THE INSTITUTE OF ADMINISTRATION AND COMMERCE

Name of Institute : Institute of Administration and commerce

National ID : 77-094010-L66

Student Number : 220051

Subject : Principles of Law

Answered questions :
QUESTION 1 

QUESTION 2 

QUESTION 3 

QUESTION 4 

QUESTION 5 

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Question 1.

1.1. Discuss the Sources of Law in Zimbabwe [15 Marks]

Zimbabwe has a hybrid, or plural, legal system in the sense that the law currently in force
was adopted from foreign jurisdictions and imposed into the country by settlers during the
colonial era. Zimbabwe’s law after several years of independence still exposes residual traits
of the process of transplantation of historical disempowerment and colonial takeover.
Zimbabwe’s Legal system consists of the Common law (non-statutory or unwritten Anglo
Roman Dutch Law) Legislation Case Law (Precedent) and Customary Law. With the
exception of Criminal Law, which has recently been reformed and codified, Zimbabwe’s law
is not codified. The Constitution of Zimbabwe is the Supreme Law of the country and it is
the parent act of any other Legislation.

In 1894, a High court was set up, from which appeals would proceed to the Cape Supreme
Court.  It is thus common knowledge that the laws administered in the colony of Rhodesia
were of foreign origin – mainly British (English Law) and Roman – Dutch Law. A landmark
occurrence took place in on 20 October 1898.  The South Rhodesia Order in Council was
enacted.  It provided for the appointment of an Administrator and a Legislative Council. The
Legislative Council had the power to enact laws for the “peace” order and good government
of Southern Rhodesia vested in the British Crown and not in the Company.  All cases tried in
the courts then bore the name of the Gown or the Rex. In October 1923, Southern Rhodesia
was formally transformed into a British Colony by the Southern Rhodesia (Annexation)
Order in Council of 30 July 1923. This influenced the law to be administered in that it led to
the adoption of English legal principles in certain instances. A Constitution then came into
being in 1923. The Constitution established a legislative assembly consisting of thirty elected
representatives of electoral districts. It also provided for the election of a Speaker and a
Deputy speaker of the Assembly.  Such a development marked the commencement of formal
parliament a model which Zimbabwe still follows today. The following are sources of
Zimbabwean law, legislation, precedent / Case law / Court Decisions, Customary Law,
Common Law and Authoritative texts.

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Legislation refers to the law validly enacted by the legislative authority of Zimbabwe and
assented to by the President of Zimbabwe.  In Zimbabwe the legislative authority of
Zimbabwe vests in the President and parliament of Zimbabwe which is the Primary
Legislation states as follows, The Legislative authority of Zimbabwe shall vest in the
Legislative which shall consist of the President and Parliament and the provisions of
subsection (1) shall not be construed as preventing the legislature from conferring legislative
functions on any person or authority. The Legislature of Zimbabwe can confer powers on any
authority to create binding laws.  Currently the Legislature of Zimbabwe is a bicameral
system consisting of a Lower House (Parliament) and an upper House (Senate).  Legislation
brought through parliament has to be scrutinized by the Senate before it goes for assent to the
executive President.  The senate was recently ushered in through Constitutional Amendment
Number 17 of 2005. It appears that currently the purpose is to slow down undesirable
proposed legislation or to frustrate it if it comes from members of the opposition. At the same
time, it expedites legislation brought in by members of the ruling party.

 
The Senate had been abolished by the ruling ZANU PF party in 1987 on the pretext that it
was expensive and that it slowed down the legislative process.  Surprisingly it was
reintroduced in 2005. The method of passing legislation is entrenched in Section 511 of the
Constitution.  All legislation in Zimbabwe is styled Acts of Parliament or Statutes. Other
authorities such as the President, acting unilaterally, and Ministries can pass legislation
known as Statutory Instruments, or Subsidiary Legislation. Subsidiary or Subordinate
Legislation consists of the following regulations made by a Minister for purposes specified in
the Enabling Act of Parliament, bye-Laws created by specified local authorities such as
Urban or Rural Councils, acting under powers given to them by the relevant Acts of
Parliament, proclamations issued by the President for purposes such as dissolving Parliament,
rules of the superior Courts to facilitate procedure and their operations and regulations made
by the President under the Presidential Powers Temporary Measures Act.

The customary law of Zimbabwe is generally unwritten.  Customary law refers to the fixed
customs and practices of the tribes of Zimbabwe which were in practice since time
immemorial.  The customs must be certain, reasonable and must had attained the recognition
of formal law. For example the criminalization of incest, in the sexual offences Act and the

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Criminal Law (Codification and Reform) Act is the recognition of customary law which
prohibits incest or sexual relationship with certain degrees of blood affinity.

The constitution entrenches the recognition of African Customary Law. Section 89 of the
Constitution of Zimbabwe in imposing the law to be administered, sets up African customary
law as part of the law to be administered.  Other Legislation, such as the Customary
Marriages Act, Administration of Deceased Estates Act and Customary Law and Local
Courts Act. The acts also establish the application of Customary Law in certain respect. The
Customary Law of Zimbabwe is limited in scope in its application. It has no criminal
Jurisdiction whatsoever and it governs some areas of Marriage, Inheritance and Guardianship
only.

Common law of Zimbabwe refers to the unwritten law or non- statutory law. Common law
excludes the African customary Law. The common law of Zimbabwe is primarily the
Roman-Dutch Law as applied at the Cape of Good Hope on the 10th of June 1891 as per the
provisions of Section 89 of the Constitution of Zimbabwe.  The Common Law was
transplanted from the Cape and imposed to Zimbabwe.  However, the common law at the
Cape in 1891 had been heavily influenced by English Law, hence the common law of
Zimbabwe must be said to be Anglo-Roman-Dutch Law. A recent development in Zimbabwe
ousts the application of Common Law. The recent Codification of Zimbabwe’s Criminal Law
through the Criminal Law (Codification and Reform) Act jeopardizes the application of
Common Criminal law Section 3 of the Act states unequivocally that Roman-Dutch Criminal
Law no longer to apply.

One cannot safely assert that authoritative text from acclaimed legal authors form part of
Zimbabwe’s law.  However, textbooks on law have persuasive authority upon which reliance
can be had in making judicial decisions.  The few authoritative legal authors in Zimbabwe
rely on old Roman Dutch writers. They mainly write commentaries and guides to the law of
Zimbabwe. Professor Geoff Feltoe has several Guides to the Laws of Zimbabwe which are
widely used and referred to in litigation. His comments and assertions form persuasive
grounds upon which cases can be decided.

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The constitution of Zimbabwe is the Supreme law of the land and any other law which is
inconsistent with it is deemed void to the extent of that inconsistence. Therefore, Zimbabwe
has Constitutional Supremacy instead of parliamentary Supremacy. The current constitution
of Zimbabwe is the result of a settlement agreement done at Lancaster House in England in
the year 1979.  It sets out the State Structure, the Bill of Rights the Judiciary the Legislature
and other administrative organs such as the public service commission. Currently there is an
ongoing struggle being waged by Zimbabwean citizens who are agitating and pressing for a
series of seventeen amendments, all of which cannot be said to be in the interest of
Zimbabweans, but instead in the interest of the current ruling party. The constitution is the
parent Act of every other Legislation.  Therefore, all Acts of parliament subordinate to it
must be intra vires the constitution or within the confines of constitutionality.

1.2. Discuss the rules relating to acceptance of an Offer in the law of contract. [10
Marks]

The second essential element to create a binding contract after an offer is made is acceptance.
An offer must be accepted to create a valid contract. If an offer is made by the offeror (the
party making the offer) and it is rejected by the offeree (the party responding to the offer),
there is no contract. Acceptance is a ‘meeting of the minds’ where the parties agree to shared
terms of a contract. There are several other details that ensure a contract is validly entered
into to have effect. We have listed a few with some examples below.

Silence does not constitute acceptance. Acceptance must be communicated to the offeror.
In Felthouse v Bindley (1862) 142 ER 1037, a man offered to buy his nephew’s horse and
stated in his offer that if he did not hear back, he would take that to mean the horse was sold
to him. The nephew did not communicate any acceptance, hence was not bound to sell the
horse. The offeree must notify the offeror of their acceptance. For example, if an
agreement is signed internally within an office, this does not constitute acceptance. If the
parties to the agreement do not communicate the terms of their offer and acceptance, such as
if the parties sign different contracts, there is no valid contract.

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Acceptance can be communicated in many ways. Acceptance is typically achieved by
performing the act asked for by the offeror, however there is no given way of how to accept
an offer. There does not necessarily have to be a handshake to “seal the deal”. Each case is
contextual and depends on the offer and the conduct itself. For example, if an offeror made an
offer to provide a train ticket to Melbourne, and the offeree printed the ticket and boarded the
train, this could constitute acceptance of the offer. Acceptance must refer to the offer. The
offeree must be aware of the offer and accept the said offer. In Crown v Clarke (1927) 40
CLR 227, a prisoner tried to claim a reward for information he provided in order to discharge
himself. He could not claim this offer however, because at the time that he provided the
information, he was unaware of the reward.

Acceptance must be made by someone that has the authority to communicate the
acceptance. For example, if an offer was made by a company to a board of directors, and an
employee overhears the discussion and communicates the board’s acceptance of the offer to
the company, this would not constitute valid acceptance as the employee did not have the
authority to do so (Powell v Lee (1908) 99 LT 284). A counter-offer is not acceptance. If
the offeree responds to the offeror with an alternative offer, they have not accepted the offer
and there is no contract. The offeree has made a new offer. If there was an error in the
offeree’s statement of acceptance, this does not constitute a counter-offer. If there was an
error but it is clear the offeree intended to accept the terms of the offer, this may still
constitute a valid contract. If someone makes an offer and it does not correspond with what
the offeree is accepting, it does not constitute acceptance.

When the person to whom the proposal has been made signifies his assent thereto, the offer is
said to be accepted. Thus the proposal when accepted becomes a promise Mere silence can
never amount to the offer being accepted. Acceptance has to be communicated to the offeror
whether it is expressed, or implied. The proposal must be accepted within the time limit given
by the offeror. If no such time limit is prescribed then it must be accepted within a reasonable
time or before the offer lapses. Now a reasonable time has no definition in law, it will depend

entirely on the situation, circumstances, and the usual norms. When the proposal is accepted

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and it becomes a proposal it also becomes irrevocable. An offer does not create any legal
obligations, but after the offer is accepted it becomes a promise. And a promise is irrevocable
because it creates legal obligations between parties. An offer can be revoked before it is
accepted. But once acceptance is communicated it cannot be revoked or withdrawn.

Question 2.

A contract is a lawful agreement, made by two or more persons within the limits of their
contractual capacity, with the serious intention of creating a legal obligation, communicating
such intention, without vagueness, each to the other and being. of the same mind as to the
subject matter, to perform positive· or negative acts which are possible of performance.
Commercial law consists of a number of different kinds of contract. The commonest forms
are sale, lease, partnership, agency, mortgage and suretyship. To each kind of contract there
are common _ principles and the goal of of this essay is to set out the rules 1vhich apply to
sale contracts. Subsequent handbooks will look at those rules’ peculiar to special kinds
of/contract.

The essentials of a valid contract found in the above definition are – The parties must
communicate their intentions to each other. Parties communicate their intentions to each
other by one party making an offer and the other party accepting that offer Before an offer
can lead to a binding contract, the offer must define all the ·terms on which agreement is
sought. An offer which leaves certain terms to be discussed at a later date is not a complete
offer. 0 K Bazaars v Bloch 1929 WLD 37. O.K. negotiated through an estate agent for the
purchase of B's shares in a property-owning company. Marcus, an employee of the estate
agent, said to B: 'Look here, we have been arguing this matter quite long enough, close at
forty-three (43 000) and we will take · 500 commission'. B said, "All right'. ','then B
suggested a possible increase in the price, M said, 'Leave the matter as arranged'. Again, B
said, 'All right'. M then told B that a deed of sale should be drawn up by his attorney, adding
''Let the two attorneys wrangle between themselves'. M admitted that a number of matters
would have to be discussed by the lawyers and conceded that the agreement would have to be

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reached on these before a deed of sale could be drawn up. HELD, the bargain between M and
B was not a final and complete bargain.

Offer must be consistent with the essentials of contract. The offer must be firm and deliberate
with an intention of its being accepted and not a mere invitation to do business, which is
illustrated by the following cases. Crawley v R 1909 TS 1105. A shopkeeper in Johannesburg
advertised a particular brand of tobacco at a cheap price, having a placard .outside his shop
on which the price was shown. C entered the shop, bought a pound of tobacco and left.. He
then re-entered the shop and asked for another pound. The shopkeeper refused. C refused to
leave the shop without the tobacco. HELD, the advertisement was not an offer and a contract
was not, therefore, concluded when C tendered the price. Chad been rightly convicted under a
Transvaal Ordinance for not leaving the premises when requested.

While generally the effect of an advertisement is that the customer is invited to offer the
marked price for the article and the tradesman can please himself whether he accepts the
offer, an advertisement an amount to an offer where a 'general offer' is made to business with
whoever shall perform certain acts. Bloom v American Swiss Watch Co 1915 AD 100. A
company, from whom diamonds and jewellery had been stolen, by means of an advertisement
in the press offered £500 for information to be given to the C. I.D. which would lead to the
arrest of the thieves and the recovery of the stolen property. B supplied the information in
ignorance of the offer and afterwards, having heard of it, he claimed the reward. · B was
unsuccessful. HELD, in order to establish a legal tie between the parties the information
would have to be given, in consequence of the advertisement, by a person: acting on the faith
of the offer. The offer must be communicated to the person with whom it is intended that the
contract should be made again illustrated in the Bloom v American Swiss Watch Co 1915
AD 100 case.

An offer' may be ended in the following ways like Revocation where an Offeror may revoke
his offer at any time before acceptance has. taken place. The revocation is ineffective until
brought to the knowledge of the offeree. Revocation may occur by implication. Greenberg v
Wheatcroft 1950 (2} PH A56 (W). On 6 June W signed a written offer to buy certain land

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from G, the owner. On 7 June W telephoned G's agent, revoking the offer. On 8 June G
signed an acceptance on the document containing the written offer. HELD, the offer had been
effectively revoked on 7 June and was no longer open for acceptance. An offer can also
Lapse An offer lapses on the death or insanity of either party, after a reasonable time, if not
accepted within the prescribed time, or . if the intended performance becomes illegal or
impossible. Laws v Rutherfurd 1924 AD 261 (on appeal from SR) . Mrs R gave L a three
months' option to enter into a contract to cut timber on her farm which expired on 26 July.
Having heard nothing Mrs R on 27 July asked L to remove certain plant he had erected on the
farm. · On 28 July by letter and 29 July by telegram L purported to exercise option. Held, as
L had not notified his acceptance within the time fixed, rule nisi interdicting him from cutting
timber had properly been made, final.

The agreement must be within the limits of the parties' contractual capacity. If an
unassisted minor accepts an offer from an intending spouse to enter into an antenuptial
contract, the acceptance is invalid and there is no contract. As a general rule, a contract made
by a minor without the guardians assistance is void as far as the minor is concerned and valid
as far as the other party is concerned. · The authority for this proposition is the Dutch jurist,
Voet, quoted in Edelstein v Edelstein NO below: "From the principles of the law it is clear
that a minor who contracts without the assistance of his guardian can render others under an
obligation to himself, but does not himself become obliged to them ... [as] on the minor's side
a contract entered into without the assistance of his guardian is ipso jure (by the law itself)
null and void."

Edelstein v Edelstein NO 1952 (3) SA 1 (AD). A female minor whose parents were
divorced (the mother was awarded custody but the father remained the natural guardian)
entered into an antenuptial contract with E. Later in 1918, she and E were married with the
implied consent of her father, who was informed of the proposed marriage and did not object.
In 194 7 E died leaving over£100 000 and the wife, considering the marriage to have been out
of community of property because of the antenuptial contract, accepted certain benefits under
E 's · will. In 1949, when she consulted her legal advisers with a view to drawing up her own
will, the validity of the antenuptial contract was questioned and she sought an order declaring
the marriage in community of property. Of the parties cited as respondents, only the

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Commissioner for Inland Revenue opposed the order to avoid losing £33 000 death duties.
HELD, by TPD, the wife was bound by ·the antenuptial contract on the ground that, while it
had excluded community of property and profit and loss, 'it had conferred benefits on her
through promises in it of marriage settlements by E. HELD, by. AD, a minor is not bound by
an unassisted contract even one to his benefit. The minor may elect to hold the other party
·bound, in which event the minor will also have to perform his obligations. But should the
minor choose to escape the contract, he is bound only to the extent of his enrichment.
Furthermore, unlike an ordinary contract, antenuptial contract cannot be ratified by a minor
on attaining majority as this would amount to an impermissible alteration of the matrimonial
proprietary regime. The wife was granted the order that the marriage was in community of
property.

The parties must. seriously intend to contract. The offer· can be accepted by express
words (Stevenson ·v McLean in 2.2.3 c. above) or acceptance inferred from the offeree's
conduct (Collen v Rietfontein Engineering Works in). Stevenson v McLean (1880) 5 QBD
346. M wrote S offering to sell 3 800 tons of iron at 40s a ton. S telegraphed to M "Please
wire whether you Would accept forty for delivery over two months, or if not, longest time
you would give". M did not reply. S then sent telegram stating they had secured his price.
HELD, S 's . first telegram ought not to be construed as a rejection of M's offer but merely as
an enquiry whether he would modify the terms of it and M's offer was still open when S
accepted it by sending the second telegram.

According to the case of Collen v Rietfontein 'Engineering Works. "If, whatever a man's real
intention may be, he so conducts himself that a reasonable man would believe that he \vas
assenting to the terms proposed by the other party, and that other party upon that belief enters
into the contract with him, the run thus conducting himself would be equally bound as if he
had intended to agree to the other party 's terms." Collen v Rietfontein Engineering Works
1948 (1) SA 413 (AD). After. some correspondence regarding the supply of a pump and a
Fairbanks Morse engine, C wrote .to R: "Enclosed please find my cheque in part payment of
pumping plant." R paid the cheque for £150 into its banking account but did not reply to the
letter. Later R supplied a different type of pump which proved unsatisfactory and C

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repudiated the contract. HELD, treating C's letter as an offer, R did by its conduct-accept the
offer. It did not reply in writing that it accepted, but it paid C's cheque into its banking
account. Its conduct in so doing and its retention of the proceeds of the cheque, coupled with
the fact that it failed to notify C that it did not accept his offer, was a sufficient indication to
C that it had accepted his proposals.

The ·agreement must not be vague, if an agreement is so incomplete or uncertain that its
meaning cannot be determined by a court on the evidence before it, ·the contract is void for
vagueness (Jajbhay V Cassim)

as follows:

“In my view the first maxim prohibits the enforcement of immoral or illegal contracts and the
second curtails the right of the delinquents to avoid the consequences of their performance or
part performance of such contracts.”

“I repeat that the two maxims, although they have a common inspiration and purpose, are
clearly distinct in that they deal with different types of claim. The maxim ex turpi causa is
self- explanatory and requires no elucidation. It is complete and unquestioned in our Courts
as in the Courts of England. But we must leave it in its own department where it reigns
supreme and not unwarrantably extend it to the province of the other maxim which is
designed to supplement the deficiencies of the first in regard to deterring illegality. The two
separately operating and properly applied are, I venture to think, adequate for that designed
purpose. When I say that the law is not settled, I mean in regard to the application only of the
second maxim in pari delicto potior conditio defendentis. This is the only maxim which, in
my judgment, concerns us in the present case, for the appellant is not seeking enforcement of
the illegal contract but seeks release from its operation. This maxim is not so self-
explanatory as the first, for the nature of the plaintiff’s claim is not immediately indicated and
the degree and nature of the delinquency is but vaguely defined.

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Performance must be possible, where a person sells another a portion of a lot in a township,
both parties thinking the lot capable of subdivision when in fact it is not, performance of the
contract by the seller is impossible and there is no contract (Wilson v Smith). Whenever, by
express agreement of the parties, a sub-agent is to be employed by an agent to receive money
for the principal, or where an authority to do so may fairly be implied from the usual course
of trade, or the nature of the transaction; the principal may treat the sub-agent as his agent,
and when he has received the money, may recover it in an action for money had and received.
If, in such case, the sub-agent has made no advances and given no new credit to the anent on
account of the remittance of the bill, the sub-agent cannot protect himself against such an
action by passing the amount of the bill to the general credit of the agent, although the agent
may be his debtor

The agreement must be lawful, where sales on a Sunday are prohibited by statute, an
acceptance on a Sunday of a valid offer to sell cattle made on the Saturday before would not
create a contract (Brandt v Bergetedt in 7.5.2 a. below). The case of Brandt v. Bergstedt
(1917 CPD 344) and the decision of the Transvaal Provincial Division in Rex v. Maseko
(1915 TPD 1) appear to me to be in conflict. In the first the reasoning implies that the
learned Judge felt himself bound by the authorities he quoted to refuse relief to the plaintiff,
whereas I respectfully suggest that he should have approached the matter from the more
fundamental point of view as to whether public policy was best served by granting or
refusing the plaintiff’s claim. If the learned Judge had so approached the case and had
considered that as an equitable Judge he was free (as I think he was) to order the restoration
of the cow, I cannot doubt that he would have granted the relief prayed. Indeed, the facts of
that case afford a typical example which called for a decision on which side public policy is
best served.

The harsh effect of the unqualified application of the par delictum rule is illustrated in the
case of Brandt v Bergstedt. The Plaintiff who had sold his cow to the defendant on a Sunday
in contravention of an ordinance which prohibited any form of trading on a Sunday was not
assisted by the court when he sought payment from the defendant for the cow. The defendant
had set up the defence inter alia that he was not obliged to pay because the sale was

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prohibited by statute. No doubt there are many similar cases in which the courts have strictly
applied the maxim.

2. Discuss ways in which a contract of Agency is terminated [10 Marks]

The contract of agency is defined as one where one party-the principal, grants authority to
another party- the agent, to act on behalf of and under the control of the principal to deal with
a third party. An agency relationship is fiduciary in nature. An agency can be created by
express or implied appointment, necessity or estoppel. There are certain duties that the parties
owe each other. Since the relationship of agency is one that is based on trust, there may arise
circumstances where this trust no longer subsists and as a result, the agency may have to be
terminated. This paper examines these situations and analyses the effect of the termination of
the agency.

By Agreement - On the basis that agency relationship is created by agreement between the
principal and the agent, such a relationship can also be ended by mutual agreement between
the parties, either in writing or orally. Termination by agreement may also occur if the agency
relationship is terminated pursuant to the provisions of the agreement itself. The following
situations may arise in this context: if the agreement provides for the appointment of the
agent for a specified period of time, the agency will come to an end automatically when that
period of time expires and if the agreement provides for the agency to terminate upon the
occurrence of a specified event, the agency will come to an end upon the happening of the
specified event.

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By the Act of Parties, an agency may be terminated by the acts of either the principal or the
agent as illustrated. Performance by the agent, if an agent is appointed to accomplish a
particular task or for a specific purpose, when the task is accomplished by the agent or the
specific purpose is attained, the agency will terminate. Revocation by the principal, The
authority of an agent may be revoked at any time by the principal. However unilateral
revocation otherwise than in accordance with the provisions of the agency agreement may
render the principal liable to the agent for the breach of an agency agreement. Any word or
conduct of the principal inconsistent with the continued exercise of the authority by the agent
may operate as a revocation of the agency. Revocation’s of the agent’s power by the principal
may not automatically discharge the principal from liability to a third party who is entitled to
rely from liability to a third party who is entitled to rely from liability to a third party who is
entitled to rely from liability to a third party who is entitled to rely on the apparent authority
of the agent on ground’s of representation by the principal of previous course of dealing with
the agent’s before notice of revocation is given to the third party. Therefore, notice of
revocation of an agent’s power should be given to the third party as soon as possible.

Renunciation by agent, an agent is entitled to renounce his power by refusing to act or by

The other way an agent can be terminated is by notice, if the agency agreement provides
that the agency may be terminated upon either party serving on the other written notice of a
specified duration. However, if the agency agreement does not contain any termination
provision, the general rule is that reasonable notice has to be given to the other party to
terminate the agency. Lastly an agent can be terminated by Operation Of Law, an agency
may terminate by the operation of law upon the occurrence of particular events, where the
party concerned is an individual, by death, by insanity and by bankruptcy. Another event is
where the party concerned is a limited company winding up and receivership and lastly the
frustration of the contract of agency.

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Sometimes former agents continue to act on their ex-principals’ behalf even though the
agency has ended. Once an agency terminates by any of the means just described, the
agent’s actual authority(expressed and implied) ends as well. Nonetheless, such “ex-agents”
may retain apparent authority to bind their former principals. Third parties who are unaware
of the termination may reasonably believe that an ex-agent still has authority. To protect third
parties who rely on such a reasonable appearance of authority, an agent’s apparent
authority often persists after termination. Thus, a former agent may be able to bind the
principal under his apparent authority even though the agency has ended.

Apparent authority ends only when the third party receives appropriate notice of the
termination, that is, when it is no longer reasonable for a third party to believe that the agent
has actual authority. Some bases for termination by operation of law (such as changed
circumstances) may provide such notice. Under the Restatement (Third) of Agency, an
agent’s apparent authority may continue even after the principal’s death or loss of capacity.
An agent may act with apparent authority following the principal’s death or loss of capacity
because the basis of apparent authority is a principal’s manifestation to third parties, coupled
with a third party’s reasonable belief that the agent acts with actual authority. When third
parties do not have noticed that the principal has died or lost capacity, they may reasonably
believe the agent to be authorized. The rule that the principal’s death does not automatically
terminate apparent authority is consistent with the interest of protecting third parties who act
without knowledge of the principal’s death or loss of capacity. To protect themselves against
unwanted liability, however, prudent principals will want to notify third parties themselves.
The required type of notification varies with the third party in question. For third parties who
have previously dealt with the agent or who have begun to deal with the agent, actual
notification is necessary.

A contract of agency is a species of the general contract. As such, an agency may terminate in
the same way as a contract is discharged except where the agency is irrevocable. The relation
of principal and agent can only be terminated by the act or agreement of the parties to the
agency or by operation of law. “An agency, when shown to have existed, will be presumed to
have continued, in the absence of anything to show its termination, unless such a length of

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time has elapsed as destroys the presumption Agency may be brought to an end either by the
act of the parties, or by operation of law”. Agency may be terminated by subsequent events.
These may be physical, as where, for example, the subject matter is destroyed, or the
principal or agent dies or becomes insane. Alternatively, they may be legal, as where the
principal or agent becomes, bankrupt, or the relationship becomes illegal (for example, if the
principal becomes an enemy alien). The effects of termination are that as far as principal and
agent are concerned, rights vested at the time of the termination will subsist, but no new
rights can be created, at least once the agent has notice of the termination. Where the agency
was created by agreement, it will be determinable in the same way. A continuing agency may
also be determined by giving such period of notice as is specified in any agreement, or failing
that, reasonable notice.\

Finally, if either party acts in a way which is inconsistent with the continuation of the agency
then it will be terminated though of course, this may well give rise to rights of action for
breach of contract. As regards termination by operation of law, if an agency is for a particular
transaction, the relationship will terminate when that transaction is completed. If it is for a
specified period, it will cease at the end of that period.

REFERENCES:

[i] www.isca.in/IJSS/Archive/v2/i11/10.ISCA-IRJSS-2013-108.pdf.

[ii] http://www.studymode.com/essays/Termination-Of-Agency-1469514.html.

[iii]https://www.inkling.com/read/business-law-jane-mallor-15th/chapter-35/termination-of-
an-agency.

[iv] www.isca.in/IJSS/Archive/v2/i11/10.ISCA-IRJSS-2013-108.pdf.

[v] http://www.studymode.com/essays/Termination-Of-Agency-1469514.html.

[vi] http://www.studymode.com/essays/Termination-Of-Agency-1469514.html.

[vii] https://www.scribd.com/doc/48004714/The-Formation-of-Agency-and-Termination.

[viii] http://agency.uslegal.com/duration-and-termination-of-agency/.

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[ix]http://www.lawteacher.net/commercial-law/essays/the-law-of-agency-commercial-law-
essay.php.

[x] http://www.studymode.com/essays/Termination-Of-Agency-1469514.html.

[xi] https://www.scribd.com/doc/48004714/The-Formation-of-Agency-and-Termination.

[xii] http://agency.uslegal.com/duration-and-termination-of-agency/.

[xiii] www.isca.in/IJSS/Archive/v2/i11/10.ISCA-IRJSS-2013-108.pdf.

[xiv] http://www.studymode.com/essays/Termination-Of-Agency-1469514.html.

[xv] http://www.studymode.com/essays/Termination-Of-Agency-1469514.html.

[xvi] www.isca.in/IJSS/Archive/v2/i11/10.ISCA-IRJSS-2013-108.pdf.

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