COMPETENCE OF PRINCIPAL

CONTENTS

1.0      Introduction

2.0      Objectives

• Main Content
• Competence of the Principal
• Infants
• Mentally Ill person
• Corporations

4.0      Conclusion

5.0      Summary

6.0      Tutor-Marked Assignment

7.0      References/Further Readings

INTRODUCTION

The most important step in determining whether the agent’s act or omission will in law bind the principal is to establish whether an agency relationship actually exists  between the supposed principal and a given agent. This type of relationship may be created or established in any of the ways to be discussed under this head.

However, some basic factors must be in existence before an agency relationship can be established and these are also to be distilled properly in this unit.

OBJECTIVES

The objectives of this unit are two folds; to establish and bring to the knowledge of the student steps to be understood before an agency relationship could be created  and secondly to examine the various ways by which an agency relationship can be  created with  the  main  aim  of  informing  the   student   of   the   relevance   of   those distinctions in commercial transactions.

MAIN CONTENT

Competency of the Principal

The general principle  of law in this regard  is that the competency of a person  to  entrust  to another the performance of a task for and on his behalf is co-existent with the competency of that person to perform the task himself. However, to every rule, there is always an exception. In this instance  where  delegation  of that  said  power  is prohibited by law, the general common law rule that powers could be delegated will be of no effect.

Section 72 of the Companies and Allied Matters Act of 1990 provides thus:

“Any contract or other transactions purporting to be entered into by the company or by any person on behalf of the company  after  its  formation   and   thereupon   the  company shall become bound by and entitled to the benefit thereof as if it has been in existence of the date of such contract or other transaction and had been a party thereto”.

“Prior to its ratification by the company, the person who purported to act in the name of  or  on  behalf  of  the company shall in the absence of express agreement to the contrary, be personally bound by the contract or other transaction and entitled to the benefit thereof”.

The principle usually applied is often expressed in the maxim “NEMO  POTEST  FACERE PER ALIUM, QUOD PER SE NON POTEST” which means that “no one can do through another what he cannot do himself”.

Three categories of persons, due to natural or  legal  disability  are  either  totally  or partially incompetent to be principals. These shall be discussed in the next segment.

Infants

 Generally, an infant cannot  validly appoint  another person, whether an adult or an infant  to be o r act as his agent except in the circumstances in which he can act personally or for himself. However, under the general law governing contracts, an infant can  validly  contract only for his legal necessaries. The term necessaries is not restricted to bare essentials of life, but extend  to  articles  and  matters  which  can  be  considered  reasonably necessary to him, having regard to his state of life.

SELF ASSESSM ENT EXERCISE 1

Discuss the exceptions to the general rule that an infant cannot validly appoint another person to be or act as his agent.

Mentally ill Persons

As in the case of an infant, a mentally ill person cannot appoint an agent where the circumstances are such that he would have been bound  if  he had himself  personally acted. To render on appointment by such a person void and of no  effect,  it must be  shown that his infirmity was such as  to  render  him  incapable  of  comprehending  the true nature and probable consequences of his act.

SELF ASSESSM ENT EXERCISE 2

Appointment made by a mentally ill person of another to act as his agent may sometimes be valid. Do you agree?

Corporations

The primary legal status of the particular corporation  usually determines the competence of that corporation to appoint a person as its agent. This presupposes that if a corporation has  legal personality  of its own quite distinct from those of its member  constituting it,    it can contract and do other  legal  acts  on  its  own  behalf  and  in  its  own  name  just like an ordinary person.

However, to be so competent, the corporation must have been duly registered under the Companies and Allied Matters  Act  of  2004  and must  have  fulfilled  the  requirements of the Act. In that regard, section 63, (1) of the CAMA 2004 states that:

“A company shall act through its members in general meeting or its board of directors or through officers or agents appointed by or under authority derived from the members in general meeting or the board of directors”.

Section 65 of CAMA states in part:

“Any act of the member, in general meeting, the board of directors, or of a managing director while carrying on in the usual way the  business  of  the company shall be treat ed as the act of the company itself and the  company  shall be criminally and civilly liable thereof to the same extent as if it were a natural person”.

SELF ASSESSM ENT EXERCISE 3

Under what conditions would appointments  made  by  a  corporation  of another to act as its agent be valid in law?

CONCLUSION

As must have been noted, the appointment of a person to  act as an agent of  another  will be  invalid  if  such  person,  body  of   persons   or  a corporation lacks the legal status to  so act. Where the capacity or competency is not ascertained, such appointment will be declared void ab-initio.

SUMMARY

By now learners are expected to be able to differentiate between the appointments of an infant, a mentally ill person and a corporation to act as a principal for another.

TUTOR-MARKED ASSIGNMENT

1. Discuss the exceptions to the general rule that an infant cannot validly appoint another person to be or act as his
2. Appointment made by a mentally ill person  of  another  to  act  as his agent may sometimes be Do you agree?
3. Under what    conditions    would    appointments    made    by    a corporation of another to act as its agent be valid in law?

  REFERENCES/FURTHER READINGS

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

Pollock and Maitland. “The History of English Law,” Vol. 11.

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.