Business organisations law Coursework Example | Topics and Well Written Essays - 500 words

Business organisations law - Coursework Example It means that the liability of actual authority is greater compared to that of apparent authority because there is an agreement already undertaken. Actual authority is said to enjoy more power than an agent with apparent authority because a third party will usually be unaware of the terms and conditions of the agreement between the principal and his agent and thus he will be unaware of the extent of the agent’s actual authority. According to John D Maltas, an agent’s apparent authority will be unaffected by limitations on the actual authority, i.e. it is easier for a third party to establish that the agent acted within the scope of his apparent authority rather than the agent’s actual authority (John D Maltas, p 43) and hence he is said to have more power than apparent authority. Richard A. Mann and Barry S. Roberts emphasize that an apparent authority can not exist where the principal is undisclosed because, apparent authority is the power resulting from acts that appear to the third party to be authorized by the principal. (Richard A. Mann and Barry S. Roberts, p. 350) Normally an agent needs to disclose to his principal all material facts known to him and circumstances that may influence his principal when entering in to contracts. Once an agent fails to disclose these facts, he is not entitled to commission. Suppose, the agent has received any profit resulting from non-disclosure is recoverable by the principal (John D Maltas, p 49). This has been well explained by S. A. Christensen and W. D. Duncan. When one party to a contract pays a secret commission to the agent and does not disclose this to the principal, the party takes the risk of non-disclosure. A party who deals secretly with the agent of another will be considered to have committed a fraud against the principal and cannot later defend the validity of the transaction. This will require the principal to return any benefits received under the transaction, because this will not prohibit him