. (a) How may agency arise by implication? (b) J was P’s agent and on P’s behalf made several contracts with T over period of some years. P later terminated J’s agency but failed to notify 7′. J continued to deal with T in his own name and on his own behalf, but became insolvent. T as a result suffered losses and now claims to be entitled to damages by way of compensation from P. Advise P as regards to his liability

(a) An agency by implication will arise where the principal places the agent in a position where it would be normal for the agent to contract on behalf of the principal although no express authority is conferred on him. For example, a person appointed as an estate agent may have implied authority to sign lease agreements on behalf of his principal although the latter has not specifically authorized him to do so.

The examples of agency by implication include (i) agency by estoppel,(ii) by cohabitation, and (iii) by necessity. These are all dealt with in answer to question 4,

(b) The facts given in this problem show that J acted as the authorized agent of P for some years. P terminated the agency but failed to notify this fact to the third party T, and that J continued to contract but in his own name and on his own behalf:

Here P has created an agency by implication by permitting J to act as his agent. He will therefore be estopped from denying the agency and will be liable to compensate T, unless he can show that T should have realized from the facts that the agency had come to an end.


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