Agency Relationships in Business
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fatih.serbest@yildiz.edu.tr
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Principal
Agent
Third party
Principal appoints the
agent to act on their
behalf as a fiduciary
Agent acts on behalf of
a principal with respect
to a third party
Binding contract
G
e
n
e
r
a
l
a
g
e
n
t
•
Can act for the principal in relation to their
general business
S
p
e
c
i
a
l
a
g
e
n
t
•
Acts for the principal with respect to a specific
transaction
F
a
c
t
o
r
•
Sells goods in their own name on behalf of the
principal and has control of the goods
•
Often referred to now as a mercantile agent and
defined in s. 1(1) of the Factors Act 1889
–
“having in the customary course of his business as
such agent authority either to sell goods, or to
consign goods for the purpose of sale, or to buy
goods, or to raise money on the security of goods”
B
r
o
k
e
r
•
Similar to a factor but a broker does not usually
control the goods and will sell them in their own
name
–
Baring v Corrie
(1818)
D
e
l
c
r
e
d
e
r
e
a
g
e
n
t
•
Also acts a guarantor for the obligations of a third
party
–
E.g. will pay if the third party doesn’t
C
o
n
f
i
r
m
i
n
g
h
o
u
s
e
•
Acts as an agent in relation to international trade
C
o
m
m
e
r
c
i
a
l
a
g
e
n
t
•
Discovers new customers for the principal and
may also help to effect transactions between
them
C
o
m
m
e
r
c
i
a
l
a
g
e
n
t
•
Defined in regulation 2(1) of the Commercial
Agents (Council Directive) Regulations 1993
–
“a
self-employed
intermediary who has
continuing
authority
to
negotiate
the
sale or purchase of
goods
on behalf of another person (the ‘principal’),
or to
negotiate and conclude
the sale or purchase
of goods on behalf of and in the name of that
principal”
‘
S
e
l
f
-
e
m
p
l
o
y
e
d
’
•
Should be an independent contractor and not
employed by the principal or anyone else
‘
C
o
n
t
i
n
u
i
n
g
a
u
t
h
o
r
i
t
y
’
•
The regulations allow for fixed-term contracts but
the definition does not include agents engaged
for one off transactions
–
Poseidon Chartering v Marianne Zeeschip VOF
[2007]
‘
N
e
g
o
t
i
a
t
e
’
•
The agent does not have to actually enter into
contracts
•
Given a broad definition
–
PJ Pipe & Valve Co Ltd v Audco India
[2005]
•
Must be on behalf of the principal
–
AMB Imballaggi v Pacflex Ltd
[1999]
‘
S
a
l
e
o
r
p
u
r
c
h
a
s
e
o
f
g
o
o
d
s
’
•
‘Goods’ is a given a wide definition but excludes
the provision of services
‘
N
e
g
o
t
i
a
t
e
a
n
d
c
o
n
c
l
u
d
e
’
•
Agents who do conclude contracts must do so in
the name of the principal
•
Even if there is a principal, if that fact is not
disclosed then that will not count
–
However where the existence of a principal is
disclose (but not their identity) then that will count
E
x
c
l
u
s
i
o
n
s
•
Regulation 2(1) provides three exclusions:
(i) a person who, in his capacity as an officer
of a company or association, is empowered
to enter into commitments binding on that
company or association;
(ii) a partner who is lawfully authorised to
enter into commitments binding on his
partners;
(iii) a person who acts as an insolvency
practitioner
E
x
c
l
u
s
i
o
n
s
•
Regulation 2(2) sets out three further exceptions:
(a) commercial agents whose activities are
unpaid;
(b) commercial agents when they operate on
commodity exchanges or in the commodity
market;
(c) the Crown Agents for Overseas Governments
and Administrations
E
x
c
l
u
s
i
o
n
s
•
Regulation 2(4) excludes those whose activities
as a commercial agent is secondary
–
“those who are primarily engaged for some other
purpose but who incidentally provide [the services
of a commercial agent]”
Agency relationships in business involve principals appointing agents to act on their behalf. There are different types of agents, such as general agents, special agents, factors, brokers, del credere agents, confirming houses, and commercial agents. Each type of agent has specific roles and responsibilities in conducting business transactions.
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Presentation Transcript
Introduction to Agency Dr. Fatih Serbest 0545 600 22 18 fatih.serbest@yildiz.edu.tr
The agency relationship Principal Principal appoints the agent to act on their behalf as a fiduciary Binding contract Agent Agent acts on behalf of a principal with respect to a third party Third party
General agent Can act for the principal in relation to their general business
Special agent Acts for the principal with respect to a specific transaction
Factor Sells goods in their own name on behalf of the principal and has control of the goods Often referred to now as a mercantile agent and defined in s. 1(1) of the Factors Act 1889 having in the customary course of his business as such agent authority either to sell goods, or to consign goods for the purpose of sale, or to buy goods, or to raise money on the security of goods
Broker Similar to a factor but a broker does not usually control the goods and will sell them in their own name Baring v Corrie (1818)
Del credere agent Also acts a guarantor for the obligations of a third party E.g. will pay if the third party doesn t
Confirming house Acts as an agent in relation to international trade
Commercial agent Discovers new customers for the principal and may also help to effect transactions between them
Commercial agent Defined in regulation 2(1) of the Commercial Agents (Council Directive) Regulations 1993 a self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of another person (the principal ), or to negotiate and conclude the sale or purchase of goods on behalf of and in the name of that principal
Self-employed Should be an independent contractor and not employed by the principal or anyone else
Continuing authority The regulations allow for fixed-term contracts but the definition does not include agents engaged for one off transactions Poseidon Chartering v Marianne Zeeschip VOF [2007]
Negotiate The agent does not have to actually enter into contracts Given a broad definition PJ Pipe & Valve Co Ltd v Audco India [2005] Must be on behalf of the principal AMB Imballaggi v Pacflex Ltd [1999]
Sale or purchase of goods Goods is a given a wide definition but excludes the provision of services
Negotiate and conclude Agents who do conclude contracts must do so in the name of the principal Even if there is a principal, if that fact is not disclosed then that will not count However where the existence of a principal is disclose (but not their identity) then that will count
Exclusions Regulation 2(1) provides three exclusions: (i) a person who, in his capacity as an officer of a company or association, is empowered to enter into commitments binding on that company or association; (ii) a partner who is lawfully authorised to enter into commitments binding on his partners; (iii) a person who acts as an insolvency practitioner
Exclusions Regulation 2(2) sets out three further exceptions: (a) commercial agents whose activities are unpaid; (b) commercial agents when they operate on commodity exchanges or in the commodity market; (c) the Crown Agents for Overseas Governments and Administrations
Exclusions Regulation 2(4) excludes those whose activities as a commercial agent is secondary those who are primarily engaged for some other purpose but who incidentally provide [the services of a commercial agent]
