Agency and other Related Concepts

The concept of agency in commercial transaction has in most cases been mistaken to be the same with some other relationship of similar nature and character. A preliminary way of understanding the  typical  features of agency relationship is to compare and contrast an agent with some other functionaries and relationships which appear similar but invariably are distinct and different. Such functionaries include trustees, servants, bailees, and independent contractors.

Agent and Trustee

For certain purposes, an agent may be treated as a trustee of his  principal. An example of this in cases of money had and received on behalf of the principal. Equally, a trustee may for certain purposes be treated as an agent of the beneficiary (cestui que trust), There is also the historical antecedent between them in that at some point in time, the concept of agency looks its root from that of trusteeship. The consequence is that certain principles of law are thereby applicable to both, such as the doctrine of fiduciary relationship with its attendant incidents. Both functionaries are nonetheless distinguishable on the following grounds:

      a)      the relationship of principal and agent is generally consensual in origin, whereas and except in minor cases, a trust is created without the consent of the beneficiary (cestui que trust) or the trustee.

       b)      when an agent is appointed, this is invariably done by  the principal himself, whereas, in a trust situation, the trustee is never appointed by the beneficiary (cestui que trust).

      c)       the agent is for all purposes, the representative of his principal in dealing with third parties whereas, the trustee is not  in  any way the representative of the beneficiary (cestui que trust).

     d)      actions between the principal and the agent may be barred  by lapse of time under the limitation Acts whereas,  no  such limitation is imposed on actions between the beneficiary (cestui que trust) and the trustee.

Agent, Servant and Independent Contractor

Basically, an agent is distinguishable from both a servant and an independent contract. The essential feature of the master servant relationship is that the master always has the right to control the diligent performance by the servant of the terms of his employment while a servant merely works for his master, an agent acts for and in place of his principal to effect legal relations of his principal with third parties.

The distinguishing features of an agency relationship are its representative character and derivative authority which give the agent a degree of discretion in the performance of the terms of its agency which a servant would not ordinarily have. An independent contractor on the other hand renders services to his employer in the course of an independent occupation or calling. He contracts with his employer only as to the results to be achieved, but not as to the means whereby the work is done. Accordingly, he employs his own means and skill and is entirely independent of control and supervision of his employer.

Agent and Bailee

A bailment arises where personal property is delivered or transferred by the owner (bailer) to another person (bailee) under an agreement that the property can be returned to the owner (bailor) or transferred to a third party or dealt with in any other way indicated by the owner (bailor). The bailee is not an agent of the bailor strictly speaking since he has no authority to deal with the property in any other  way  except  in accordance with the instructions of the bailor. The bailee does not be render any service at all to the bailor which is an essential purpose of agency.

There are some important distinguishing  features  between an agent and a bailee, they are:

1) The agent is the representative of his principal but the bailee does not thereby become the representative of the bailor.

2) The agent has authority to contract for and on behalf of his principal and can make him liable in tort. A bailee essentially has no authority to bind the bailor in contract except perhaps to preserve the property the subject of the bailment, and can rarely make the bailor liable in tort.

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