services rendered. This duty may be express or implied. The agent must earn his remuneration by performing the undertaking. However, it is immaterial that the principal has not benefited from the However the principal is not bound to remunerate the agent if:
He has acted negligently.
He has acted in breach of the terms of the contract.
He has made a secret profit without disclosure.
Indemnity: It is the duty of the principal to compensate the agent for loss or liability arising. However, the principal is only liable for loss or liability arising while the agent was acting within the scope of his authority.
