The Laws of Agency, Representation & Mandate

Agency Law including Representation and Mandate

Do you know the difference?

Cherine Hoffman

Director at CH Legal Consulting, CAPPIM RiskManagement & The Legal Web
 

THE LAWS OF AGENCY

In South Africa, Agency, Representation & Mandate all fall under the “Laws of Agency”.

1. “AGENCY”

The term “Agency” does not admit of a concise definition as it covers a variety of meanings.

In short, the term “Agency” refers to an act by a person (“the Agent”, on behalf of another, “the principal” and the the Principal’s authorization.

The above act, results in a legal tie (vinculum juris), which arises between the principal and a third party (which becomes binding / binds the principal to the 3rd party)

Which creates, alters or discharges legal relations between the Principal and a Third Party.

The term “agency” is sometimes also used more broadly:

  • to describe both the position of an agent as representative of a principal to perform juristic acts that affect the principal’s legal relations with third parties, and
  • also a relationship of mandate in which an “agent” is bound as mandatary to carry out some task for the principal as mandator.[8]

In the commercial world, the term “agent” is often used to describe a person who is not an agent in the true legal sense, for example a person who buys goods from a manufacturer or trader and has the right or sole right to resell them in a particular area.

In modern law, however, the agent is simply and solely the representative of his principal on whose behalf he concludes transactions with third parties.

  • The transactions, when made, are the transactions of the principal and binding as between the principal and the third person. [12]

2. REPRESENTATION

2.1 Definition

  • Representation refers to instances of purely juristic representation;
  • Representation entails one person performing a juristic/s act on behalf of another. [13][14]

[Juristic Act: An action intended and capable of having a legal effect; any conduct by a private individual designed to originate, terminate, or alter a right. A court performs a juristic act when it makes a decision and hands down a judgment.]

2.2 Authority

  • The agent’s ability, as representative, to affect the principal’s legal relations is primarily derived from, and its extent determined by, the agent’s authority to do so.
  • “An act of representation,” held Corbett JAA in Joel Melamed and Hurwitz v Cleveland Estates (Pty) Ltd; Joel Melamed and Hurwitz v Vorner Investments (Pty) Ltd, [15] “needs to be authorized by the principal.
  • Such authorization is usually contained in a contract. Can be by operation of Law.
  • The authorisation of the representative is a distinct unilateral act.
  • Although some representatives (such as public officials, company directors, guardians and curators) are often referred to loosely as agents, the current tendency is to reserve the term “agent” to denote a representative who is bound by contract with a principal to carry out a mandate and also authorised to create, alter or discharge legal relations for the principal.[16][17][18]

2.3 Personal liability

  • modern notion of an agent as representative—that is, as someone who enters into contracts for a principal on which the agent usually cannot be held personally liable—was not generally recognised in Roman law.[19][20]
  • The idea eventually came to form part of Roman-Dutch law,[21][22][23][24] although it was not developed to the same extent as the modern principles of commercial agency in England and America. As a result, South African courts have been greatly

2.4 Key Elements of Representation

Agency, Representation and Mandate

3. MANDATE

Mandate refers to the Performance of a lawful task

3.1 Definition

Mandate (mandatum) is a contract in which one person, the mandatary, undertakes to perform some lawful task for another, the mandator.

3.2 Concept under Roman Law

In Roman law, the mandatary was not the mandator’s representative.[25]

Where the mandator concluded contracts with third parties in executing the mandate, the mandatary did so in his own name and not on the mandator’s behalf. The rights and duties under such contract were the mandatary’s alone.

While the mandator could indirectly acquire rights against the third party by means of cession, he she could not do so directly.[26][27][28][29]

3.2 Concept under Modern Law

  • The position in modern law is different. The mandate may well include a power to represent the mandator, but it need not do so.[30] For example, a person wishing to sell a house will often instruct an estate agent merely to find a suitable purchaser with whom the seller might conclude the sale personally, but may also authorise the estate agent to sell the property on the seller’s behalf.[31]
  • Where the mandate involves, or is coupled with, a power (or authority) to represent the mandator, the mandatary is an agent.[32][33][34][35]
  • The term “agent” is difficult to define, however, for it has a variety of meanings.[36][37] Sometimes it is used to denote the representation where the emphasis falls on the juristic relationship established by the agent between the principal and third party. At other times, it is used to refer to the contractual relationship between the principal and agent: the so-called “contract of agency” that in reality is a species of mandate.[87][39]
  • Very often, the term is used in a broad sense to embrace both the contract between the principal and agent, and the concept of representation.
  • This usage, while criticised,[40][41] is almost inescapable because both mandate and representation are obviously fundamental elements of the field of law generally referred to as the law of agency.[42]

EXAMPLES:

Estate Agents, Attorneys, Sales Agents

4. AUTHORITY – HOW IS AUTHORITY FORMED

  • The agent’s authority to represent the principal constitutes the essence of commercial agency which may be formed in a number of ways.
  • The principal may authorise the agent by express or implied appointment.
  • Generally, the acts of an “agent” without actual authority cannot bind the principal.
  • The principal may, however, be estopped from denying the agent’s authority.
  • The principal may also ratify the agent’s unauthorised acts.
 

Article written by Cherine Hoffman

Director of CH Legal Consulting

Website: www.chlegalconsulting.com

Email: cherine@chlegalconsulting.com

T: 0724793863

Linkedin: https://www.linkedin.com/company/chlegal/

 

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