UNIT 7

  • WHAT IS AN AGENCY
  • NATURE AND CHARACTER OF AGENCY RELATIONSHIP
  • CLASSIFICATION OF AGENTS

WHAT IS AN AGENCY

Agency is a fiduciary relationship where one party, called the agent, acts on behalf of another party, known as the principal, in transactions with third parties. The agent is authorized to create legal relations between the principal and third parties. The legal framework governing agency relationships in Nigeria is primarily found in the common law, supplemented by statutory provisions.


NATURE AND CHARACTER OF AGENCY RELATIONSHIP

The Nigerian Law of Agency is largely governed by common law principles, but specific statutes like the Companies and Allied Matters Act (CAMA) also contain relevant provisions, particularly concerning corporate agents. See the case of Okoye v. Lagos State Government (1991) 6 NWLR (Pt. 199) 501 where the court elaborates on the authority of the agent and the binding nature of the agent’s actions on the principal and the case of Union Bank of Nigeria Ltd v. Ozigi (1994) 3 NWLR (Pt. 333) 385 where the court discusses the fiduciary duty of the agent to the principal. The agency relationship is characterized by the following features:

  1. Consent: This is where both the principal and the agent must consent to the relationship. This can be express (explicitly stated) or implied (inferred from the conduct of the parties).
  2. Authority: This is where the agent must have the authority to act on behalf of the principal. Authority can be actual (express or implied) or apparent (ostensible authority).
  3. Fiduciary Duty: This is where the agent owes a duty of loyalty and good faith to the principal. This includes acting in the principal's best interest, avoiding conflicts of interest, and not making a secret profit.
  4. Control: This is where the principal has the right to control the actions of the agent. This control is usually over the manner in which the agent carries out the principal's instructions.
  5. Mutuality: This is where there is a mutual understanding that the agent will act on behalf of the principal, and the principal will accept the results of the agent's actions.

CLASSIFICATION OF AGENTS

CAMA (Companies and Allied Matters Act) under sections 63 and 64 provide the legal framework for the authority and responsibilities of corporate agents in Nigeria. See section 21 of the Sales of Goods which deals with the powers and authority of mercantile agents in transactions involving the sale of goods. See also the case of Akpene v. Barclays Bank of Nigeria Ltd (1977) 1 SC 47 where the court highlights the classification and scope of authority of different types of agents and the case of Niger Progress Ltd v. North East Line Corporation (1989) 3 NWLR (Pt. 107) 68 where the court discusses the role and responsibilities of mercantile agents. Agents can be classified based on the scope of their authority, the nature of their function, and the type of principal they represent. Some common classifications include:

  1. General Agent: these are agents authorized to act on behalf of the principal in all matters concerning a particular business or trade like a manager of a company.
  2. Special Agent: these are agents authorized to act only for a specific transaction or a set of transactions like a real estate agent authorized to sell a particular property.
  3. Universal Agents: these are agents which have unlimited authority to act on behalf of the principal. This is rare and usually arises from a power of attorney giving broad authority.
  4. Mercantile Agents: these are agents involved in trade and commerce, such as factors, brokers, auctioneers, and del credere agents. We have the following;
    1. Factor: this is an agent entrusted with the possession of goods for sale.
    2. Broker: this is an agent who negotiates contracts for the purchase and sale of goods without having possession of the goods.
    3. Auctioneer: this is an agent authorized to sell goods at an auction.
    4. Del Credere Agent: this is an agent who guarantees the performance of the contract by the third party.
  5. Corporate Agents: these are agents acting on behalf of corporations, including directors and officers of the company, who have authority as defined by the company’s articles of association and relevant corporate laws.
  6. Commission Agents: these are agents who sell goods on behalf of the principal and earn a commission based on the sales made.

CONCLUSION

Understanding the concept of agency, the nature and character of the agency relationship, and the classification of agents is crucial for commercial transactions in Nigeria. These principles help in determining the scope of an agent's authority and the extent to which a principal can be held liable for the actions of their agents. The Nigerian legal system, through common law and specific statutes, provides a comprehensive framework to regulate these relationships and ensure smooth commercial operations.