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SS2: COMMERCE - 2ND TERM

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  1. Marine Insurance | Week 1
    3 Topics
  2. Non-insurable Risks | Week 2
    4 Topics
  3. Banking - Central Bank of Nigeria | Week 3
    3 Topics
    |
    2 Quizzes
  4. Types of Account | Week 4
    4 Topics
    |
    2 Quizzes
  5. Warehousing | Week 5
    1 Topic
    |
    1 Quiz
  6. Capital | Week 6
    2 Topics
    |
    1 Quiz
  7. Credit | Week 7
    3 Topics
    |
    3 Quizzes
  8. Profit | Week 8
    2 Topics
  9. Turnover | Week 9
    3 Topics
    |
    2 Quizzes
  10. Business Law | Week 10
    8 Topics



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Definition of Agency

this is a contractual relationship between a principal and an agent in order to bring the principal into an agreement with the third party. Agency relationship involves the consent of the agent and the principal that one should aft for the other. 

Definition of an Agent

This is a person who is authorized to bring one person into a legal relationship with a principal. He affects a contract between his principal and the third party.

Characteristics of an Agent

An agent has the following characteristics

  1. Power to make a binding contract between his principal and third parties.
  2. He will not become a party to the contract between the principal and third party.    

Duties of an Agent

1. Obey Principals Lawful Instructions: the agents must carry out their principals’ lawful instruction.

2. The Agent Must Not Make Secret Profit Or Take Bribe: the agent must not make a secret profit or accept a bribe in respect of the agency. Any profit realized will be submitted to the principal.

3. No Conflict of Interest: the interest of the agent must not conflict with the interest of the principals.

 4. Non Disclosure of Confidential Information: the agent must not disclose confidential information regarding his principal’s affairs. The information remains the property of the principal.

5. An Agent Must Render Proper Account: the agent must render a proper record of accounts. Records of transactions must be properly kept and rendered to the principal.

6. Exercise due Care And Skill: it is the duty of an agent to exercise due care and skill in the performance of his duties.

7. No Delegation of Duties: the agent must not delegate the performance of his duties to another party. He must allocate all the duty allocated to him alone.

8. Disclosure of All Relevant Information: he has to disclose to the principal any material information he may receive in execution of his task.

9. Act On Behalf of the Principal: an agent is employed principally to act on behalf of his boss. He must carry out all his instructions.

Rights of an Agent

1. Right of Lien: an agent has a right to retain possession of goods until he has been paid.

2. Right of Stoppage Of Transit: the agent has a right to stop the goods in transit before they got to the principal.

3. Right to Receive Remuneration Or Commission: the agent has a right to receive his remuneration from the principal.

4. Right of Reimbursement of Expenses: he is to be reimbursed for all the expenses incurred on behalf of the principal.

5. Right of Indemnify: the agent will be compensated for losses arising in the course of his work.

Termination of Agency

Agency can come to an end due to the following circumstances:

1. Bankruptcy of the Principal: when the principal cannot meet his financial obligations the agency can come to an end.

2. Insanity of Agent or Principal: if the principal or agent is insane, an agent contract will come to an automatic end.

3. Death of Either of the Parties: the death of the agent will bring the agency contract to an end.

4. By Mutual Agreement: in a situation where both the principal and agent agree to end the contract then this will be a binding discharge.

5. By Completion of the Agreement: it can come to an end if the specific purpose for which the agreement is created is accomplished.

6. Breach of Contract: a party to the agency contract may fail to perform part of his own side of the contract.

7. Frustration of the Agency: an agency agreement can be terminated if the subject matter is destroyed or frustrated.

8. Illegality of the Object: in the event of the business been illegal, the contract is automatically terminated by law. 

9. By Lapse of Time: an agency can be terminated if the period fixed for the agreement comes to an end.

Appointment of an Agent

Agency can be created through the following:

1. Agency by Agreement: an agent can be appointed expressly in writing, orally, or by deed.

2. Agency by Implication: the circumstance of the situation may warrant a principal to appoint an agent by conduct or implication but not in writing. In this case, a person may find himself in a situation where his services are accepted as an agent.

3. Estoppel: this arises when the principal by words or conducts allows the impression that another person is acting on his behalf which he may not later deny the authority of such a person to act on his behalf.

4. Necessity: an agency may arise by necessity when an unforeseen emergency occurs. This arises when an individual is in possession of a property belonging to another and it becomes necessary for the holder to do something in connection with the property to protect the owner’s interest.

5. Ratification: this happens when one person approves an act previously done by another in the former’s name without authority.

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