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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
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- 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
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- 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:
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