Termination of the
Ageny Relationship
University of Ghana School of Law
Dr. Kweku Ainuson
30th March 2020
Covid 19 Edition
Termination of Agency
At common law, the Agency relationship may be terminated by
1. Mutual consent of the parties.
2. By operation of law.
3. By the unilateral act of either party to the Agency contract
1. Termination by Mutual Consent
• Where an Agent is appointed for fixed period (eg. 3 months) or
appointed to perform a specific task (eg. Sell a house), the Agency
relationship ends at the expiration of the time or after the specific
task has been performed.
• The parties may also agree mutually to terminate the Agency
relationship at any time. Here, once terminated, the Agent will be
discharged of his contractual duties so that he cannot be liable for
breach of contract.
2. Termination by operation of law
• Frustration – An Agency contract may be frustrated in the same
way that any contract can be frustrated. Eg if the Agency contract
becomes illegal or impossible to perform.
• Death – Death of either party ends the Agency contract. Note that
winding up of the company also ends the Agency contract.
• Insanity – If either party becomes insane, the Agency contract is
terminated.
• Bankruptcy – an order of the court declaring a party to the
Agency contract bankrupt will terminate the relationship.
3. Termination by Unilateral Action
NOTE: Unilateral termination may end the Agency relationship, but it may open
up the party who unilaterally terminates to a claim for breach of contract.
Where A commits a material breach of the Agency contract (secret profit, bribe) P
may unilaterally terminate the contract without exposing himself to an action in
breach the contract.
• Where there is an express/implied term of the contract that P may not hinder or
prevent A’s earnings (eg. Sole Agent/Sole Agent with exclusive right to sell). P
may be in breach if he unilaterally terminates the contract. See Luxor v. Cooper.
• Where A is appointed for a fixed term, (process insurance claims at Makola for 5
yrs), P may terminate the Agency at any time before the expiration of the 5yrs if A
breaches the Agency contract. P may rely on A’s breach even though he was not
aware of the breach at the time P dismissed A . See Boston Deep Sea Fishing and
Ice co v. Ansell [1888] 13 Ch D 339
• Where A is appointed for an indefinite term, the right to terminate depends on
the terms of the contract. Where the contract includes a termination clause, the
parties may terminate the contract by giving the requisite notice.
• If there is no termination clause, the court may imply a term allowing
termination by giving reasonable notice. Reasonable notice is dependent on the
facts of each case.
• In MB Aircraft Co v Canadian Flight Equipment (1955) 2 QB 556. A agreed to
act as sole agent for the sale of P’s products, to be paid by commission. A
agreed to spend time and money to promote P’s products and not to sell
competing products. It was held that the contract was terminable on 12 months
notice.
• See also Martin-Baker v Canadian Flight Equipment [1955] 2 QB 556
END
