Creation of Agency & the Agent's Authority — KSLU Contract 2 Notes

Creation of Agency & the Agent’s Authority

An agent (S.182) is a person employed to do any act for another or to represent another in dealings with third persons; the person represented is the principal. The defining feature is the power to bind the principal to third parties. Agency may be created by express or implied agreement (S.187), by estoppel (holding out), by ratification (S.196), by operation of law, or by an agency of necessity (S.189).

flowchart TD
    A["AGENT'S AUTHORITY"]:::root
    A --> B["ACTUAL authority<br/>(express S.187 or implied)"]:::leaf
    A --> C["APPARENT / OSTENSIBLE<br/>(estoppel, holding out)"]:::leaf
    A --> D["AGENCY OF NECESSITY<br/>(S.189 — emergency)"]:::leaf
    A --> E["Authority in EMERGENCY<br/>to protect principal from loss"]:::leaf

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    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

Kind of Agent	Role
General agent	Acts for the principal in all matters of a trade or business
Special agent	Appointed for a single, specific transaction
Del credere agent	Guarantees the solvency of buyers for an extra commission
Mercantile / factor / broker	Deals in goods; factor has possession, broker merely negotiates
Sub-agent (S.191)	Appointed by, and under the control of, the original agent
Substituted agent (S.194-195)	Named by the agent but works directly for the principal

A sub-agent properly appointed binds the principal as regards third parties, but the agent remains responsible to the principal for the sub-agent’s acts (S.192); a substituted agent, by contrast, is the principal’s own agent. Ratification (S.196–200) lets a principal adopt an unauthorised act done on his behalf — it must be of the whole act, by a competent and disclosed principal, and cannot prejudice a third party’s vested rights.