Chapter 4: Agency

Alana enters into a contract with Hugo for the purchase of Hugo's car. Alana is acting as agent for Penny. Applying the basic principles of agency law, who may sue and be sued on the contract?

• Alana and Hugo

• Penny and Hugo

• Alana and Penny

• Alana, Hugo and Penny

When an agent enters into a contract with a third party, the principal must have full contractual capacity to be liable on the contract.

• TRUE

• FALSE

An agent may be appointed orally or in writing.

• TRUE

• FALSE

Alain retired as a partner of Le Gourmet, a business with three French restaurants in London, but neither he nor the remaining partners, Pierre and Marie, informed the firm's supplier of French cheese. Alain used some old letterheaded paper (showing the three partners' names) to order a large amount of expensive cheese for Christmas. The supplier sent the invoice to Le Gourmet's office. Which of the following statements best describes the legal position?

• Le Gourmet is not bound by the contract because Alain is no longer a partner.

• Le Gourmet is not bound to settle the invoice because Alain has no authority.

• Le Gourmet is bound by the contract because an agency by estoppel has arisen

• Le Gourmet is obliged to settle the invoice because Alain gave the impression that he was still a partner.

Emma was a vet who lived in the same village as Natasha, a farmer who owned a herd of cows and who (in Emma's opinion) failed to look after them properly. They had never spoken to each other. One day Emma was out walking and saw one of Natasha's cows stuck in a ditch. She called her assistant and together they rescued the cow and treated its injuries. Emma sent Natasha a letter asking for reimbursement of her costs and in respect of her assistant's time.

Has an agency of necessity arisen?

• YES

• NO

Emma was a vet who lived in the same village as Natasha, a farmer who owned a herd of cows and who (in Emma's opinion) failed to look after them properly. They had never spoken to each other. One day Emma was out walking and saw one of Natasha's cows stuck in a ditch. She called her assistant and together they rescued the cow and treated its injuries. Emma sent Natasha a letter asking for reimbursement of her costs and in respect of her assistant's time.

Would your answer differ if Emma was the vet regularly called in to attend Natasha's cows?

• YES

• NO

With regard to ratification of a contract by a principal:

Can they ratify, even though they had no legal capacity at the time the contract was made, provided they have full legal capacity at the time of any purported ratification?

• YES

• NO

With regard to ratification of a contract by a principal:

Can they ratify even if the agent had no authority at all to enter into the contract?

• YES

• NO

Wasim entered into a contract to take a lease of a new waterside office being built in Stratford once the building work was complete. Shortly after entering into contract, Wasim's solicitor advised him that he should incorporate his business in order to lessen his potential liabilities and to improve his tax position. Wasim did so and re-established his business in the name of Wasim Ltd.

Can Wasim Ltd ratify the contract entered into by Wasim and complete the lease?

• YES

• NO

Wasim entered into a contract to take a lease of a new waterside office being built in Stratford once the building work was complete. Shortly after entering into contract, Wasim's solicitor advised him that he should incorporate his business in order to lessen his potential liabilities and to improve his tax position. Wasim did so and re-established his business in the name of Wasim Ltd.

If the other party to the contract fails to complete the building in Stratford, who could sue for breach of contract?

• Wasim

• Wasim Ltd