Agency (Principle Of)

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Pastoor v. Pastoor, 2007 CanLII 28331 (ON SC)

[17] As I read Wells, J.A.’s judgment, the rationale of his judgment is rooted in the law of agency. A lawyer is an agent for his or her client, and in accordance with the law of agency: “where a principal gives an agent general authority to conduct any business on his behalf, he is bound as regards third persons by every act done by the agent which is incidental to the ordinary course of such business or which falls within the apparent scope of the agent's authority.” A lawyer retained for litigation has apparent authority to bind his or her client to a particular compromise, but that is just an application of the more general agency law principle. Wells, J.A. goes on to say that the court, however, is not bound to enforce the contract entered into by the lawyers.

[18] In the case at bar, for some many months, with the assistance of lawyers, the parties negotiated towards a settlement of a matrimonial dispute. As a matter of the law of agency, Ms. Pastoor held her lawyer out as her agent to negotiate and effect a settlement and based on the principle that underlies Scherer v. Paletta and in the circumstances of this case, the court ought to enforce the Minutes of Settlement.


Travelbrands Inc. v. Bramalea Travel Centre Inc., 2018 ONSC 5090 (CanLII)

[15] During the course of his submissions counsel for the defendant did propose that his client was the agent of the plaintiff. There is little if any evidence that would support such a conclusion. The term “agent” is used to describe all manner of common relationships. It has a colloquial meaning. The legal concept of “agency” is more limited.[11] The American Restatement of the Law of Agency provides a definition:

…the relationship which results from the manifestation of consent, by one person to another, that the other shall act on his behalf and subject to his control, and consent by the other so to act.[12]

[16] Agency is seen as “a consensual relationship” between the parties.[13] One party (the principal) consents to the other party (the agent) exercising authority on its behalf and the agent agrees to do so. There can be no “self-appointed agent”.[14] Generally, the entry into the relationship is mutual.[15]

[17] There is an element of control. The agent is subject to the control of the principal. The underlying characteristic is the authority of the agent, subject to that control, to affect the legal position of the principal:

Agency is the relationship that exists between two persons when one, called the agent, is considered in law to represent the other, called the principal, in such a way as to be able to affect the principal’s legal position by the making of contracts or the disposition of property.[16]

Foot Notes


Bedell v Kidder, 2010 CanLII 99890 (ON SCSM)

I first address the parties to the contract. In regard to the plaintiffs, Mr. Bedell was an owner and acting as agent for his brothers who were also owners of the properties. They are identified in the easement agreement and the deed that they signed as owners. In regard to the defendants, the defendant, Patricia May Kidder,[25] was the owner of the property and also identified in the easement agreement and the deed. Mr. Kidder was not an owner of the property but was clearly acting as agent for the defendant, Patricia May Kidder. Their legal relationship was one of agent and principal. As a matter of law, an agent and a principal cannot both be found liable in contract. The doctrine of alternative liability applies to the liability of an agent or a principal to a third party in contract. The general principle is found in the often quoted statement from [http://canlii.ca/t/2f2hq Murray v. Delta Copper Co., 1925 CanLII 32 (SCC), (1925) 4 D.L.R. 1061 (S.C.C.) at 1067. Newcombe J., speaking for the Supreme Court of Canada, stated:

“The ordinary rule is that the principal and agent may be liable to the other contracting party in the alternative, which alternative liability continues until the election of the latter to accept one, either the principal or the agent, as his debtor.”

Scintilore Explorations Ltd. v. Larche, 1999 CanLII 14948 (ON SC)

168 The third case, Tombill Gold Mines Ltd. v. Hamilton (City), 1954 CanLII 99 (ON SC), (1954) O.R. 871 (Ont. H.C.); affd. (1956), 1956 CanLII 22 (SCC), 5 D.L.R. (2d) 561 (S.C.C.) reinforces the point that the extent of the agent’s duties must be determined by reference to the precise nature of the obligation undertaken. The defendant had a written retainer with the plaintiff to provide engineer’s services for a few days a month in connection with the plaintiff’s mining interests. The defendant was approached by a prospector with some potential claims. The defendant proceeded to stake those claims, but first mentioned to the plaintiff that he was going to stake the claims and offered to try to stake other claims in the same area for the plaintiff. The plaintiff declined, but then sued the defendant, alleging breach of fiduciary duty in relation to the claims he had staked. Gale J. dismissed the claim on the ground that the limited retainer agreement did not stipulate an obligation to bring any mining properties to the attention of the plaintiff. Gale J. noted that within the field of employment, an agent is reposed with trust and confidence and, as such, a fiduciary relationship may arise. He held, however, at 893 that:

the agent is not prohibited from acting if the transaction does not come into conflict with his engagement as agent, even though such action injuriously affects the principal.
…liability of an agent to account arises only when his activities are inconsistent with that which he is required to do as agent.
…When he is not acting in the execution of his duties as agent, and is not engaged in transactions which are within the limits of the agency, he is free to retain any profit which he manages to make.

Gale J.’s judgment was upheld by the Supreme Court of Canada, where Locke J. stated that the plaintiff’s rights had to be determined by the agreement and that as the agreement did not stipulate the general obligation asserted by the plaintiff, it was decisive.


Q.N.S. Paper Co. v. Chartwell Shipping Ltd., 1989 CanLII 35 (SCC), (1989) 2 SCR 683

The judgment of Wilson, La Forest, Sopinka and Cory JJ. was delivered by

LA FOREST J. -- At issue in this appeal is whether under Canadian maritime law an agent of an unnamed or partially disclosed principal is personally liable on a contract entered into by the agent with another party when the agent expressly indicates to the other party that he is acting as an agent only. Before that issue can be addressed, however, a threshold issue of what law is applicable must be settled.

(...)

... As Brandon J. (citing Halsbury's Laws of England (3rd ed. 1952), vol. 1, at pp. 228-29, para. 517) put it in Bridges & Salmon, Ltd. v. The "Swan", [1968] 1 Lloyd's Rep. 5, at p. 13, "if he [the agent] states in the contract, or indicates by an addition to his signature, that he is contracting as agent only on behalf of a principal, he is not liable, unless the rest of the contract clearly involves his personal liability, or unless he is shown to be the real principal"....

Canadian Imperial Bank of Commerce v. Madill Bank of Nova Scotia v. Madill, 1983 CanLII 1919 (ON CA)

Issue 1 -- Did the plaintiff banks sustain a loss as a result of an occurrence covered by Insuring Agreement "D"?

On this issue the learned trial judge reached the following conclusion as stated in his reasons for judgment [at pp. 756-7 O.R., pp. 533-4 D.L.R.]:

In my judgment, that loss was imposed by law. There can be no question that the correspondents affected were the appointed agents of the plaintiff banks respectively and under an obligation to service their principals as instructed with respect to Travellers Letters of Credit. The printed instructions of June, 1974, which I have quoted, make this clear beyond doubt.
On the basis of the evidence as to what transpired at the Dover branch of the Midland Bank and the Brussels branch of Lloyd's Bank International, I find as a fact that personnel at those banks carried out the very simple instructions of their principals reasonably and not negligently.
By the agreement that these encashments were typical, this finding thus becomes applicable to all encashments by correspondent banks.
. . . . .
Having found the encashing correspondents to be agents of the plaintiffs respectively, acting reasonably and in accordance with instructions, it follows as a matter of law that the loss is the loss of the principal who is obligated to indemnify such an agent.

Edmonton (City) v. W. W. Sales Ltd., 1942 CanLII 27 (SCC), (1942) SCR 467

[Page 468]

The findings of fact by the trial judge have been accepted by the appellate court, and the evidence does not disclose anything which would justify a reversal of these judgments by this Court.—The servants were "not on a frolic of their own"; but they were in fact doing work, which was intended to be of service to their master and was in fact closely connected, with acts which they were specifically instructed to do. The burning of the debris was, therefore, as a matter of fact, within the course of the servant's employment. Lockhart v. Canadian Pacific Railway Co. (1941 CanLII 39 (SCC), (1941) S.C.R. 270) followed.—Also, in view of the finding of the trial judge, the appellant cannot succeed on the ground raised by it, that the act of lighting a fire at the place and under the circumstances in which it was lit was an illegal act, being in breach of certain city by-law and that, there being no express order given by the appellant to the servant to light the fire, no authority to light could be implied. Dyer v. Munday ([1895] 1 Q.B.D. 742) ref.

APPEAL from the judgment of the Appellate Division of the Supreme Court of Alberta[1], affirming the judgment of the trial judge, Howson J.[2] and maintaining the respondents' actions to recover damages for loss occasioned to them, through appellant's servants' alleged negligence, by reason of a fire which damaged their buildings and their contents.


The question involves the responsibility of a master for the negligence of his servant. The principles to be kept in mind are authoritatively discussed in the recent case of Lockhart v. Canadian Pacific Railway Co.[7], in which judgment was delivered (not yet reported) on August 5th, 1942, in the Privy Council. In that case I thought, in the Court of Appeal, that the defendant was not liable, and the error of that conclusion is made clear in the unanimous judgment of this Court and of the Privy Council. Lord Thankerton, who delivered the opinion of the Lords of the Judicial Committee, says in part:—

The general principles ruling a case of this type are well known, but, ultimately, each case will depend for decision on its own facts. As regards the principles their Lordships agree with the statement in Salmond on Torts (9th ed.), p. 95, viz.:—
"It is clear that the master is responsible for acts actually authorized by him: for liability would exist in this case, even if the relation between the parties was merely one of agency, and not one of service at all. But a master, as opposed to the employer of an independent contractor, is

[Page 473]

liable even for acts which he has not authorized, provided they are so connected with acts that he has authorized that they may rightly be regarded as modes—although improper modes—of doing them. In other words, a master is responsible not merely for what he authorizes his servant to do, but also for the way in which he does it * * * On the other hand, if the unauthorized and wrongful act of the servant is not so connected with the authorized act as to be a mode of doing it, but is an independent act, the master is not responsible; for in such a case the servant is not acting in the course of his employment, but has gone outside of it."
The well known dictum of Lord Dunedin in Plumb v. Cobden Flour Mills Company Limited[8], that "there are prohibitions which limit the sphere of employment, and prohibitions which only deal with conduct within the sphere of employment," may be referred to. Their Lordships may also quote passages from the judgment of this Board in Goh Choon Seng v. Lee Kim Soo[9], which was delivered by Lord Phillimore: "The principle is well laid down in some of the cases cited by the Chief Justice, which decide that 'when a servant does an act which he is authorized by his employment to do under certain circumstances and under certain conditions, and he does them under circumstances or in a manner which are unauthorized and improper, in such cases the employer is liable for the wrongful act. * * *' As regards all the cases which were brought to their Lordships' notice in the course of the argument this observation may be made. They fall under one of three heads: 7 The servant was using his master's time or his master's place or his master's horses, vehicles, machinery or tools for his own purposes; then the master is not responsible. Cases which fall under this head are easy to discover upon analysis. There is more difficulty in separating cases under heads and. Under head are to be ranged the cases where the servant is employed only to do a particular work or a particular class of work and he does something out of the scope of his employment. Again, the master is not responsible for any mischief which he may do to a third party., Under head come cases like the present, where the servant is doing some work which he is appointed to do, but does it in a way which his master has not authorized and would not have authorized had he known of it. In these cases the master is nevertheless responsible."
In Goh Choon Seng's case the appellant's servants had been employed by him to burn vegetable rubbish collected on his land, and they burnt some of it by lighting fires on Crown land left waste and uncultivated, which was wedged in between the appellant's land and that of the respondent, with the result that the fires spread to the respondent's land and caused damage to his property. The appellant was held liable to the respondent.

The Chief Justice of this Court in the Lockhart case[10] refers to passages from Story adopted by Lord Macnaghten in Lloyd v. Grace, Smith & Co.[11], and one of these passages is in part as follows:—

The passage in the judgment of Blackburn J. as reported in McGowan & Co. v. Dyer[12] is as follows: "In Story on Agency, the learned author

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states, in s. 452, the general rule that the principal is liable to third persons in a civil suit 'for the frauds, deceits, concealments, misrepresentations, torts, negligence, and other malfeasance or misfeasances, and omissions of duty on his agent in the course of his employment, although the principal did not authorize, or justify, or participate in, or indeed know of such misconduct, or even if he forbade the acts, or disapproved of them.' He then proceeds, in s. 456: "But although the principal is thus liable for the torts and negligences of his agent, yet we are to understand the doctrine with its just limitations, that the tort or negligence occurs in the course of the agency. For the principal is not liable for the torts or negligences of his agent in any matters beyond the scope of the agency, unless he has expressly authorized them to be done, or he has subsequently adopted them for his own use and benefit."

The instructions given to Eckstrom and Fleming were to go to the basement of the Sheldon block and "clean up" the premises. It is urged that these instructions, while they might be authority to sweep up the debris in the basement, consisting of paper, straw, dust and pieces of wooden boxes, and to remove and pile it, did not, and should not be interpreted to, include the burning of it, and that any burning was, under the circumstances, outside the course of employment. The trial judge says in part:

"behind the store on the northeast corner of the intersection of 97th street and 101st avenue, an incinerator is constructed for the destruction of the debris from that store, and that there are standing orders to all employees to collect in cartons all waste material to be destroyed, and that the same should be burned only by the shipper or his assistant. It is quite evident that the complete cleaning-up process at that store consists in sweeping up, carrying out, depositing in cartons, and burning. Behind the Sheldon block there was no incinerator or other receptacle for either the destruction or accumulation of the debris from the defendant's premises there. Wilson swore that the above standing orders applied also to the Sheldon block premises. I do not accept that statement. There is nothing to indicate that the shipper or assistant shipper ever were at the Sheldon block. On the other hand, Eckstrom had done this cleaning-up on several previous occasions. I am satisfied that general orders "to go to the Sheldon block and clean up those premises" were given."