When acting as an agent in a contract, it's important to understand you are being held responsible for managing an affair that's being transacted by others. Agents take on many different capacities. It all depends on the nature of their employment. An agent may be an attorney, a broker, a factor, a supercargo, and the like. Each of these examples comprises an agent.

An agent's authority is established by deed, in writing, by parol, by the act of their employment, from the capacity of the parties involved, or by the nature of the act. This makes an agent's appointment either express or implied.

What Is the Scope of an Agent's Authority?

An agent's authority may be general or specific. It may be contained to a single act or extend to every act in connection with their employment. This means an agent can either be bound by specific instructions or be left to use their own discretion.

An agent is duty-bound to the following actions:

  • To perform the action or actions undertaken.
  • To exercise the necessary care.
  • To render all accounts.

There may be a single agent or joint agents. Common law dictates that when several agents are involved and no authority has been given, all agents must come to an agreement when binding the principal.

This means that if the authority is given to three agents, two of them cannot execute it on their own. Decisions must be made by all or the one who was given authority.

However, if the authority is apparent, the principal can award power to others and an execution by two would be permitted. However, this rule only applies to private agencies. Public agencies allow the authority to be executed by a major.

Commercial transactions are different again. Typically, when there are numerous agents, each possesses whole power. For example, if you were dealing with the consignment of goods to two partners, each possesses whole power over the goods.

Who Can Become an Agent?

Very few people are exempt from becoming an agent or exercising the authority given to them by another. An agent does not have to be sui juris, or able to act in their own right, to act in the interest of others. In truth, infants, outlaws, aliens, and others who would normally be considered incompetent to handle such affairs, are all eligible to act as an agent.

However, if someone is considered to be incompatible, they will not be allowed to act as an agent. For example, you could not act as an agent for someone who is looking to buy goods from you.

What Are the Rights of an Agent?

An agent's rights stem from their obligations to the principals or third parties. Their rights against principals are as follows:

  1. To be properly compensated for their services, unless they were gratuitous. Compensation is usually referred to as a commission and is either regulated in an agreement or presumed by both parties.
  2. To be reimbursed for any expenses made on behalf of the agency, with interest.

If an agent has to enforce his entitlement to his commission or reimbursement, he now has a lien against the property. These rights arise in the creation of the contract or as a result of torts committed by the principal.

An agent's rights against a third party arise when the contract is put into writing and is understood to be a contract. For example, if a promissory note is given to an agent for the benefit of the principal, the money must be paid out to the agent.

When the agent contemplates the law, he or she becomes the contracting party. For example, if an agent sells the principal's products in his own name, he then becomes eligible to sue the buyer in his own name. The principal still has the right to sue, too.

When an agent is eligible to act as the principal, he becomes eligible to enforce the contract through action. For example, if an auctioneer sells products for someone else, he may create an action for the price simply because he is in possession of the product and has an interest in the goods.

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