4.8 Termination of Agency

Actions That Could Be Taken By the Principal

4. The principal may refuse to pay commission or remuneration to the agent

5. Principal may sue the agent & 3rd party for damages, for any loss he suffered due to entering the contract

4.7.9 Not to Disclose Confidential Information Or Documents Entrusted To Him By His Principal

 An agent must not disclose any confidential information or documents entrusted to him by the principal to other party. The agent is bound to keep the information to himself only.

4.7.10 Not to Delegate His Authority

 The maxim delegatus non potest delegare (a delegate cannot delegate) applies in the relationship of agency.  An agent is not permitted to delegate to another person any duties or powers which have been entrusted to the agent personally.  However, there are exceptions to this general rule: i. Where the principal approves or consents to the delegation of the authority. ii. Where it is presumed from the conduct of the parties that the agent has power to delegate his authority. iii. Where the customs of the trade or business permits the delegation. iv. In case of necessity or unforeseen emergency. E.g. illness of agent. v. Where the act to be done purely ministerial or clerical and does not involve the exercise of discretion.

4.8 TERMINATION OF AGENCY

 An agency that have been existed can be terminate in a different of ways.  Termination means the ending of the contract of agency between principal and agent.  Agency can be terminated in one of the following ways:

By agreement By the principal revoking the agent's authority By the agent's renunciation

By performance By operation of law By frustration

4.8.1 By Agreement

 When both parties desire and agree that the agency shall terminated, the agency is terminated.  In this method, both the principal and agent can agree that the agency is to come to an end.  If the agency is evidenced by a contract, then any provisions regarding the termination should be observed by the party wishing to terminate the agency.  Reasonable notice must be given depends on the facts and circumstances.

Sohrabji v Oriental Security Assurance

Held: 3½ months’ notice was not adequate to terminate an agency which had lasted to 50 years. In this circumstances, two years’ notice would have been reasonable notice.

4.8.2 By The Principal Revoking the Agent’s Authority

 The principal may revoke the authority of the agent at any time before it has been exercised to bind the principal.  The principal can revoke the agent’s authority where; i. The principal gives notices to agent ii. The agent is in default under the agency  However, the power to revoke the agency by principal is limited to: i. Section 155 – the agent has an interest in subject-matter

ii. Section 157 – the principal cannot revoke the authority given to his agent after the authority has been partly exercised.

Smart v Sanders

Facts: A factor (an agent) was sent with goods to be sold on behalf of the principal. The factor had loaned money to the principal for the security of the goods.

Held: The agency cannot be terminated by the principal because the agent has an interest in the goods by paying the security of the goods.

Read v Anderson

Held: A principal could not revoke the turf commission agent’s authority after losing the bet. The principal would have to indemnify the agent for the amount which the agent had paid to the person with whom he made the bet.

4.8.3 By the Agent’s Renunciation

 An agency may be terminated when the agent surrenders his or her authority and by doing so ends the mandate given to him as agent.  The agent can terminate the agency by giving reasonable notice of termination to the principal – Section 159.  If the notice is given, the agent will no longer be liable to the principal and he can claim reimbursement for all his services and expenses up to the date of the termination of his agency.  According to Section 158, if the agent failed to give reasonable notice, agent is liable for any damages suffered by the principal.

4.8.4 By Performance

 According to Section 154, the contract of agency is brought to an end when the agent has performed the contract.  This can happen when an agency is created for a single specific transaction and the transaction is completed.

4.8.5 By Operation of Law

 An agency may be revoked by operation of law in any of the following circumstances: i. Upon the death of the principal or the agent  The agency comes to an end when the principal or the agent dies. This provision has been stress in the case of Blades v Free.  According to Section 161, an agency which is terminated by the death of the principal is effective only when the agent has notice of the principal’s death ii. When the principal or agent becomes insane  Since insane people is not capable of entering a valid contract, the agency is terminated by such insanity. iii. When the principal or agent becomes insolvent or is made a bankrupt  Upon insolvency, a person’s right and liabilities are vested in the Director General of Insolvency and, therefore, the agency relationship ceases.

4.8.6 By Frustration

 Upon the happening of an event which renders the agency unlawful, the agency may be terminated.  An agency contract, like any other contract, may be discharged by frustration.

Stevenson v Aktiengesellschaf Fur Cartonnagen

Held: An outbreak of war made the principal an enemy alien, it was held that the agency was terminated.