Sunday, August 1, 2021

Agency Authority Derived from the Law

In most cases, the source of agency is authority of an agent derived from the agreement of the parties, that is, a bilateral agreement between a principal and an agent. Apart from this usual source, agency relationship could emanate from the operation of the law, that is, agency authority is derived from the law itself. Consequently, the consent of the principal has no role in creating the agency relationship and hence it is beyond the principal's consent that agent – principal relationship comes into existence.


This usually happens where a person to be represented is not in a poison to appoint his agent for one thing or another. Moreover, it is due to the necessity to safeguard the interest of the person to be represented. Further, agency is created by operation of the law, as opposed to agency created as a result of agreement of the principal and agent; there is already a single contract, that is, a contract which is concluded by the representative, on behalf of the one represented, with the third party. Hence, the internal relationship between the representative and the represented, in this case, is legal and not contractual since it is created by the operation to the law. 


In spite of the legal relation created between the representative and the represented, the rights and duties arising there from are governed by the provision pertaining to agency contract once the law has established the relation. 

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