An agent is a person employed to do any act for another or to represent another in dealings with third persons. Agency law is covered under Cap 23 Laws of Kenya.
In agency law we have 3 parties
1. The Principal – person who owns the goods or who hires or employs the agent; usually the principal and the agent enter into a contract where the principal gives consent for the agent to do whatever representation that the principal wants the agent to do for him. This is a complete contract unto itself.
The principal goes through the agent and if the agent is the one selling the goods to 3rd persons with the authority of the principal. The agent by definition is employed or authorised to transact on behalf of the principal e.g. an auctioneer is an agent of the owner.
2. When the Agent is selling those goods to a third party, then there is a sales contract that is governed by the law of contract and both the agent and the 3rd party must meet all the requirement of a contract. This is another contract.
NB: When the law says that the Agent is a person employed to act for the principal, the agent can only perform those acts which the principal is empowered legally to do. So when we say act it should be qualified to be any legal act.
3. The purpose of the Agent is to link the 3rd party with the principal and once he has done this, he can actually disappear. The agent is there as a middleman to link the principal and third party.
NB: The person with the property has power to transfer the property; the agent has only authority to sell on behalf of the principal but has no power. Power begets authority. He who has the power can authorise somebody else to do that which he who has the power is authorised to do. The power to transfer property is with the principal. The authority of the agent binds the principle. The agent has 3 types of authority
(a) Actual authority; I am authorising you to drive my truck to Mombasa
(b) Apparent authority; incidental if the agent is the driver of the principal’s lorry and stops at a petrol station and tells the attendant to fill the lorry with diesel, and after this is done can he now ask the attendant to sign a document and later to claim money from his boss? He has apparent authority to fill, refill the truck if the need arose. Apparent authority comes with the drivers’ responsibilities i.e. to refuel the vehicle etc. The principal is bound by the acts of the agent if and when he exercises the apparent authority for example to refuel the car.
(c) Ostensible authority: - this is close to apparent authority but arises from a scenario of dealings. It has not been given but the dealings between the agent and the 3rd parties are such that the agent has led 3rd parties to believe that he actually has that authority. For instance an insurance broker will approach you and lead you to believe that they have authority to waive disclaimers in the application form and all that you need to do is sign.
In Agency Law as soon as a contract is complete, for all purposes, the Agent can disappear after connecting the principal and the 3rd Party. The termination of the contract is crucial. If by the time the Agent sells the goods he has been already deprived of the authority by the principal, then the contract is not legal. The principal would still be liable however. If the Agent or the Principal are declared insane, the contract is terminated.