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

An agent may be appointed orally or in writing.

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?

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?

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?

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?

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?

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?

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?

The relationship between a principal and their agent is a fiduciary one.

The agent only owes duties to a principal to the extent that such duties have been negotiated and included in the contract between them.

An agent has a right to exercise a lien over property owned by the principal and in the agent's possession, pending payment of any sums owed to them by the principal.

An agent is not permitted to delegate the performance of their tasks to another, even if their agreement with the principal permits delegation.

Raj is 16 and works as a bookkeeper for Eleanor. Freddie is Eleanor's agent, who deals with her property matters. One day, Eleanor tells Raj to drive her around town so she can make preparations for a party that she is organising. Raj is not yet old enough to be legally permitted to drive in the UK. Eleanor also instructs Freddie to book a particular nightclub for the party.

Is Raj bound to comply with Eleanor's instruction to drive her around town?

Raj is 16 and works as a bookkeeper for Eleanor. Freddie is Eleanor's agent, who deals with her property matters. One day, Eleanor tells Raj to drive her around town so she can make preparations for a party that she is organising. Raj is not yet old enough to be legally permitted to drive in the UK. Eleanor also instructs Freddie to book a particular nightclub for the party.

Can Freddie refuse to book the nightclub, honestly and reasonably believing that to do so is not in Eleanor's best interests, since he knows that the nightclub is in a dangerous part of town?

For the past 20 years, William has acted as an agent for Mohammed. Following a recent incident when William sold Mohammed's boat without his authority, they decided to part company. When his appointment is terminated, William claims that he should be paid in respect of the following:

(1)    expenses that he has had to meet during the course of his agency

(2)    expenses that Mohammed should actually have paid himself but William has paid for him

(3)    expenses incurred in advertising Mohammed's boat for sale

(4)    remuneration that he is due for the past three months

To which sums is William entitled?

Walter is appointed by Boris to sell his sports car for at least £10,000. Apart from stating the amount that Walter is to be paid, provided he is successful, no other terms are discussed or contained in the appointment.

Does Walter also have authority from Boris to advertise the car for sale?

Walter is appointed by Boris to sell his sports car for at least £10,000. Apart from stating the amount that Walter is to be paid, provided he is successful, no other terms are discussed or contained in the appointment.

Does Walter have authority from Boris to negotiate on the price and accept, say, £9,000?

Usual authority arises when a principal expressly delegates a task to their agent.

An agent's ostensible authority may exceed their actual authority.

Chloe Smith and Karmel Jones are accountants in partnership together, serving small businesses in their local community. Chloe obtained a law degree before training as an accountant and sometimes gives legal advice in addition to her usual role as an accountant. She does so in the name of Smith & Jones, their partnership. Karmel is aware of Chloe's conduct in this respect but has never objected, believing it to be a good source of extra business. When Chloe gives some negligent legal advice, the client sues the partnership. Karmel seeks to argue that the legal advice was not part of the firm's business and therefore only Chloe should be liable in respect of it. Which of the following statements best describes the legal position?

Nadeem owns a boat yard and is appointed to sell Martin's yacht for him. In carrying out this task, Nadeem buys a half page of advertising in Yachts' Monthly at a cost of £400. Martin did not tell him to advertise in magazines and had rather expected that Nadeem would simply sell it to one of his regular customers, although the matter had never been discussed. Martin refuses to pay the bill for the advertisement when it is forwarded by Nadeem. Which of the following best describes the legal position?

Where a person leads a third party to believe that they are acting as agent for a principal and the third party relies on that representation and suffers loss as a result, the principal is estopped from denying that an agency relationship exists.

Where a principal has represented to a third party that an agent has authority to act and then subsequently revokes the agent's authority, the principal's liability will cease at the same time as the authority is revoked

Abigail enters into a contract with Tamsin, on the express instruction of Phoenix, but Tamsin believes Abigail to be acting on her own account. In the event of a breach of contract:

Can Tamsin sue Abigail?

Abigail enters into a contract with Tamsin, on the express instruction of Phoenix, but Tamsin believes Abigail to be acting on her own account. In the event of a breach of contract:

Can Phoenix sue Tamsin?

Luca tells Thelma that he is acting for Pauline, a well-known and reputable car dealer, when he agrees to buy Thelma's car. Thelma delivers the car but when she goes to pick up the money from Pauline, Pauline says that she knows nothing about the sale.

Can Thelma enforce the contract against Pauline?

Luca tells Thelma that he is acting for Pauline, a well-known and reputable car dealer, when he agrees to buy Thelma's car. Thelma delivers the car but when she goes to pick up the money from Pauline, Pauline says that she knows nothing about the sale.

Can Thelma sue Luca?