Port Agents–Role and Functionsa) Whatever a person can do personally, he can do through an agent. The rule is of course

subject to certain exceptions, like acts of marriage, which are personal in character.b) He who does an act through another does it by himself (qui facit alium facit per se). In

other words, subject to certain conditions, the acts of an agent are the act of the principal.

Port Agents (also Steamer Agents)

Port Agents are those which look after the tramp ships, those that are operating on a charter party rather than a liner service. Their remuneration is always an agency fee.

The duties of an agent will vary depending upon the ship, cargo and port, besides of course, what precisely his principal wants him to do. Notwithstanding the same, the reason for requiring an agent will always be to look after all the needs of the ship and her personnel while she is arriving at, staying in and departing from the port. It would be impossible for the principal to take care of the needs of the ship and her personnel at ports all over the world. Hence, someone, who is akin to local conditions besides having an establishment, has to be appointed to do the job.

The fist thing an agent must do is to identify the principal. This is very important because the agent will spend substantial amounts and establishing where the money is coming from has to be a priority. At this stage you may easily say that the principal can be none other than the ship-owner. This would be largely true, but what if the ships is on time charter? This would be largely true, but what if the ship is on time charter? In such a situation the time-charter is the principal and that is why in legal terms he is referred to as the “Disponent Owner”. If you are clear on the above, it would be right to state that the principal for whom the agent is working is the person who pays him.

Taking the case of a time – charter, where the principal is the time-charterer, the ship-owner may want certain things to be done, such as repairs, crew changes or manadatory certification, for which he may need help at the foreign port. In such a situation there would be no contractual relationship between the agent and the ship-owner. What should the agent do if he is requested to carry out such jobs? The agent may carry out the above mentioned jobs which do not concern the time-charterers. In case however, the jobs which require extensive time and money, the following remedies would be available to the agent:

a. Separate contract between ship-owner and agent with a fee spelt out

b. If there is a conflict in the job being p;erformed, the only thing, which the agent can do, is handle the situation skillfully and clarifying his position to both the parties.

c. In case the conflict cannot be resolved, then the agent has to revert back to working only for his principal – the time charterer, and theowner would have no option but to appoint a separate agent.

With regard to voyage charterers, one point to be noted here is that some charter forms contain the words “vessel to be consigned to “Charterers agents” or Charterers nominated agents”. This means that the ship is on a voyage charter and the agent would report to and be paid by the shipowner, but would be nominated by the charterers. For clarity, it would be worthwhile repeating that the agent whether nominated by charterers or not will always is responsible to the owner or Disponent owner. Nevertheless, when such a appointment is made, the charterer would always want something in exchange, having nominated the agent and got him the business. The agent who cannot handle such a situation should ideally decline the appointment.

The question which arises from the above is as to why a “Charterers agent” is required? There could be several reasons:

1) In tanker charterers, jetties cost millions of dollars and charterers want to appoint agents who have knowledge of the trade.

2) It might sound strange, but charterers are sometimes too jealous of their reputation to risk dealing with agents who would attract complaints from owners.

3) To protect trade secrets, i.e. for maintaining confidentiality.

Hence in a situation like the above, there no contractual relationship, between the charterer and the agent but the former does expect a quid pro quo. Therefore , agent has to ensure that there is o conflict of interestbwetween the charterer and the owner. In theory this sounds simple. However, there are many cases when the agents keep favouring the charterers and theowners remain a dissatisfied lot. In such a situation the owner is left with no choice but to appoint a “supervisory agent” . The supervisory agent normally charges half of the normal agency fees and is expected to represent the owners in any dispute, besides looking after the requirements of the vessel. Owners do not generally like the clause of “Charterers Agents”, especially when they have no means of checking the financially viability of the agent.

THEAGENTS DUTIES

The agent has to look after the needs of the ship and her personnel while the ship is arriving at, staying in and departing from the port. In tramp agency there is very rarely a written agreement between the principal and agent; a fairly brief nomination is made by fax, telex

or email. However, the functions of the port agent would be similar and would essentially comprise ofjobs related to the ship, cargo and the ship’s company.

A SHIP RELATED FUNCTIONS;

These functions relate with interacting with the port authorities and arranging for a suitable berth. The dimensions of the ship vis-a-vis the port/jetty limitations have to be borne in mind and are of particular significance as this is an area where the agents are subjected to the maximum number of claims.

The agents would need to know the dimensions of the ship and inform the port authorities about the same. He would also have to arrange for pilotage, towage (if necessary), and other flotilla craft. Further, he would also be required to take care of the bunkering requirements of the vessel and provide additional services towards maintenance and repairs.

CARGO RELATED FUNCTIONS;

First of all the agent has to obtain an accurate description of the cargo, especially if the same is hazardous. Then he has to line up the place where it has to behandled. At times he would need to get in touch with the owner of the storage facility and also the stevedores who would need to be provided with the manifest. He would determine the normal working hours at the port and request for overtime operations if required after obtaining permission of the principal.

The agents would also get in touch with the shipper/receiver and keep them apprised. It would also be extremely important to obtain customs clearance from the national authorities by filing the requisite manifests.

SHIPS COMPANY RELATED FUNCTIONS:

Functions with relation to the ship’s company would involve keeping principal informed on the progress of the ship on day to day basis. Besides, other functions would comprise of arranging for stores, arranging cash for the master; organising for medical treatment for the crew, making arrangements for crew repatriations, delivering mail, submitting disbursement accounts in time, preparation of a Statement of Fact with complete details, reporting and contracting an owners P&I Club in case of a mishap, cargo claims etc.

Law of AgencyThe law of agency is governed by Part X of the Contracts Act 1950. An agent is defined as a person employed to do any act for another or represent another in dealings with third person[1]. The person for whom such act is done, or who is so represented, is called the “principal”

In other words, agency is the relationship which subsists between the principal and the agent, who has been authorized to act for him or represent him in dealings with others

e.g. Azzizul appoints Samdan to sign the agreement on his behalf, here Azzizul is called the principal and Samdan is his agent.

Thus in agency there are in effect two contracts:-

i. the first made between the principal and the agent from which the agent derives his authority to act for and on behalf of the principal; andii. the second, made between the principal and the third party through the work of the agent.

A. Who can be come an agent/principal?

Section 136 CA - Any person who is eighteen years old and above and who is of sound mind may be a principal. As between the principal and third persons, any person may be come an agent, but persons of unsound mind and who are below 18 years of age are not liable towards their principal for acts done by them as agents[2]

eg. if A employs B (a minor) to buy some goods from C on his behalf and C supplies the goods, A cannot allege that he is not liable to pay for the goods just because B is not at the age of majority. A is still liable to pay C for the goods.

B. CREATION OF AGENCY

Like any other contracts, a contract of agency can be expressed or implied for the circumstances and the conduct of the parties. In other words, the authority of an agent may be expressed (given by words spoken or written) or implied (inferred from things spoken or written or from the ordinary course of dealings.)

eg. X lives in Ipoh and owns a shop in Kuantan. The shop is managed by Y who normally orders goods from Z in X’s name for the purpose of the shop and Y then pays for the goods out of X’s fund with X’s knowledge.

Section 138 CA provides that no consideration is necessary to create an agency.

By express appointment by the principalBy implied appointment by the principalby ratification by the principalby necessity i.e. operation of lawby the doctrine of estoppel

KGN Jaya Sdn Bhd v Pan Reliance Sdn Bhd [1996] 1 MLJ 233

The Court of Appeal held that the law does not require that an agency or sub agency agreement must be in writing.

Further more, Part X of the Contracts Act 1950, which contains the relevant provisions on agency does not contain any requirement that the appointment of an agent or sub agent has to be in writing or be evidence in writing.

1. BY EXPRESS APPOINTMENT

Express appointment may be in written or oral form. An example of an express appointment made in writing is a Power of Attorney. Even a letter written or words spoken may be effective in appointing an agent.

2. BY IMPLIED AGREEMENT

The Law can infer the creation of an agency by implication when a person by his words or conduct holds out another person as having authority to act for him.[3]

e.g. If he allows another person to order goods on his behalf and habitually pays for them, an agency may be implied. In such terms he will be bound by the contracts as if he has expressly authorised them.

Chan Yin Tee v William Jacks & Co (Malaya) Ltd [1964] MLJ 290

The appellant and Yong (a minor), were registered as partners. At a meeting with a representative of the respondent company, the appellant held himself out to be Yong’s partner. Goods were supplied to Yong but were not paid for. The respondent company obtained judgement against the appellant and Yong. The appellant appeal to FC which held that since the appellant had held Yong out of his agent who had the authority to do things on his behalf, the appellant was liable for Yong’s act.

By virtue of Section 7 of the Partnership Act 1961, partners are each other’s agents when contracting in the course of the partnership business.

BY RATIFICATION

Agency by ratification can arise in any one of the following situations:-

i. An agent who was duly appointed has exceeded his authority orii. A person who has no authority to act for the principal has acted as if he has the authority.

Section 149 CA 1950 –

Where acts are done by one person on behalf of another but without his knowledge or authority, he may elect to ratify or to disown the acts. If he ratifies them, the same effect will follow as if they had been performed by his authority.

When the principal accepts and confirms such a contract, the acceptance is called ratification. ratification may be expressed or implied[4]

Ratification is retrospective i.e. it dates back to the time when the original contract was made by the agent and not from the date of the principal’s ratification.

e.g. On 2 January 1996, A appointed B as his agent to buy a car not exceeding RM100,000/-. On 5 January B went to GRG Motors and ordered a car costing RM135,000/-, telling GRG Motor’s salesman that he was buying the car on A’s behalf. On 12 January, GRG Motors deliver the car to A. If A confirms and adopts the contract on 12 January, then B is said to be an agent through ratification. A can also rejects the contract since B had exceeded his authority.

Contract can be ratified under the following circumstances:-

The act must be authorisedThe agent must, at the time of the contract, expressly act as an agent for the principal[5]i.e. he must not allow the third party to think that he is the principal.

Keighley Maxted & Co v Durant

An agent, R was authorised by the appellants to buy wheat at a certain price. The agent exceeded his authority and bought at a higher price in his own name but intending it for Keighley. Keighley agreed to take the wheat at that price but failed to take delivery. The court held that Keighley was liable to the Durant since R at the time of the contract did not profess to act as an agent.

SRM Meyappa Chettiar v Lim Lian Koo [1954] 20 MLJ 246

PC, the attorney of SC, entered into an agreement with the respondent under which the PC handed over to the respondent a piece of land belonging to his principal in consideration of RM

7,000/- and agreed ‘ upon the return of normal conditions, the vendor shall obtain a special power of attorney from the said SC now in India and execute the true and lawful transfer of the said land at the purchaser’s own expenses’. He further agreed that if he was unable to obtain the necessary power from his principal the RM7,000/- will be return to the respondent. At the trial, the learned judge held that the agreement had been satisfied by SC and therefore dismissed a claim for recovery of possession of the land. The Court of Appeal held that the terms of the agreement showed that PC was acting in his personal capacity and therefore the principal of ratification could not apply to the agreement

The principal only applies where the agent has professed to contract for his principal who afterwards ratifies.

The doctrine is thus stated by Tindal C.J in Wilson v Tumman [1843] 6 M&C 242 at page 242

The act done for another, by a person, not assuming to act for himself, but for such other person, tough without any precedent authority whatever, becomes the act of the principal, if subsequently ratified by him, is the known and well established rule of law. In that case the principal is bound by the act, whether it be for his detriment or his advantage, and whether it to be founded on a tort or on a contract, to the same effects as by, and with all the consequences which follow from the same act done by his previous authority.

The agent must have a principal, who is in actual existence or capable of being ascertained, when a contract is made. No one can ratify a contract if he is not a party competent to a contract at the date of the contract.

Kelner v Baxter [1866] LRE 2 CP 174

A contract to buy a hotel made by an agent on behalf of the company which is about to be formed, could not be ratified by the company since it did not exist at the time. The agent therefore held for the contract unless the third party agreed to release him.

The principal must have contractual capacity at the time when the contract is being made and at the time of ratification.The principal must at the time of ratification, have full knowledge of all material facts, unless it can be shown that he intended to ratify the contract whatever the facts may be and assume responsibility from them[6]The principal must ratify the whole act or contractThe ratification must not injure the third party, i.e. it must not subject the third party to damages or terminated his right or interest[7]

BY NECESSITY

An agency by necessity may be created if the following three conditions are met:-

1. It is impossible for the agent to get the principal’s instruction[8]2. The agent’s action is necessary, in the circumstances, in order to prevent loss to the principal with respect to the interest committed to his charge e.g. when an agent sells perishable goods belonging to his principal to prevent from rotting.3. The agent of necessity must have acted in good faith.

In an emergency an agent has authority to do all such acts for the purpose of protecting his principal from loss as would be done by a person of ordinary prudence, his own case, under similar circumstances[9]

BY ESTOPPEL

A person cannot be bound by a contract made on his behalf without his authority. However, if he by his words and conduct allows a third party to believe that the particular person is his agent even when he is not, and the third party relies on it to the detriment of the third party, he will be estopped or precluded from denying the existence of that person’s authority to act on his behalf.

C. Agency in Relation to Banking

The law of agency is relevant to bankers because the relation between a banker and a customer is based on agency. Furthermore, bank employees are agents of the bank.

D. Bank as Agent of Customers

The relationship between a banker and his customers are generally that of a debtor and a creditor or vice versa.

Foley v Hill [1848] 9 ER 1002

When a banker receives money from his customers as deposit, the banker is a debtor and his customers are creditors. On the other hand, where a banker advances money as a loan or other credit, or extends banking facilities to his customer, the bank is the creditor and the customer is the debtor.

When a customer hires a safe deposit box in which he keeps his valuables, the bank is the customers agent.

E. Bank Employees as Agent for the Bank

Within a bank, employees of the bank are agents for the bank. Thus employees who are so authorised may act on behalf of the bank. The bank, as employer, is vicariously liable for the torts committed by its employees in the course of business.

F. Duties of Principal and Agent

The rights and duties of the principal and agent depend on the express or implied terms of the contract of agency. Where there is no such contract of agency, the rights and duties of an agent to his principal and vice versa are laid down in Section 164 – 176 of the Contracts Act 1950

a) Section 164 – Agent’s duty in conducting principal’s businessb) Section 165 – Skills and diligence required from the agentc) Section 166 - Agent’s accountd) Section 167 – Agent’s duty to communicate with the principale) Section 168 – Right of principal when agent deals, on his own account, in business of agency without the principalf) Section 169 – Principal’s right to benefit gained by agent dealing on his own account in business of agencyg) Section 170 – Agent’s right to retainer out of sums received on principals accounth) Section 171 – Agent’s duty to pay sums received for the principal

Mahesan v Malaysian Government Officers Co Operative Housing Society Ltd [1978] 1 MLJ 149

The appellant who was a director and secretary of the respondent co operative society bought land at the price of RM 944,000 on behalf of the respondent. The appellant knew that the vendor had earlier paid RM 456,000 for it but did not inform the respondent accordingly. It turned out that the appellant had received RM 122,000 as a bribe or secret profit from the vendor.

held: The respondent could recover either the bribe or the amount of the actual loss suffered by it as a result of entering into the contract.

i.Section 172 – When agent’s remuneration becomes due.j.Section 173 – Agent not entitled to remuneration for business misconduct.k. Section 174 - Agents’ lien on principal’s property.l. Section 175 – Agent to be indemnified against consequences of lawful acts.m. Section 176 – Agent to be indemnified against consequences of acts done in good faith.

G. DUTY OF PRINCIPAL TO AGENTThe duties of principal to agent is provided under section 175 – 178

Section 175 – agent to be indemnified against consequences of lawful acts

Section 176 - agent to be indemnified against consequences of acts done in good faithSection 177 – non liability of employer of agent to do criminal actSection 178 – compensation to agent for injury caused by principal’s negligent.

H. THE AUTHORITY OF AN AGENT

An agent’s authority may be actual or apparent. Actual authority is authorised expressly given by the principal (orally or written) or implied from the express authority given, from the circumstances of the case, custom or usage of trade, and the conduct of parties.

I. TERMINATION OF AGENCY

Section 154 – 163 of Contract Act 1950 deal with the manner which an agent may be terminated.

J. TERMINATION BY THE ACT OF THIRD PARTY.

When both parties agree that the agency shall terminate, the agency is terminated. The principal may revoke the authority of the agent at any time before it has been exercised to bind the principal.

When the agency is for an indefinite period of time, the agent can terminate the agency by giving reasonable notice of termination to the principal - Section 159.

K. TERMINATION BY OPERATION OF LAW

An agency may be revoked by operation of law in any of the following circumstances.:-

i. When the contract of agency has been performedii. Upon the expiry of the period fixed in the contractiii. Death of the principal or agentiv. When the principal or agent become insanev. When the principal or agent become insolventvi. Upon the happening of a event which renders the agency unlawful.[1] Section 135[2] Section 137[3] Section 140 and the illustrations.[4] Section 150 – Ratification may be expressed or implied in the conduct of the person on whose behalf the acts are done.

[5] Section 149 CA 1950

[6] Section 151 Contract Act 1950[7] Section 153 Contract Act 1950[8] Section 142 Contract Act 1950[9] Section 142 Contract Act 1950