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In the context of the law of agency, an agent will not be liable for a contract in which of the following situations?
Where the
– agent’s authority has been terminated by the principal but the third party is not aware of that termination
-agent intends to take the benefit of the contract for himself but fails to disclose that he is an agent
-agent fails to disclose that he acts as an agent
-agent acts on his own behalf but does identify that he is an agent
This question is on your quiz and the answer is D but why not A? It’s written in your notes that revocation is not effective until communicated to the third party. So the right option should be D as per that.
Hi
Good question! However, let’s follow the transaction through.
The agent (A) enters into a contract with a third party (TP) and obtains benefit from that contract.
A then refuses to pay TP so TP chases the Principal (P).
P says ‘Sorry, but A’s authority was terminated before he entered the contract’
TP says ‘I didn’t know that so, so far as I am concerned, you are primarily liable’
Agreed, P has to pay TP.
But is P going to sit back and say to himself ‘Oh dear. Maybe I should have told everyone (in the World?) that A is no longer acting with my authority’
Of course, P will regret not having taken the necessary steps to prevent such a situation arising
BUT surely P is now going to pursue A to recover the money that P has just had to pay out to TP
And A IS therefore liable
OK?
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