Agency CASES
In English law, agency refers to a legal relationship where one party (the agent) is authorised to act on behalf of another (the principal), creating legal obligations between the principal and third parties.
Definition and principles
Agency arises when the agent acts with authority—express, implied, or apparent—to affect the principal’s legal position. The principle from Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd (1915) emphasises that an agent creates contractual obligations directly between the principal and third parties, not between the agent and third parties.
Authority of agents
Agents act within specific limits of authority: express authority is explicitly granted; implied authority arises from the nature of their role or conduct; apparent (ostensible) authority occurs when the principal’s actions reasonably suggest authority to third parties.
Duties and obligations
Agents owe fiduciary duties, including loyalty, care, and transparency, acting in the principal’s best interests. Principals must indemnify agents against liabilities incurred while acting lawfully within their authority.
Liability and relationships
Typically, the principal, not the agent, is liable for contracts entered into by the agent within their authority. However, agents acting outside their authority or without disclosure of agency may incur personal liability.
Termination of agency
Agency relationships terminate by mutual agreement, completion of the agreed purpose, revocation by the principal, renunciation by the agent, death, bankruptcy, or mental incapacity of either party.
Criticism and contemporary application
Critics argue agency principles can be overly rigid, occasionally mismatching modern commercial realities. Courts balance traditional rules with evolving business practices.
Home » Agency
Stevedores negligently damaged cargo. They sought to rely on a liability limitation clause in the bill of lading between the cargo owner and carrier. The House of Lords held they could not, as they were not a party to the contract. Facts Midland Silicones Ltd (the respondents/cargo owners) were the consignees of a drum of chemicals shipped from New York to London. The contract of carriage was made with the United States Lines (the carriers) and was contained in a bill of lading. This bill of lading included a clause limiting the liability of the carrier to $500 per package.
A customer signed a hire-purchase offer for a car, but returned it to the dealer before the finance company accepted. The car was then stolen and damaged. The court held no contract existed as the offer was revoked or, alternatively, was subject to an implied condition that the car remain in the same state. Facts On 16th March 1961, the defendant, Mr Stimson, wished to acquire a car on hire-purchase terms. He saw the car at the premises of a dealer, Stanmore Motor Co. He signed a hire-purchase agreement form provided by the dealer. This form, which was an agreement
Stevedores negligently damaged cargo while unloading. A bill of lading, to which they were not a party, contained an exemption clause extending protection to them. The Privy Council held the stevedores could rely on the clause, creating a binding contract through their performance. Facts A valuable drilling machine was shipped from Liverpool to Wellington, New Zealand, under a bill of lading issued by the carrier. The contract of carriage, evidenced by the bill of lading, was between the shipper (the consignor) and the carrier. The bill of lading contained Clause 1, a ‘Himalaya Clause’, which sought to extend the benefit
Established the doctrine of privity of contract.
![Dunlop tyres as in Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847](https://www.lawcases.net/wp-content/uploads/2025/04/dunlop-tyres-selfridges.png)
