LL.B Notes

TERMINATION   OF AGENCY BY ACTS OF THE PARTIES

CONTENTS

1.0      Introduction

2.0      Objectives

  • Main Content
  • Agreement between Principal and Agent
  • Revocation by Principal
  • Remuneration by Agent

4.0      Conclusion

5.0      Summary

6.0      Tutor-Marked Assignment

7.0      References/Further Readings

INTRODUCTION

Generally, under the law of contract which by extension applies to commercial transactions, parties to an agreement usually state the modes by which their contractual relationship may come to an end. Failure of any of the  parties  to  adopt  any  of  the modes stated under the contract may actuate the other contracting party to sue for damages. This rule is also applicable to agency contract.

OBJECTIVES 

The objectives of this unit is to highlight and state the general modes  by  which  an agency agreement is terminated by the parties as provided in their agreement, provided there is one and also in the event of absence of such  express  agreement.  This  is  to enable the learners to know that an action for breach of contract will lie at the suit of the perceived innocent party. 

MAIN CONTENT

Subject to the operation of the principle of irrevocable authority, an agency relationship may be terminated by an act of the principal or and the agent. Such an act may be an agreement between the two parties or a unilateral act of either of them. A unilateral act of the principal terminating his relationship  with  his  agent  is  referred  to  as  revocation and that of the agent with the same effect is a remuneration. These three aspects of termination require further elucidation for better assimilation of their nature, effect and significance.

Agreement between Principal and Agent

The general nature of relationship of principal and agent is primarily consensual. It is generally considered as good sense to allow the parties the freedom  to  be  able  to terminate their relationship when it is no longer beneficial to them or fulfilling their purpose.

This freedom to terminate an agency relationship accruing to the two principal parties  exists irrespective of the previous or original agreement by which the agency relationship was established or in any subsequent constituted agreement.

In Esso West African INC. v. Alli (Supra)  an agency agreement provided for termination of the relationship at the end of six months or thereafter by  one  month’s notice. An Ibadan High Court held that the agency relationship constituted by that agreement could be terminated by either party at the end of six months without notice.

SELF ASSESSM ENT EXERCISE 1

The agreement by parties to terminate their agency relationship collectively at the happening of a particular event is unchallengeable. Do you agree?

Revocation by Principal

An agency relationship is generally presumed to have been created, formed or established for the benefit of the principal. It therefore follows that he is generally also  free  at  any time to revoke the agency  or  any authority  granted  to  the  agent  when  he  considers  that  the  object  or purpose  is  no  longer  attainable  or  when   that   benefit   is   no   longer accruing to him.

Such revocation may constitute a breach for which  an  action  may  lie.  While  a revocation may be valid and effective and  the authority granted to  an  agent  terminated, the principal may also be liable  in  damages  to  the  agent  or  a  third  party  who  has  dealt with the agent for any loss, injury or damage sustained as a result of such revocation.

In spite of this general rule, a revocation is subject to the principle of  irrevocable  authority and the giving of reasonable notice.

See Alexander Logios v. Att. General of Nigeria  (1938)4  W.A.C.A. 163.

Generally, no formality is required in respect of mode of revocation of an agency relationship. It is effective if the principal  informs  the agent or the third party who  may be affected as a result, personally or if the y independently learn of the event which revokes the agent’s authority.

It may also be effected  orally or simply by the principal  intervening during  the  course  of any negotiation by the agent and inferring by the parties concerned.

Where the agent is appointed via a written authority or a deed, any revocation by the principal is required to be recorded in like manner to be valid and effectual.

Revocation may be implied or  inferred  where  the  principal  has withdrawn all  necessary facilities originally provided to the agent for the proper execution  of  his  agency or such facilities  as  will  render  the  effectual  operation  of  the agency untenable.

SELF ASSESSMENT EXERCISE 3

The right of revocation of agency by the principal is exercisable without regard to the rights of the agent and third parties. Do you agree?

Renunciation by Agent

Renunciation occurs where the agent unilaterally terminates his relationship with his principal. This right is implied in every agency relationship  if  the  agent  so  wishes except in  cases  of  irrevocable  authority.  The  agent  is  contractually  bound  to  perform his agency and any renunciation by him may constitute a breach of contract which may expose him to liabilities in damages. This would however not prevent the renunciation from being valid and effective to terminate his authority and duties as an agent.

Renunciation by the agent is also subject to the giving of notice by the agent to the principal. However, the agent may renounce his authority without notice where the principal is equally guilty of misconduct or breach of duty to the agent. 

Modes of Renunciation

  • by a written instrument
  • by words of word
  • by simply refusing to act
  • by an unequivocal abandonment of the object of the agency

Where the renunciation is wrongful, the agent may be liable to the principal  in  damages  for injury sustained by the principal consequent upon the renunciation.

Consequences of Renunciation

The agent may forfeit his right to receive commission or renunciation or compensation for services rendered but not for those due prior to the renunciation. In other words, he may be entitled to a reasonable value of such services or a reasonable proportion of any agreed commission or remuneration after taking into consideration any damage  or  injury sustained by the principal as a result of the agent’s action.

SELF ASSESSMENT EXERCISE 3

This right to renunciate an agency contract by an agent is exercisable without any consequences – Discuss.

CONCLUSION

Termination of agency by acts of the parties has been discussed  under  the  foregoing heads. The consequential effect of failure to comply with the laid down procedures as contained in the agency agreement b y either of the parties has also been discussed the contractual procedure is followed.

SUMMARY

The right of the parties to put an end to their relationship may be express or implied as shown above and learners are expected to have learnt and be able to distinguish between  the various options available under this head.

TUTOR-MARKED ASSIGNMENT

Differentiate the following.

  1. Termination by Agreement of the parties
  2. Revocation by the principal
  3. Renunciation by the Agent

REFERENCES/FURTHER READINGS

Kingsley Igweike (1993). “Nigeria Commercial Law: Agency.”  Jos,  Nigeria: FAB Educational Books.

Markesinis and Munday (1986). “An Outline of Agency.” 2nd Edition, Pollock and Maitland. “The History of English Law,” Vol. 11.

Sir William Holdsworth “A History of English Law,” Vol.  IV

Walker,    D.W.   91980).   “The   Oxford    Companion   to Law.” London: Butterworths.

American Restatements, Second, Agency, Article.

Friedman,       G.H.L.   (1984).Law    of    Agency,    7th  Edition.   London: Butterworths.

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