Enumerate the five methods of creating agency

Agency may be created by:

  1. Express Appointment. This type of agency will arise by express appointment of an agent, he may be appointed verbally even if he is employed to make a contract on behalf of his principal which must be by law in writing or evidenced in writing. However, where an agent is appointed to execute a deed on behalf of his principal, then his appointment must be by deed. This is known as ‘power of attorney’.
  2. Agency by EstoppeL Whereas an agency can in general arise by the will of the principal, he may nevertheless so conducts himself leading another to believe that someone is his agent, he is then stopped from denying the fact. For example, if a person allows another to order goods on his behalf and always pays for them, then he will be estopped from denying the authority to a third person who relied on the appearance (Lloyd v Grace Smith & Co. 1912).
  3. Agency by Cohabitation. Where a man and his wife (or mistress) are living together, the wife is presumed to be husband’s agent to pledge his credit for the purchase of necessaries. The husabnd is, however, free to rebut the presumption in any of the following ways:
    • (a) that the wife was adequately provided with such necessaries, or the means with which to purchase them,
    • (b) that he (husband) had forbidden her to pledge his credit,
    • (c) that he had previously warned the trader not to given any credit to his wife,
    • (d) that he gave a public notice in the newspaper that he will not be responsible for his wife’s debts,
    • (e) that the wife’s order was excessive in quantity etc.
  4. Agency by Necessity. An authority may be conferred by law where an agent has acted by reason of a genuine emergency with a view of protecting his principal’s goods which are in danager of being perished, and it is not possible for him to obtain fresh instruction of his principal(GNR v Swaffield,1874).
  5. Agency by ratification. Where an agent has no authority to contract on beĀ¬half of a principal. But it is possible in such a situation for the principal to ratify the contract. The effect of ratification is to render the contract as binding on the principal as if the agent had been properly authorised at the time of entering into the contract.
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