THE LAW OF AGENCY

PRINCIPAL AND AGENT

DEFINITIONS

1. Agency is the relation between two or more persons, created by a contract, express or implied, by which one party (the agent) undertakes, with more or less discretionary power, to represent another (the principal) in the transaction of certain lawful acts or business.

The principal is the employer or constitutor of an agent; the person who gives authority to the agent to act for him; he is the one primarily concerned in the contract of agency.

The agent is one who undertakes to transact the business, or to manage some affair, for another, by the authority and on account of the latter, and to render an account of it.

Agents are either general or special. A general agent is one whom the principal puts in his place to transact all his business of a particular kind; one employed in his capacity as a professional man, or master of an art or trade. A special agent is one employed to conduct a particular transaction or authorized to perform a specified act.

PARTIES COMPETENT TO ACT

WHO MAY BE A PRINCIPAL

2. At common law, every person who is competent to act in his own right and in his own behalf may act by an agent. A principal cannot confer authority on an agent to do that in his behalf which he has not the ability to do for

19Co. (Eng.) 75 (a) (1613).

For notice of copyright, see page immediately following the title page

himself, if personally present and acting. A corporation, if not prohibited by its charter, may delegate its authority to its officers and agents so far as may be necessary to effect the purpose of its creation. This is true of necessity, for it must act in this mode or not at all. Each member of a partnership firm is a principal, and it is implied in the very nature of their connection that each has a right to depute and appoint an agent to act for all in matters relative to their joint interest, and such an appointment will be binding on the firm.*

WHO MAY NOT BE A PRINCIPAL

3. The rules of disability recognized by the law of contracts generally regulate the matter of incompetency of principals." Those who come under this heading may be placed in two distinct classes: (1) Those who from some natural causes are incapable of making binding contracts. A lunatic is an example of this class; an act done by one assuming to be the agent for a lunatic is void. Drunkards, also, are in this class; but drunkenness renders a contract voidable only, not void, and the act of an agent may be ratified by the intoxicated person, or his representative, when he is sober.' (2) Those who are legally incompetent, because of the policy of the law. Under this class are infants, married women, and alien enemies. As to infants, it is settled law that the contract of an infant appointing an agent, or attorney in fact, is absolutely void. and incapable of ratification."

At common law, a married woman was incompetent to appoint an agent, because of her disability to enter into. contracts." Of recent years the legislatures of most states have removed this disability by the enabling statutes

2 67 Ala. 389 (1880).

33 Head (Tenn.) 638 (1859).

41 Dall. (Pa.) 269 (1788); 9 M. & W. (Eng.)

79 (1841); 117 Mass. 55 (1875).

5 See The Law of Contracts.

615 Wall. (U. S.) 9 (1872); 3 Bush (Ky.) 210

(1867).

761 Mich. 384 (1886-7); 19 Ind. 128 (1862). 81 Hill (N. Y.) 567 (1841).

9 16 M. & W. (Eng.) 777 (1847); 22 Pa. 337 (1853); 40 Ind. 148 (1872).

103 Taunt. (Eng.) 261 (1810); 4 Duer (N. Y.) 113 (1854).

conferring upon a married woman the right to contract in her own behalf, and this right has been held to include the right to appoint and act by an agent."

WHO MAY BE AN AGENT

4. The requisites to enable one to hold the position of a principal are not necessary in the case of an agent; any one with a sound mind and understanding may be an agent. At common law, monks, infants, married women, persons attainted, outlawed, excommunicated, villeins, or aliens, could act as agents for others." But persons not of sound mind and understanding cannot act as agents; thus, idiots, lunatics, and others not of sound mind cannot perform acts as agents that will bind the principals. An infant may be an agent and bind his principal by his acts." The capacity of married women to act as agents is treated elsewhere in this Course."

PURPOSES AND CREATION OF AGENCY

5. The relation of principal and agent may be created for any lawful purpose." Whatever a person can do himself, he can do by another; but there are things which are personal and so inseparably annexed to the person of a man that he cannot do them by another; for instance, the making of a will or contracting a marriage."

The relation is a contractual one. An agency is created (authority is actually conferred) much as a contract is made, that is, by an agreement between the principal and agent that such a relation shall exist. The minds of the parties must meet in establishing the agency. The principal must intend that the agent shall act for him, and the agent must intend to accept the authority and act on it, and the intention of the parties must find expression either in words or

1171 Ind. 159 (1880); see The Law of

Husband and Wife.

12 Co. Litt. 52 (a) (1628).

131 A. K. Marsh. (Ky.) 436 (1819).

14 See The Law of Contracts, The Law of Parent and Child, The Law of Husband and Wife.

159 Co. (Eng.) 75 (a) (1613).

16 67 Ala. 389 (1879).

conduct between them." In other words, the relation of principal and agent requires the consensus of both parties, and the fact of agency is to be determined by the real understanding between the principal and agent. Therefore, since no one can become the agent of another except by the will of the principal, either express or implied from particular circumstances, an agent cannot create in himself an authority to do a particular act by its performance, and the authority of the agent cannot be proved by general reputation or by his own statement that he is such.

However, where an express authority is given, an implied authority is combined with it to do all acts which may be necessary for the purpose of effecting the object for which the express authority was given. Where an oral authority is given, it may be enlarged verbally or even additional authority superadded to it by the employment of the parties, known to, and acquiesced in, by them. Thus, a merchant may authorize a clerk to accept or indorse bills of exchange for him, but this will not, of itself, authorize his paying or receiving money due on such bills; but if, by the course of the employment, the clerk, with the knowledge of the merchant, has been allowed to do so, this will constitute a sufficient authority for that purpose and discharge the holders of the bills. So, also, an agent employed to negotiate and conclude contracts is not thereby authorized to pay or receive money which may become due under such contracts, but the course of employment may justify one in paying or receiving money, if known to the principal and not objected to by him."

MODE OF CREATING THE RELATION

6. The authority given by the principal to the agent, enabling the latter to bind the former by acts done within the scope of that authority, may be express or implied. Express contracts may be under seal, in writing not under

171 Wheat. (U. S.) 151 (1816); 57 Fed.

Rep. 753 (1893); 15 Ch. Div. (Eng.) 349 (1880); 22 Ohio St. 305 (1872).

18 28 Beav. (Eng.) 562 (1860).

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