INCIDENCE OF TERMINATION OF AGENCY
CONTENTS
1.0 Introduction
2.0 Objectives
- Main Content
- Doctrine of Irrevocable Authority
- Notice of Termination
- Effect of Termination
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Readings
INTRODUCTION
Apart from the generally recognized situation by which an agency relationship could be brought to an end, there exists a particular situation, in the doctrine of irrevocable authority which either party to the agency relation must strictly observe where it exists in the agency agreement. Notice of termination and effect of termination are the other incidents of termination of an agency agreement.
OBJECTIVES
The contents of this unit shall include the doctrine of irrevocable authority, notice of termination and the effect of termination.
MAIN CONTENT
The three major incidents of termination of agency to be discussed under this unit have so well be discussed sparingly in the body of this work. Hence, minimal reference shall be made to irrelevant facts.
Doctrine of Irrevocable Authority
The general rule that an agency agreement could be brought to an abrupt end by an agreement of the parties, unilateral action of any of the parties or by operation of law is not absolute. There are identified exceptions.
There exists certain situation in which the authority of the agent cannot effectively be revoked or renounced at will by the principal or the agent, as the case may be, nor can the relationship be terminated by death, insanity or bankruptcy of either the principal or the agent. These involve cases in which the agency relationship was created for the benefits of either the agent or a third party rather than for the principal. In such situations, the authority of the agent is considered irrevocable.
To be irrevocable, however, the power or authority must:
- be created by deed and for a valuable consideration
- be granted in order to effect a security or protect the title or interest of the agent or some third party
In the same vein, a power of attorney expressed to be irrevocable and either given for a valuable consideration or for a period not exceeding one year in favour of or purchase for value is irrevocable.
The most common form of irrevocable authority is one coupled with an interest in the subject matter. The mere existence of a right to earn a commission is not an interest. In First v. Firth (1906) A.C. 254, It was held that the ordinary case of an agent employed for pecuniary reward in the share of a fixed salary without more, though confers upon him a benefit is not irrevocable.
The reason given was that the appointment of a salary contained no reference to any special interest in the subject matter of the agency and was not intended to be subservient or dependent on the continuance of such interest.
The fact that the agent subsequently acquires an interest in the subject matter of the agency also does not thereby render his authority irrevocable. To be irrevocable, the authority of an agent must have been conferred as a protection or security for the agent’s interest.
Where an agent has incurred personal loss or liability such that the principal is obliged to indemnify him in respect of such loss or liability, his authority cannot be revoked by the principal solely to avoid his obligation to indemnify the agent.
SELF ASSESSMENT EXERCISE 1
Discuss the Doctrine of Irrevocable Authority in relation to termination of agency agreement.
Notice of Termination
This is another incidence of termination of agency and in fact a pre- requisite in some cases.
The general rule as to notice of termination of agency relationship is that an agent’s authority continues until any purported termination is communicated to him.
For a notice under this rule to be valid and effective in law, it must be reasonable notice which to all intent and purposes depends on the facts of the particular case and the surrounding circumstances.
In A lexander Logios v. Att. General of Nigeria (supra) a Solicitor was appointed by the appellant to represent him in certain negotiations with the Government of Nigeria. The West African Court of Appeal held that the respondent was entitled to assume that the solicitor was still the agent of the appellant in as much as no step was taken to inform the government that the solicitor had exceeded his authority or that his agency had been revoked and warning them not to deal with him any longer.
In general, no form of notice is required. Therefore, notice is equally effective if the principal informs the agent or the third party directly or if they independently learn of the event which terminates the agent’s authority.
Notice may be given orally or in writing or by an overt act or omission, except that if the authority of the agent was ordinarily given in writing notice of termination should invariably be given in writing.
On the other hand, where the written authorization indicates specific conditions upon which the agent’s authority will terminate and the agent or third party learns that such conditions have occurred no further notice is required.
If the principal gives the required notice or if the agent or third party independently learns of the termination, the principal incurs no further liability if the agent continues to act for him.
SELF ASSESSMENT EXERCISE 2
Termination of agency agreement with notice is required to follow a particular form oral or written. Do you agree?
Effect of Termination
The third incident of termination of an agency agreement is the consequential effect of that termination.
Where the agency is revoked by the principal, the agent’s act for the principal does not terminate until notice of revocation is given or received by the agent.
Upon the receipt of the notice, the agent ceases to have authority to bind the principal but without prejudice to any rights and liabilities subsisting or accruing prior to the giving or receipt of the notice.
The same applies in other instances where notice of termination might be required as in cases of insanity, bankruptcy or dissolution of a limited liability company.
In instances where notice of termination is not required, e.g. where the act of termination is involuntary, as in the case of death of a party, or frustration or where termination is effected by performance, effluxtion of time of the authority of the agent ceases automatically. The rights and liabilities of the principal, the agent and any affected third party are discharged forthwith except as they stood at the time of such termination.
In case of death or bankruptcy of the principal, his legal representative or trustee in bankruptcy, as the case may be, could elect to continue the agency or to ratify particular transactions effected by the agent. Where if the agent dies or becomes bankrupt, the principal cannot compel the agent’s legal representative or trustee in bankruptcy, as the case may be, to perform the services rendered by the agent instead.
SELF ASSESSMENT EXERCISE 3
Examine the various effects of termination of an agency agreement.
CONCLUSION
Doctrine of Irrevocable Authority, Notice of Termination and Effect of Termination are the three incidents of termination of agency which the learner must have in mind. Even at the time of entering into an agency agreement, parties do have these factors at the back of their minds so that rights and liabilities could be easily ascertained.
SUMMARY
Doctrine of Irrevocable Authority, Notice of termination and Effect of Termination are fundamental in any agency relationship. It must always be borne in mind that as in all other relationships, agency agreements also come to an end.
TUTOR-MARKED ASSIGNMENT
Doctrine of irrevocable authority, notice of termination and effect of termination are detachable and independent from the concept of termination of agency as a whole. Discuss.
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. (1980). “The Oxford Companion to Law.” London: Butterworths.
American Restatements, Second, Agency, Article.
Friedman, G.H.L. (1984). Law of Agency, 7th Edition. London: Butterworths.
Companies and Allied Matters Act (1990). Laws of the Federation of
Nigeria
.