CHAPTER XXII

THE CONTRACT OF AGENCY1

§ 126. Appointment

The appointment of an agent may be oral, written, or by usage. An agent can be legally appointed for most purposes by an oral or spoken contract. The objection to an oral contract is the difficulty of proving it, and the strong probability that there will be some misunderstanding as to the terms of the contract between the parties. For all ordinary purposes, an oral contract of agency is just as binding as a written contract, provided its terms can be proved.

Usually an agent is appointed in writing; either a formal contract is drawn up and signed by both parties, or a letter or a telegram is sent and the other party replies to it, in which case the letter or the telegram and the reply thereto would constitute the written contract.

When an agent is appointed to vote at a corporate meeting, his written appointment is called a "proxy," and is usually signed by the principal and by a witness. Some corporations require acknowledgment of the proxy before a notary public; but this is not usually necessary. (See Chapter CII, Forms 31-33.)

When an agent is appointed to sell land, or to perform any important act, or to conduct any important negotiations, he is given formal power of attorney under seal (see Form 28). A power of attorney is a particular kind of written contract of agency. Where land is to be deeded or a mortgage executed, the agent is called an attorney in fact and it is

1 For forms of agency contracts, see Chapter CII, Forms 26-33.

absolutely essential to have the formal power of attorney executed just as carefully as a deed, and acknowledged before a notary so that it can be filed in the registrar's office with the deed or the mortgage. (See § 130.)

. In many cases of agency, the agent is appointed to an office where he exercises certain powers without any formal specification of what he can do and what he cannot do. In such instances, the agent will be held to have all the powers usually attached to such an office. For instance, a ticket-seller for a railroad is an agent of the company and has certain wellknown powers; beyond these he cannot go.

An agent appointed to conduct a given business for his principal has authority to do all things incidental or essential to the performance of his duties as agent. If the duties of the agent involve the management of a mercantile business, and it is necessary to employ salesmen, the principal will be bound for the salaries whether he has given express authority to the agent to employ assistants or not.2

Notes:

I.

2.

3.

4.

An oral contract is hard to prove, and is liable to be misunderstood.

An agent should be appointed by a written contract signed by both parties.

An agent to sell or to mortgage land must be appointed by a sealed power of attorney executed and filed like a deed.

An agent conducting business for his principal has the usual powers of anyone doing such a business.

§ 127. Express Appointment

The express appointment of an agent requires a specific designation of the agent by the principal. Such an appoint

* Baldwin v. Garrett, 111 Ga. 876.

ment consists of a definite contract for the agent's services. Most agents are appointed in this way.

The express authority of an agent is that authority which the principal directly grants to him. This includes of necessity (whether the agency is general or special) all such powers as are necessary and proper as a means of effecting the purpose for which the agency was created.3

The apparent authority of an agent is that which the principal knowingly permits the agent to exercise, or which the agent exercises without objection from the principal.

§ 128. Implied Appointment

The appointment of an agent is implied when it is just to infer it from the circumstances. If A stands by and sees B sell goods which belong to A and makes no protest, but acquiesces, A will be held to have appointed B his agent and will be bound by B's transactions. This is also called "agency by estoppel," because A will be estopped from denying the fact of B's agency after acquiescing in B's acts as agent and permitting a third person to so regard him.

When in the usual course of the business of a corporation an officer has been allowed, in his official capacity, to manage its affairs or to make certain contracts, his authority to represent the corporation will be inferred from the manner in which he has been permitted by the company to conduct its business.*

A wife, as the domestic manager of the house, may buy all things that are naturally and ordinarily necessary for the management of a household. She may contract for household supplies, domestic service, medical attendance, articles of clothing for the use of herself and children, suitable to the style in which the husband lives. It is implied that she is authorized to do this, and the husband is held responsible for

Dispatch Ptg. Co. v. Nat'l Bank, 109 Minn. 440.

Martin v. Webb, 110 U. S. 7.

the cost. She is not held to be authorized beyond this, unless expressly made the agent of the husband for some particular purpose, in the same manner in which he would appoint a stranger.

Notes:

I. An agent's authority should be expressed by a writ

2.

ten contract.

But an agent's authority may be implied from the conduct of his principal.

3. An agent placed in a position requiring authority has implied authority to do all things that are necessary.

§ 129. Ratification

Where one acts as the agent of another without authorization, his acts as agent may be ratified by the acquiescence of the principal or by the principal's taking the benefit of the agent's performance. It happens not infrequently that an agent, appointed for a definite set of duties, sees opportunity to do something for which he has no authority, but which will benefit his principal. Sometimes a person volunteers to act as agent for a principal whom he has not had opportunity to consult. After an unauthorized act of this kind has been done, the principal may (when he learns of it):

I. Refuse to be bound by it.

2. Expressly ratify the act.

3. Impliedly ratify it, by taking the benefit of the action.

If the principal ratifies the unauthorized action, he must ratify it as a whole. He may not ratify part of the agent's act and refuse to recognize the other part.

Ratification, to be effectual, must be made with full knowledge of everything which has any material bearing on the transaction.

Notes:

I. Ratification has the same effect as an original au

2.

thorization.

Ratification may be express, or by acquiescence.

3. Taking the benefit of an unauthorized act (with knowledge of the circumstances) is a ratification of the act.

§ 130. Sealed Contracts

An agent, in order to execute a deed or sealed instrument, must be appointed by an instrument of like formality.

For most purposes an agent may be appointed by a simple written agreement or by word of mouth; and sometimes his authority may be implied from circumstances. When, however, land is to be conveyed or mortgaged, or some important instrument like a deed or a mortgage which is to be recorded in some office of public registry is to be executed, it must be done by the principal himself or by an agent appointed by power of attorney executed with all the formalities of a deed or instrument for record, which must be filed in the same office of public registry as the deed itself. An agent appointed by a power of attorney is called an "attorney in fact."

The most important feature of a deed is the fact that it is executed under seal. It is usually witnessed and is then acknowledged before a notary public. The power of attorney requires the formal execution and the same acknowledgment that a deed would require. The doctrine may be summarized thus: An agent to contract under seal must be appointed under seal.

Authority under seal is necessary to enable an agent to bind his principal by a deed or other instrument under seal. It is a technical, but a thoroughly settled rule of the common law, that an agent cannot bind a principal by a deed of con