CHAPTER XXIX, TERMINATION OF AGENCY 334. Introduction. The contract between an agent and his principal is formed as a result of an offer and an acceptance and it may be terminated by a like process. If the agency is for a certain time, the expiration of the time will terminate the agency so far as the immediate parties are concerned. 335. How terminated. An agent's power to bind his principal may be terminated or brought to an end in any one of the following ways: 1. Revocation by the principal. 2. Renunciation by the agent. 3. By lapse of time. 4. Completion or destruction of the subject-matter. 5. Insanity of principal or agent. 6. Death of principal or agent. 9. War. 336. Revocation. The time when and manner in which an agency may be terminated depends upon the nature of the agency itself. Rule: As the authority is conferred on the agent by the principal, and is to be executed for his own purpose and benefits, he has a right to determine or revoke the authority thus given to his agent at his own pleasure. The agent cannot, therefore, insist upon acting when the principal has withdrawn his confidence and no longer desires his aid. Rule: If the agent have an interest in the subject-matter, or has given a valuable consideration for the appointment, the principal cannot revoke. Suppose A authorized B to collect certain debts, and to reimburse himself out of the collection for money which B had paid for A. A cannot revoke the agency until B has collected a sufficient amount to satisfy his claim. 337. Renunciation. Rule: The agent may terminate the relation by renunciation. But if the agency were founded on a valuable consideration, or has been partially executed, the agent, by renunciation, will be liable for damages. A corporation employed A & Co., for a consideration of $1,000.00 to place their bonds upon the market. A & Co., finding the task more difficult than they expected, notified the corporation that they would no longer endeavor to carry out their contract. A & Co., are liable to the corporation for damages for their renunciation. By renunciation in law is meant an explicit disclaimer of a right or privilege. 338. By lapse of time. Rule: If an agent be appointed to do a particular act, or for a definite period of time, the relation of principal and agent terminates on the completion of the act or expiration of the time. A, who was about to depart on a voyage, appointed B to manage his affairs until he returned home. On the return of A the agency terminates by its own limitation. 339. Completion or destruction of subject-matter. Rule: When the sale is completed the agency has its natural termination. A & Co. appoint B to sell a cargo of bananas of a certain steamer which is expected to arrive in a few days. B cannot bind A & Co. in any other contracts. So, also, if the steamer were shipwrecked, and the cargo lost, the agency would be at an end, because of the destruction of the subjectmatter-the bananas. 340. Insanity. Rule: Insanity of the principal or agent will terminate the agency. In general, anything which incapacitates either of the parties from performing the duties incident to the agency will terminate it. 341. Death. As the agent receives his authority to act from his principal, the authority must necessarily cease at his (principal's) death, for "as a dead man can do nothing, so he can authorize nothing." 342. Power coupled with an interest. Rule: If the agent have an interest in the subject-matter of the agency, the death of the principal will not terminate the agency. For example, A lends money to B in consideration for which loan B gives A power of attorney to collect some debts due B in settlement for the loan. A's agency would then be coupled with such an interest as would continue it until completed, even though it be after B's death. When an agent has only an interest in the execution of the power, the agency will be revoked by the death of the principal. Thus, A gave a bond to B to be delivered to C after A's death. Held, that B could not deliver the bond to C, since the death of A revoked the agency. The death of an agent necessarily terminates the agency. 343. Bankruptcy of principal. Rule: When a principal becomes bankrupt he loses control of his property, and as he can no longer manage and control it, neither can one whom he has appointed to represent him. Bankruptcy is the state of a man whose business is stopped and broken up because he is insolvent and utterly incapable of carrying it on; therefore, bankruptcy terminates the agency. 344. War. It is the general law in the different states in this country that the existence of a state of war between the country of the principal and that of the agent terminates the agency. This is because trading is prohibited between two countries at war. 345. When revocation takes effect. Rule: A revocation (cancellation) becomes operative as to the agent from the time it is actually made known to him. But as to third persons dealing in good faith with one who was duly authorized to act as agent, the revocation will not affect the dealings of such persons until notice is given them. An action was brought by A against a wholesale house on a contract made by a drummer representing such house. The company claimed they were not responsible, because the contract was made subsequent to the discharge of the drummer. A claimed that he had received no notice whatever of the said discharge. The company must fulfill the contract, because a revocation becomes operative as to the agent from the time it is actually made known to him. QUESTIONS 1. In how many different ways may an agent's power to bind his principal be terminated? 2. Under what circumstances is it beyond the power of the principal to revoke the agent's authority? 3. What is meant by renunciation? 4. When will an agency terminate by a lapse of time? 5. What is a power coupled with an interest? 6. Why does bankruptcy terminate an agency? 7. What effect has war on an agency? 8. When does revocation of an agency take effect? CASES (GIVE REASONS FOR YOUR ANSWERS) 1. B had a piece of land to sell. He put the land in the hands of W to sell. He also gave F the agency to sell the land. W sold the land the next day. A few days later F found a purchaser for the land but B had already conveyed the land to the purchaser which W had procured for him. B gave F no notice that the land had been sold. F sued B for his commission. Is he entitled to recover? 2. A real estate broker was authorized to sell certain property for A. The broker found a purchaser who was ready to comply with all the terms of the sale. A, however, refused to sell. The sale not being consummated, is the broker entitled to his commission? 3. A appointed B as his agent while A was on a trip to Europe. B sold some goods for A after A's return to America. A refused to recognize the sale. Can the buyer force A to deliver the goods? 4. A engaged B to sell a cargo of hemp, which was on its way from Manila to San Francisco. Before B made the sale the cargo was lost at sea. Neither A nor B knew of the loss until after B had found a buyer. Is B entitled to a commission for making the sale? 5. B was lying at the point of death and unconscious. Some time previous B had given his note to L for $50.00. While B was unconscious L came to the house and persuaded B's wife to pay the note. It appeared that B's wife had been in the habit of transacting business for her husband, who had been in poor health for some time. B's administrator sued L for the money on the ground that B's wife had no authority to pay the note. Is the administrator entitled to recover the money? 6. A employed B to act as his agent in New York City in selling coal. After B had been in A's employ for six months A became insane and incapable of transacting any business. There was no specified term for the agency to continue. Were the contracts which B made after A's insanity valid? 7. A appointed B as his agent to buy wool. A did not have sufficient capital to make the business a success. B then invested $500.00 in the enterprise. A then discharged B without cause before the deal was completed. B went ahead and sold the wool as if he were still A's agent. Is the sale good? 8. K, a Russian, employed J, a Japanese, to buy a cargo of rice for K in Japan to be shipped to Russia. J purchased the rice but before he could ship it, war broke out between Russia and Japan. K refused to receive the rice. Was he justified in doing so? 9. A was engaged in buying goods for B in Europe. These goods were for the Christmas trade. Before A could ship the goods B was forced into bankruptcy. Can A sell the goods to another buyer? |