[Law of Agency]

Key points The main ideas covered in this chapter can be summarised as follows: Law of agency An agent is a person who has the authority or power to act on behalf of another person, known as the principal. Questions of agency law often arise when an insurance intermediary makes a mistake or is generally careless in carrying out their duties. Agency may be created by agreement or consent, by ratification and by necessity. The principal of an insurance agent An insurance intermediary may, at different times, act on behalf of both the proposer/ insured and the insurer. Duties of an agent The duties of an agent are to obey the principal's instructions; to exercise proper care and skill; to perform duties personally; to act in good faith towards the principal and to account for monies received on behalf of the principal. An insurance intermediary must exercise a level of care and skill that is appropriate for the class of agent they represent. Imputed knowledge Under the law of agency, any knowledge which an agent possesses is imputed to the principal. This is of particular importance in relation to the duty of disclosure in non- consumer (business) insurance. The Insurance Act 2015 introduced a detailed section clarifying 'knowledge of insured'. Rights of an agent The rights of an agent are the right to remuneration and the right to indemnity. Authority of an agent . Agents can have different types of authority: - actual authority (express or implied); or - apparent or ostensibly authority. Contract made by an agent Contracts made by the agent with third parties can be for a disclosed or undisclosed principal Agencies can be terminated by agreement, performance, lapse of time, withdrawal of authority, renunciation by the agent, death of principal or agent, bankruptcy, insanity or frustration.EF Ltd is an estate agent offering various property-related services. EF Lid has lost substantial revenue after a large commercial client failed to pay for its professional services. EF Ltd has not been paid fees in respect of contracted estate management services from this commercial client. It has also not been paid the relevant fees for finding buyers for a number of the client's properties. Although not instructed to do so, EF Lid has found buyers for this client many times in the past and received payment without question. This client claims to be withholding the estate management fees due to poor service by EF Ltd. The client is also withholding fees based on the fact that EF Lid was not instructed to find buyers for their properties. (a) Identify, with justification, the legal issues arising from the client's failure to pay the estate management fees. (4) (b) Explain, with justification, the legal issues arising from EF Ltd finding buyers and not being paid the relevant fees. (6)