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174 Chapter 6Agency

Where a person supplies a service in the course of a business, and the contract or any

course of dealings does not fix the price, s. 15 of the Supply of Goods and Services Act 1982

provides that a reasonable price should be paid. This section can apply to agents, but only

if the price of the agent’s services has not been expressly or impliedly fixed by the contract

or by a course of dealings. So s. 15 SGSA would not alter the decision in Re Richmond Gate

Property Co Ltdif the case were to arise today.

Indemnity

Unless the contract which created the agency provides otherwise, an agent will be entitled

to an indemnity from the principal for liability incurred, or money spent, in the perform-

ance of the agency. This means that the principal must repay any expenses which the agent

has properly incurred while acting within his actual authority.

Lien

A lien is a right to hold on to property until a debt has been paid. An agent to whom the

principal owes money may have a lien over the principal’s goods. A lien can arise only if

the agent has possessionof the goods. Furthermore, the lien must not be excluded by the

contract between the principal and agent.

To exercise the lien, the agent must have lawfully come into possession of the principal’s

property and have done so in his capacity as an agent. The agent’s lien is a particular lien

rather than a general lien and can therefore be exercised only over property in respect of

which the debt became due. It does not give a right to sell or dispose of the property. An

agent may lose a lien by waiving it, or by voluntarily giving up possession of the goods.

Example

Asif is given actual authority to buy jewellery on Phil’s behalf. Asif is to be paid a commission

of 5 per cent of the purchase price, payable one week after the purchase was made. Asif

buys a diamond ring for Phil and takes possession of it from the seller. Three weeks later,

Asif has not been paid his commission, despite his asking for it. Asif can keep possession

of the ring until he is paid what he is owed. Once he is paid what he is owed, the right will

disappear. Asif has no right to sell the jewellery and, if he did so, he would be liable to Phil

Adamson vJarvis (1827)

An auctioneer was asked by a principal to sell goods, and the goods were duly sold for over

£6,000. In fact, the principal did not own the goods. After the auctioneer had sold the goods

he was sued by the real owner and had to pay damages to him.

HeldThe auctioneer could recover an indemnity from the principal to cover him for his

liability to the true owner.

HeldThe managing director was not entitled to any payment. An express term of the con-

tract determined what he should be paid. An implied term could not contradict this, and nor

could more be paid on a quantum meruit(see Chapter 5 at p. 157) because the express

terms of the contract had set out the basis on which he should be paid.