Distribution of this document is illegal
Commercial Transactions
Key
Red = cases
Blue = topic headings
Highlighted blue = relevant topic a case falls under
Agency
Introduction
- the performance of a juristic act by one person for another which creates, alters or extinguishes
a legal relationship for the person
- Juristic act = an act to which the law attaches legal consequences
- In some cases, representation is essential: for example, a legal entity cannot act in its own name
and needs a representative
- Representative = agent
- The person whom an agent represents = principal
- No contractual nexus arises between the agent and the third party
- Agency is not a contract, it is a mechanism
Agent distinguished from other parties
- Mandatary = a person who is contractually obliged to carry out a particular task for another.
Mandatary is not an agent in the legal sense eg. an estate agent
Kaya Borkowski
, Distribution of this document is illegal
- Mandate involves two parties while agency involves 3 (principal, agent, third party)
- In a mandate, the rights and obligations are created between party 1 and party 2 while in agency
- Messenger = task is to pass on information. Does not conclude juristic act
- adiectus solutionis causa = person to whom a debtor is obliged to make a payment in terms of
his contract with the creditor. In receiving payment, an adiectus acts in his personal capacity and
not on behalf of the creditor
- State official charged with performing juristic act = not an agent but rather an executive of the
law
Note ⭐
- Only a person with capacity to perform juristic acts can be a principal, but a person with no or
limited capacity to perform juristic acts may be represented by an agent. Eg. a minor may be
represented by his guardian
- Capacity to act as agent must not be confused with capacity to perform juristic acts
The requirements for representation
- The principal must exist
- The agent must have capacity to act as an agent
- It must be clear from the circumstances, that the agent is acting in a representative capacity and
not in his personal capacity.
- The principal need not be named or identified (Marais v Perks)
The two elements of agency
- A contract of mandate
- A bilateral contract in terms of which the agent/mandatory undertakes to perform a service for the
principal
- The contract of mandate is sometimes referred to as a ‘contract of agency’, but representation
and mandate are separate concepts and should not be confused.
- Mandator = gives instructions
- Mandatory = performs instructions
Kaya Borkowski
, Distribution of this document is illegal
- Authority
- A principal may unilaterally confer the authority on an agent to perform acts on her behalf
- Authority is a unilateral juristic act in terms of which the principal manifests its intention to the
agent that they may conclude a juristic act on their behalf
- Unilateral means it is not an agreement, it is not a contract
- Cases relevant for authority: Natal Bank; Firs Investment; Smit v Origize
Forms of authority
Actual authority
- Express authority (either in words or in writing eg. power of attorney)
- Implied (usually where a person’s role tacitly confers authority eg. In a company or the guardian
of a child. It is neither written or spoken)
- Ostensible authority (Makate)
- NB: implied authority, like express authority, is ACTUAL authority.
Agency by estoppel (not actual authority)
- Where an agent has both authority and mandate:
- Agent contracts with a 3P then drops out of the picture then the principal is now bound. This is
the attribution rule
Who can be an agent?
- Anyone with the capacity to perform juristic acts. Limited capacity will suffice.
- Dreyer v Sonop Bpk 1951 (2) SA 392 (O)
Who can be a principal?
- Anyone with the capacity to perform juristic acts.
- minor needs assistance of parent to authorise an agent to contract on her behalf
- Principal must exist but there is an exception: S 21 of 2008 Companies Act:
Kaya Borkowski
, Distribution of this document is illegal
Termination of authority:
- Source of authority ceases to exist
- Period of authority lapses
- Act authorised is performed
- Principal dies/ is declared insolvent etc
- Principal revokes authority
- Agent is declared not of sound mind (but note insolvency of agent is acceptable because you still
need to keep a job “as a broke person”)
- Agent renounces her agency
Irrevocable authority
- General rule: conferral of authority is a unilateral juristic act and thus generally revocable (can be
taken back) by the principal.
- Can authority ever be irrevocable? EG principal undertakes in a contract that she will not revoke
the agent's authority (perhaps within a specified period)? Yes, it can be irrevocable (meaning it
cannot be taken back)
- There are instances where authority is irrevocable, an exception to the general rule. Natal Bank
tells us that when giving authority for security, it is irrevocable for the time that the debt is
outstanding. From the reading of the judgement, even if you do not sign an irrevocable power of
attorney, the law still applies and it will be irrevocable
- If can always revoke authority then could lead to abuse of power
Fiduciary Duties of the agent/mandatory
- Impose FD of agent. The agent’s duties are:
- To carry out the mandate
- Not to exceed terms of mandate
- To perform mandate personally
- To act with reasonable care and skill
- To act in good faith
- Not to make a secret profit (Robinson)
- To render accounts (both of facts and financial affairs)
- To account to mandator for his areas of responsibility under mandate.
Kaya Borkowski
Commercial Transactions
Key
Red = cases
Blue = topic headings
Highlighted blue = relevant topic a case falls under
Agency
Introduction
- the performance of a juristic act by one person for another which creates, alters or extinguishes
a legal relationship for the person
- Juristic act = an act to which the law attaches legal consequences
- In some cases, representation is essential: for example, a legal entity cannot act in its own name
and needs a representative
- Representative = agent
- The person whom an agent represents = principal
- No contractual nexus arises between the agent and the third party
- Agency is not a contract, it is a mechanism
Agent distinguished from other parties
- Mandatary = a person who is contractually obliged to carry out a particular task for another.
Mandatary is not an agent in the legal sense eg. an estate agent
Kaya Borkowski
, Distribution of this document is illegal
- Mandate involves two parties while agency involves 3 (principal, agent, third party)
- In a mandate, the rights and obligations are created between party 1 and party 2 while in agency
- Messenger = task is to pass on information. Does not conclude juristic act
- adiectus solutionis causa = person to whom a debtor is obliged to make a payment in terms of
his contract with the creditor. In receiving payment, an adiectus acts in his personal capacity and
not on behalf of the creditor
- State official charged with performing juristic act = not an agent but rather an executive of the
law
Note ⭐
- Only a person with capacity to perform juristic acts can be a principal, but a person with no or
limited capacity to perform juristic acts may be represented by an agent. Eg. a minor may be
represented by his guardian
- Capacity to act as agent must not be confused with capacity to perform juristic acts
The requirements for representation
- The principal must exist
- The agent must have capacity to act as an agent
- It must be clear from the circumstances, that the agent is acting in a representative capacity and
not in his personal capacity.
- The principal need not be named or identified (Marais v Perks)
The two elements of agency
- A contract of mandate
- A bilateral contract in terms of which the agent/mandatory undertakes to perform a service for the
principal
- The contract of mandate is sometimes referred to as a ‘contract of agency’, but representation
and mandate are separate concepts and should not be confused.
- Mandator = gives instructions
- Mandatory = performs instructions
Kaya Borkowski
, Distribution of this document is illegal
- Authority
- A principal may unilaterally confer the authority on an agent to perform acts on her behalf
- Authority is a unilateral juristic act in terms of which the principal manifests its intention to the
agent that they may conclude a juristic act on their behalf
- Unilateral means it is not an agreement, it is not a contract
- Cases relevant for authority: Natal Bank; Firs Investment; Smit v Origize
Forms of authority
Actual authority
- Express authority (either in words or in writing eg. power of attorney)
- Implied (usually where a person’s role tacitly confers authority eg. In a company or the guardian
of a child. It is neither written or spoken)
- Ostensible authority (Makate)
- NB: implied authority, like express authority, is ACTUAL authority.
Agency by estoppel (not actual authority)
- Where an agent has both authority and mandate:
- Agent contracts with a 3P then drops out of the picture then the principal is now bound. This is
the attribution rule
Who can be an agent?
- Anyone with the capacity to perform juristic acts. Limited capacity will suffice.
- Dreyer v Sonop Bpk 1951 (2) SA 392 (O)
Who can be a principal?
- Anyone with the capacity to perform juristic acts.
- minor needs assistance of parent to authorise an agent to contract on her behalf
- Principal must exist but there is an exception: S 21 of 2008 Companies Act:
Kaya Borkowski
, Distribution of this document is illegal
Termination of authority:
- Source of authority ceases to exist
- Period of authority lapses
- Act authorised is performed
- Principal dies/ is declared insolvent etc
- Principal revokes authority
- Agent is declared not of sound mind (but note insolvency of agent is acceptable because you still
need to keep a job “as a broke person”)
- Agent renounces her agency
Irrevocable authority
- General rule: conferral of authority is a unilateral juristic act and thus generally revocable (can be
taken back) by the principal.
- Can authority ever be irrevocable? EG principal undertakes in a contract that she will not revoke
the agent's authority (perhaps within a specified period)? Yes, it can be irrevocable (meaning it
cannot be taken back)
- There are instances where authority is irrevocable, an exception to the general rule. Natal Bank
tells us that when giving authority for security, it is irrevocable for the time that the debt is
outstanding. From the reading of the judgement, even if you do not sign an irrevocable power of
attorney, the law still applies and it will be irrevocable
- If can always revoke authority then could lead to abuse of power
Fiduciary Duties of the agent/mandatory
- Impose FD of agent. The agent’s duties are:
- To carry out the mandate
- Not to exceed terms of mandate
- To perform mandate personally
- To act with reasonable care and skill
- To act in good faith
- Not to make a secret profit (Robinson)
- To render accounts (both of facts and financial affairs)
- To account to mandator for his areas of responsibility under mandate.
Kaya Borkowski
