THE RELATIONSHIP OF PRINCIPAL AND AGENT
| Published date | 01 January 1954 |
| Date | 01 January 1954 |
| DOI | http://doi.org/10.1111/j.1468-2230.1954.tb02143.x |
THE
RELATIONSHIP
OF
PRINCIPAL
AND AGENT
THE law governing the relations between principals and their agents
has been neglected by most of the writers who have analysed and
restated English law, and, unfortunately, this subject has not
been illuminated by any comprehensive review by the English
judges in an appellate court. The incidents and the character
of
the legal relatior of principal and agent have long been obscured
by the use of the fictions that principal and agent are one person
and
qui
facit
per
alium
facit
per
se
in the commentaries on agency
law. The majority of the text-writers who ’have attempted
to
clarify this subject have been content to state the law of the
relation in the form of a catalogue of the main incidents-the
rights, duties, powers and liabilities of the parties
inter se.’
As
to the character of the relation,
it
has been variously described as
a special kind of contract,2 a fiduciary relati~n,~ and a grant
of
a~thority.~ In this paper
it
is proposed to examine afresh the main
rules of English law
’
governing the relation of principal and agent,
to determine the essential element in this relation, and to restate
the incidents of the relation in terms of this essential element.
I.
AGENCY
AND
CONTRACT
A
view as to the nature of the relation
of
principal and agent which
is still widely held is that it is essentially contractual.e
It
has been
1
Powell,
Law
of
Agency
(1952), pp. 238-301; Hanbury,
Principles
of
Agency
(1952), pp. 48-84;
Bowstead on Agency,
11th ed., arts. 43-80; Wilshere,
Outline
of
the
Law
of
Agency,
pp. 34-59; Halsbury’s
Laws
of
England,
3rd
ed., Vol.
I,
pp. 181-207;
Chitty on Contracts,
20th ed., pp. 1088-1097;
Anson on Contracts,
20th ed., pp. 395401.
2
e.g.,
Pollock
on
Contract,
13th ed., p. 46.
3
e.g.,
Halsbury’s
Laws
of
England,
3rd ed., Vol.
I,
p.
182.
4
e.g.,
Salmond and Winfield,
Law
of
Contracts,
p. 340.
5
The law governing the relation
of
principal and agent in American and
Canadian jurisdictions has been thoroughly examined by American and
Canadian writers. The following are the leading contributions on this
subject :-Sesvey,
‘‘
The Rationale
of
Agency,” 29 Yale
L.J.
859; American
T~aw Inst,itute’s
Restatement
of
the
Lain
of
Agency
(1933).
$5
12-14, 376-528;
Mechem,
Law
of
Agency,
2n2 cd.,
$5
25-78, 1188-1353, 1507-1705; Williston,
Law
of
Contructs,
revised ed.,
$$
274, 1012-1030A; Falconbridge,
“
Law
of
Agency,” 17 Chn.Rar Rev. 248; Abbott,
‘‘
Of
the Nature
of
Agency,”
9
Ham.
TAR.
507;
Story on .4guncy,
7th ed. (1869),
$5
1-4, 182-217, 323-390. These
writers have based their conclusions for the most part on caaes decided in
.4merican and Canadian courts. However, the materials on which this paper
is based are exclusively cases decided in the English courts.
6
Cheshire omd
Pifoot,
Law
of
Contract,
3rd ed.,
p.
373:
Pollock
on
Contract,
13th ed., p.
46;
Chitty on Contracts,
20th ed., p. 1088; Salmond and Winfield,
I,aw
of
Contracts,
p. 340; Halsbury’s
Laws
of
England,
3rd ed., Vol.
I,
p.
181:
cf.
Mechrin,
Law
of
Agency,
2nd ed..
$5
3%4.
24
JAN.
1954
RELATIONSHIP
OF
PRINCIPAL AND AGENT
25
assumed that the relation is created only when there exists
a
contract between the parties, and that the many well-known
incidents of agency are express
or
implied terms in such a contract.
Many lawyers subscribed to this view in the nineteenth century,
and their assumption that the relation was contractual may have
been based on no sounder foundation than the fact that, before
the Common Law Procedure Act, the normal remedies at common
law for the enforcement of duties between principal and agent
were the various species of
assumpsit.
In the late nineteenth and
early twentieth centuries, when
it
was fashionable to press all
species of civil liability at common law into either the category of
contract
or
tort,
it
is understandable that the agency relation
should have been classed as contractual rather than tortious, as in
many particulars
it
has an affinity with contract. An agency
is
usually founded on an agreement between the principal and agent.
Consideration, sufficient to convert this agreement into a contract
binding each party, can be found in most cases. Besides, an agency
is
not infrequently constituted in writing under seal, when an agent
is
appointed by power of attorney. Further, in a great many
instances, breach of agency duties by either party will give rise to
liability for damages for breach of contract.
Although there are undoubtedly these points in common between
most agencies and contracts it does not follow that every agency is
a contract. A close examination of the law governing the relation
between principal and agent reveals several points of divergence.
For instance, while
it
is axiomatic that a simple contractual relation
rests upon agreement between the parties to specific terms, never-
theless the relation of agency may exist between
P
and
A
in respect
of a particular enterprise upon which
P
and A have never agreed,
as in the case where A, a carrier of goods belonging to
P,
acts as
P's
agent without his authority in circumstances amounting
to
commercial necessity.' Again, consideration still remains a cardinal
necessity in the formation of a simple contract under English law
;
yet in cases where A has acted gratuitously as the agent of
P,
and
it
is impossibIe to find consideration on P's part without resort to
sophistries, the courts have not hesitated to recognise the relation
of principal and agent as existing between
P
and
A
to attach to
A
normal agency duties.8 Further, although an agreement between
two persons which is collateral to an illegal transaction is tainted
with illegality and does not constitute a valid contract, there
is
authority for the proposition that when
P
employs
A
as agent to
effect an illegal transaction and
A
receives property under that
7
e.g., The Argos (Cargo er), Gaudef
V.
Brown
(1873)
L.R.
5
P.C.
134;
Great
Northern
Ry.
v.
Swafield
(1874)
L.R.
9
Ex.
132.
8
WiZkinson
V.
Coverdale
(1793)
1
Esp.
75;
Wallace
V.
TcZZfair,
unreported
bnt
cited in the last-mentioned report
;
Massey
v.
Banner
(lR'20)
1
Jac.
&
W.
241
;
Donaldson
v.
Haldane
(1840)
7
C1.
&
Fin.
762;
Turnbull
V.
Garden
(1860)
9
Bar
RP~.
219.
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