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By agreement |
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| a. |
On the basis that an agency relationship is created by agreement between the principal and the agent, such a relationship can also be brought to an end by mutual agreement between the parties, either in writing or orally. |
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| b. |
Termination by agreement may also occur if the agency relationship is terminated pursuant to the provisions of the agency agreement itself. The following situations may arise in this context: |
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| i. |
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. |
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| ii. |
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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2. |
By act of the parties |
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An agency may be terminated by the acts of either the principal or the agent, as illustrated below:
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| a. |
Performance by the agent |
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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. |
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| b. |
Revocation by principal |
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| i. |
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 breach of the agency agreement. |
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| ii. |
Any word or conduct of the principal inconsistent with the continued exercise of authority by the agent may operate as revocation of the agency. |
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| iii. |
Revocation 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 on the apparent authority of the agent on grounds of representation by the principal or previous course of dealing with the agent 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. |
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| c. |
Renunciation by agent |
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| i. |
An agent is entitled to renounce his power by refusing to act or by notifying the principal that he will not act for the principal. |
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| ii. |
Unilateral termination of the agency by the agent before he has fulfilled his obligations to the principal under the agency agreement will render the agent liable to the principal for breach of the agency agreement, such as payment of damages for loss suffered by the principal. |
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| d. |
By notice |
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| i. |
If the agency agreement provides that the agency may be terminated upon either party serving on the other written notice of a specified duration, for example, three months' written notice, either party may terminate the agency agreement by serving the required notice on the other party. |
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| ii. |
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. |
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3. |
By operation of law |
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An agency may terminate by operation of law upon the occurrence of the following events: |
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Where the party concerned is an individual:
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death; |
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insanity; or |
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bankruptcy. |
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| b. |
Where the party concerned is a limited company: |
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winding-up; or |
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| ii. |
receivership. |
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| c. |
Frustration of the contract of agency |
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