The principal assumes the liability if he ratifies the agreement either expressly or by implication, by taking the benefit. An agent is liable to a third party if he holds himself out as principal, or conceals his principal, or has a fictitious principal. An agent warrants the competency of his principal. A contract made by an agent subsequent to the death of his principal is a nullity. A state of war between the respective countries of the contracting parties suspends the contractual relationship. 112. QUESTIONS What is the relationship between agent and principal? Discuss the duties of each. What is the rule as to compensation and outlays made by the agent? What is a lien? What is the rule relating to instruction? Discuss skill of an agent. What do you understand by saying that an agent must make an accounting? What is the nature of the contract between the principal and the third party? Explain how principal may be bound when agent exceeds authority. What is the scope of the agent's authority? What is the rule in regard to an agent's torts? What is the rule of notice? What are the duties of public agents? What is the relationship of third party to principal? What is the nature of the relationship between the agent and the third party? When is the agent bound? When is neither party bound? State the rule in regard to the liability of public agents. : 113. Introduction. Mutuality is a predominating factor in the formation of the agency contract. The needs of business created the necessity. The contract affects but the agent and principal, and since this contract is formed as a result of an offer and an acceptance it may be cancelled by a like process. If the agency is for a single act, or a certain time, the accomplishing of the act or the expiration of the time works a dissolution of the agency so far as the parties are concerned. 114. Revocation. The contract of agency is of a confidential nature, and since the principal has conferred the authority on the agent he should have the power to annul the appointment. This is true even though there may be an agreement to the contrary. The principal has the power to sever, at all times, the relationship although he may not have the right. The agent's authority to act may be revoked by express statement to that effect, or it may be by implication where the principal acts in such a way that it is impossible for the agent to act, as when an agent is appointed to rent certain property belonging to the principal, who sells same before the agent can act. 115. Notice. So far as the principal and agent are concerned, the notice of revocation to the agent, either express or implied, terminates the agency, but in order to fully protect himself the principal is obliged to give notice to all third parties with whom the agent has transacted business or who have knowledge of the appointment. The nature of the notice would depend upon conditions. If the third party received actual notice, it would be sufficient. If he has information that would be investigated by a person of ordinary caution, and who does investigate and thereby receives notice, it is sufficient. Notice is generally effected by a written communication being mailed to all customers who have had dealings with the agent and a notice by publication to all others. 116. Liabilities. While, undoubtedly, the principal has the power to discharge, he is bound to respect the contracts with the agent or be held in damages. 1. Coupled With an Interest. An agent who possesses an interest in the agency cannot be discharged by the act of the principal. This must not be confounded with a percentage of profit that the agent may receive as the result of the agency contract, which is not sufficient to prevent his discharge. An agent is appointed to sell certain property, deduct commissions, and place the proceeds to the credit of the principal on a debt due the agent. The agency in which the agent has an interest cannot be terminated by the principal. 117. Remuneration. If one party has the right or power to terminate a contract, certainly equity and justice demand the same right for the other party. This is generally so. The remuneration may be by express agreement or may arise by implication. The principal in order to protect himself from subsequent acts of the agent must notify third parties. If an agency is for an indeterminable period the agent has the power and right to terminate the contract at any time. If, however, the agency is to endure for a definite period, the remuneration may be by express agreement or may arise by implication. If the contract is for personal service of extraordinary skill and ability the agent may be enjoined from using his services elsewhere. 118. By Operation of Law. The relationship of agency may be terminated by operation of law in several ways, namely: death, insanity, bankruptcy, destruction of subject matter, marriage, war. 1. Death. The death of either party terminates the agency at that moment. Contracts made by an agent after the death of a principal, even though the death may not be known to either agent or third party, are of no force. 2. Insanity. Voidability is a consequence of a contract relationship wherein one party to the contract is insane. If the principal is insane, valid authority cannot be given; if the agent is insane, a termination of the agency results, as the agent does not possess the ability to follow instructions. 3, Bankruptcy. In case of bankruptcy of the principal his property is taken from him, his title vesting in a trustee for the benefit of his creditors. 4. Destruction of Subject Matter. If the subject matter of the agency should be destroyed, there is no reason for the continuance of the agency. If an agent is appointed to perform a certain act, as the selling of a horse, and the horse dies, or of a building, which is destroyed by fire, the agency terminates. If two agents are appointed to sell the same piece of property the sale by one dissolves the other contract of agency. 5. Marriage. The marriage of a female at common law would work a dissolution of an agency, as, if a principal, her property would be under certain control by another, her husband. 6. War. If the agent and principal are subjects of different countries, a state of war would suspend the contract of agency, at least during hostilities. The principal may at any time revoke the authority of the agent to act. Notice of revocation or remuneration should be sent to all third parties. An agency may be terminated by operation of law, for death, insanity, bankruptcy, destruction of subject matter, marriage, war. An agency coupled with an interest cannot be terminated by the principal. 120. QUESTIONS What is the principal's authority of revocation? Limitation? Explain notice necessary to terminate the agency. Explain rule in reference to liability of principal in case of revocation. What is the agent's power as to renunciation? What liability may follow? In what other ways may the agency be terminated? 121. DECISIONS BY THE COURTS 1. In S Mfg. Co. v. R, 132 U. S. 518, R was injured by carelessness of C, who was employed to sell machines and collect payments for them. In his contract he agreed that he would not hold himself out as an agent for the company and that the company was not responsible for his acts. Held, the company was nevertheless liable for the acts of C, who was both an agent and a servant. 2. In P v. B, 55 Ala. 435, plaintiff attempts to recover an interest in land conveyed while a minor, through power of attorney held by his father, to S, who in turn transferred to defendant. Held the transfer void and that defendant failed to show any defense to plaintiff's claim. 3. In D v. N, 42 B. Div. (C. A.) 661, action of plaintiff to recover for goods supplied to defendant's wife. The wife had been appointed agent. The defendant became insane. The insanity was not known to the |