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Chapter 5
Creation of agency
An agency relationship can be created in the following ways:
Express agreement
This occurs where the principal actually appoints the agent as his agent and the
agreement can be in writing or oral.
It is usual for commercial transactions to be in writing so that the terms and rights
and duties of the agent are clear.
Where an agent is given a power of attorney the appointment must be made by
deed. A power of attorney gives the agent full authority to deal with all of the
principal’s property as defined in the deed.
Implied agreement
In this situation the principal has not expressly agreed to appoint an agent but the
agreement can be implied from the parties’ conduct or relationship.
The extent of the implied authority is indicated by all of the circumstances in which
the agency arose such as the relationship of the parties, the usual authority of an
agent in that business and the nature of the principal’s orders.
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