Law of Agency in Malaysia

Law of Agency By: MOHD IZZAT AMSYAR AMSYAR MOHD ARIF LL.B (Civil S!a"ia!# ($SIM#% LL.M ($&M#% A"a'ic Ce". (Da)a*c+* $nive"*iy# i,,a-a)*ya"!o)ail.co)  The law of agency is governed by Part X of the Contracts Act 1950. An agent is dened as a person eployed to do any act for another or represent anotherr in deali anothe dealings ngs with third person !1" !1".. The person for who s#ch act is done$ or who is so represented$ is called the %principal& 'n ot othe herr wor words ds$$ ag agen ency cy is the the rel elat atio ions nshi hip p wh whic ich h s# s#bs bsis ists ts be betw twee een n th the e principal and the agent$ who has been a#thori(ed to act for hi or represent hi in dealings with others. e.g. A(( e.g. A((i(# i(#ll appo appoint ints s )a )adan dan to sig sign n the agree agreeent ent on his beh behalf alf$$ her here e A((i(#l is called the principal and )adan is his agent.

 Th#s in agency there are in e*ect two two contracts+, i. the rst ade between the principal and the agent fro which the agent derives his a#thority to act for and on behalf of the principal- and ii. the second$ ade between the principal and the third party thro#gh the wor of the agent.

/HO CA0 B1COM1 A0 A210T34RI0CI4AL5 )ection 1/ CA , Any person who is eighteen years old and above and who is of so so#n #nd d i ind nd a ay y be a pr prin inci cipa pal. l. As be betw twee een n th the e pr prin inci cipa pall an and d th thir ird d persons$ any person ay becoe an agent$ b#t persons of #nso#nd ind and who are below 1 years of age are not liable towards their principal for acts done by the as agents!2" agents!2" eg. if A eploys 3 4a inor to b#y soe goods fro C on his behalf and C s#pplies the goods$ A cannot allege that he is not liable to pay for the goods

 6#st beca#se 3 is not at the age of a6ority. A is still liable to pay C for the goods.

CR1ATIO0 OF A210CY  7ie any other contracts$ a contract of agency can be e8pressed or iplied for the circ#stances and the cond#ct of the parties. 'n other words$ the a#thority of an agent ay be e8pressed 4given by words spoen or written or iplied 4inferred fro things spoen or written or fro the ordinary co#rse of dealings.

eg. X lives in 'poh and owns a shop in #antan. The shop is anaged by : who norally orders goods fro ; in X
3y 3y 3y 3y 3y

e8press appointent by the principal iplied appointent by the principal ratication by the principal necessity i.e. operation of law the doctrine of estoppel

>? @aya )dn3hd v Pan eliance )dn3hd !199" 1 B7@ 2//  The Co#rt of Appeal held that the law does not re#ire that an agency or s#b agency agreeent #st be in writing. D#rtherore$ Part X of the Contracts Act 1950$ which contains the relevant provisions on agency does not contain any re#ireent that the appointent of an agent or s#b agent has to be in writing or be evidence in writing.

6. BY 174R1SS A44OI0TM10T E8press appointent ay be in written or oral for. An e8aple of an

e8press appointent ade in writing is a Power of Attorney. Even a letter written or words spoen ay be e*ective in appointing an agent.

8. BY IM4LI1D A2R11M10T  The 7aw can infer the creation of an agency by iplication when a person by his words or cond#ct holds o#t another person as having a#thority to act for hi.!/" e.g. 'f he allows another person to order goods on his behalf and habit#ally pays for the$ an agency ay be iplied. 'n s#ch ters he will be bo#nd by the contracts as if he has e8pressly a#thori(ed the.

Chan :in Tee v Fillia @acs G Co 4Balaya 7td !19=" B7@ 290  The appellant and :ong 4a inor$ were registered as partners. At a eeting with a representative of the respondent copany$ the appellant held hiself  o#t to be :ongoods were s#pplied to :ong b#t were not paid for.  The respondent copany obtained 6#dgeent against the appellant and  :ong. The appellant appeal to DC which held that since the appellant had held :ong o#t of his agent who had the a#thority to do things on his behalfthe appellant was liable for :ong
raties the$ the sae e*ect will follow as if they had been perfored by his a#thority. Fhen the principal accepts and conrs s#ch a contract$ the acceptance is called ratication. atication ay be e8pressed or iplied !=" atication is retrospective i.e. it dates bac to the tie when the original contract was ade by the agent and not fro the date of the principal> Botors and ordered a car costing B1/5$000K,$ telling >> Botor> Botors deliver the car to A. 'f A conrs and adopts the contract on 12 @an#ary$ then 3 is said to be an agent thro#gh ratication. A can also re6ects the contract since 3 had e8ceeded his a#thority.

Contract can be ratied #nder the following circ#stances+,  The act #st be a#thori(ed. The agent #st$ at the tie of the contract$ e8pressly act as an agent for the principal!5"i.e. he #st not allow the third party to thin that he is the principal. eighleyBa8tedG Co v L#rant An agent$  was a#thorised by the appellants to b#y wheat at a certain price.  The agent e8ceeded his a#thority and bo#ght at a higher price in his own nae b#t intending it for eighley. eighley agreed to tae the wheat at that price b#t failed to tae delivery. The co#rt held that eighley was liable to the L#rant since  at the tie of the contract did not profess to act as an agent. )B BeyappaChettiar v 7i 7ian oo !195=" 20 B7@ 2= PC$ the attorney of )C$ entered into an agreeent with the respondent #nder which the PC handed over to the respondent a piece of land belonging to his principal in consideration of B H$000K, and agreed M #pon the ret#rn of 

noral conditions$ the vendor shall obtain a special power of attorney fro the said )C now in 'ndia and e8ec#te the tr#e and lawf#l transfer of the said land at the p#rchaser
that he intended to ratify the contract whatever the facts ay be and ass#e responsibility fro the!".  The principal #st ratify the whole act or contract  The ratication #st not in6#re the third party$ i.e. it #st not s#b6ect the third party to daages or terinated his right or interest!H"

3: ?ECE))'T: An agency by necessity ay be created if the following three conditions are et+, 1. 't is ipossible for the agent to get the principal
A person cannot be bo#nd by a contract ade on his behalf witho#t his a#thority. Nowever$ if he by his words and cond#ct allows a third party to believe that the partic#lar person is his agent even when he is not$ and the third party relies on it to the detrient of the third party$ he will be estopped or precl#ded fro denying the e8istence of that person
A210CY I0 R1LATIO0 TO TRA91L I0D$STRI1S

 The law of agency is relevant to travel and hospitality ind#stries beca#se the relation between a travel agent and a c#stoer is based on agency. D#rtherore$ travel agents are agents of the hotels etc. 4sae as relationship between ban$ ban oOcer and client

Doley v Nill !1=" 9 E 1002 Fhen a baner receives oney fro his c#stoers as deposit$ the baner is a debtor and his c#stoers are creditors. In the other hand$ where a baner advances oney as a loan or other credit$ or e8tends baning facilities to his c#stoer$ the ban is the creditor and the c#stoer is the debtor. Fhen a c#stoer hires a safe deposit bo8 in which he eeps his val#ables$ the ban is the c#stoers agent. 3an Eployees as Agent for the 3an Fithin a ban$ eployees of the ban are agents for the ban. Th#s eployees who are so a#thorised ay act on behalf of the ban. The ban$ as eployer$ is vicario#sly liable for the torts coitted by its eployees in the co#rse of b#siness.

D$TI1S OF 4RI0CI4AL A0D A210T  The rights and d#ties of the principal and agent depend on the e8press or iplied ters of the contract of agency. Fhere there is no s#ch contract of  agency$ the rights and d#ties of an agent to his principal and vice versa are laid down in )ection 1= J 1H of the Contracts Act 1950 a )ection 1= J Agent
e )ection 1 J ight of principal when agent deals$ on his own acco#nt$ in b#siness of agency witho#t the principal f )ection 19 J Principalovernent IOcers Co Iperative No#sing )ociety 7td !19H" 1 B7@ 1=9  The appellant who was a director and secretary of the respondent cooperative society bo#ght land at the price of B 9==$000 on behalf of the respondent. The appellant new that the vendor had earlier paid B =5$000 for it b#t did not infor the respondent accordingly. 't t#rned o#t that the appellant had received B 122$000 as a bribe or secret prot fro the vendor. held+ The respondent co#ld recover either the bribe or the ao#nt of the act#al loss s#*ered by it as a res#lt of entering into the contract.

i.)ection 1H2 J Fhen agent
D$TY OF 4RI0CI4AL TO A210T  The d#ties of principal to agent is provided #nder section 1H5 J 1H )ection 1H5 J agent to be indenied against conse#ences of lawf#l acts )ection 1H , agent to be indenied against conse#ences of acts done in good faith

)ection 1HH J non liability of eployer of agent to do criinal act )ection 1H J copensation to agent for in6#ry ca#sed by principal
TH1 A$THORITY OF A0 A210T An agent
T1RMI0ATIO0 OF A210CY  )ection 15= J 1/ of Contract Act 1950 deal with the anner which an agent ay be terinated. A. TEB'?AT'I? 3: TNE ACT ID PAT:. Fhen both parties agree that the agency shall terinate$ the agency is terinated. The principal ay revoe the a#thority of the agent at any tie before it has been e8ercised to bind the principal. Fhen the agency is for an indenite period of tie$ the agent can terinate the agency by giving reasonable notice of terination to the principal , )ection 159. 3. TEB'?AT'I? 3: IPEAT'I? ID 7AF An agency ay be revoed by operation of law in any of the following circ#stances.+, i. Fhen the contract of agency has been perfored ii. pon the e8piry of the period 8ed in the contract iii. Leath of the principal or agent iv. Fhen the principal or agent becoe insane v. Fhen the principal or agent becoe insolvent vi. pon the happening of a event which renders the agency #nlawf#l.

!1" )ection 1/5 !2" )ection 1/H !/" )ection 1=0 and the ill#strations. !=" )ection 150 J atication ay be e8pressed or iplied in the cond#ct of  the person on whose behalf the acts are done. !5" )ection 1=9 CA 1950 !" )ection 151 Contract Act 1950 !H" )ection 15/ Contract Act 1950 !" )ection 1=2 Contract Act 1950 !9" )ection 1=2 Contract Act 1950

Qlien /Rlē(ə)n/  Noun A right to keep property belonging to another person until a debt is paid.

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