Often when you buy goods and services you are not dealing directly with the person selling the goods or services but with an agent or agency. Broadly speaking, 'agency' describes the relationship that arises when one person is appointed to act as the representative of another. Some examples are:
- Travel Agent
- Independent Financial Advisor
- Estate Agent
- Insurance Broker
- Auctioneer
- Credit Broker
The basic rule in contract law is that an agent is authorised to bring about an agreement between you (the third party) and the person or business they are acting for (the principal). The agreement made is a contract between the principal and the third party, and it is they who have legal rights and responsibilities to each other and can sue each other. The principal is responsible for what the agent does in connection with the contract.
When you buy from an agent, it is very important to take precautions to safeguard your money and your rights. Paying by credit card for goods or services that cost over £100 gives you extra protection - see our leaflet 'Your Rights When Buying on Credit'. Bonding and compensation schemes run by reputable trade associations and official organisations may be worth looking for too, but check what is covered before going ahead. Insurance may be available to cover some risks.
Whenever you have a query or complaint about an agreement where you have used an agent, always contact the person or firm the agent is acting for. You are likely to have rights against them and they should be able to solve the problem.
For example: When you visit a travel agent to book a package holiday, the travel agent, acting as agent for the tour company, arranges a contract between you and the tour company. You pay the tour company. If you find that your holiday is not up to standard or you have been misled, your legal claim under the contract will be against the tour company, not against the agent.
- You do not always know what an agent has been authorised to do. Check any terms and conditions displayed or contained in an agreement.
- There may be particular laws to be taken into account, for example the Estate Agents Act 1979 and Consumer Credit Act 1974.
- You have a right to expect terms and conditions to be clear and reasonably easy to understand. Your attention should be drawn to important conditions you could not be expected to know about. Get all agreements with the agent in writing.
- Some firms call themselves agents but are not really agents at all, e.g. a garage may call themselves agents of the manufacturer. If they actually sell you the goods themselves, as they usually do, there will be a contract regulated by the Sale of Goods Act 1979 (as amended), giving you rights against the shop or garage.
- Take care when asked to pay an agent that your money is safe. You may have to pay again if you pay an agent who fails to pass the money on to their principal. You will have a claim against the agent and the agent may have committed a criminal offence, but it is better to take precautions beforehand as the agent might disappear or become insolvent, preventing you from getting your money back.
- If in doubt, take advice before entering a binding contract.
Estate Agents
The agreement between an estate agent and the seller of a property is governed by the Estate Agents Act 1979, which regulates some of the terms used, requires a written agreement and lays down some of the duties of the agent to the seller and the third party (usually the buyer). Remember, if you are a buyer, that the agent is usually the seller's agent as regards the sale of the property. Even though the Property Misdescriptions Act 1991 makes it an offence to publish misleading facts about a property, this does not give the person who has been misled extra rights in civil law. You will need good advice if you want to take legal action in this kind of case, as the legal situation is far from clear.
Letting Agents
They may have authority to deal with all contractual matters on behalf of the owner. In this case, the tenant may be able to sue the agent for breach of contract but will also have the right to sue the owner if they are identified. Good advice is essential when you have a problem with the contract for a property let.
Travel Agents
You should normally pay the tour operator and not the agent when you buy a package holiday. For example, you should make your cheque payable to the tour company. Financial bonding, a Trust or an Insurance policy to provide security is a legal requirement for tour operators - for example, all members of the Association of British Travel Agents (ABTA) are bonded.
The sale of charter flights and some scheduled flights is controlled by the Civil Aviation Authority that requires agents to hold an Air Transport Operators Licence (ATOL). You should only book a charter flight when you can verify that it is covered by an ATOL number. Information is available from ATOL, Consumer Protection Group, Civil Aviation Authority, CAA House, 45-59 Kingsway, London, WC2B 6TE. Telephone 020 7453 6430.
Credit Brokers
When someone introduces you to a source of credit, they are a credit broker and acting as agents for the finance company or lender. The Consumer Credit Act 1974 sets out duties of the parties when the agreement is a regulated credit agreement, and requires the broker and the credit provider to hold a consumer credit licence. An example is a garage arranging a hire purchase deal on a car; they act as an agent for the finance company. Always complain to both the broker and the finance company if you have a problem that is not being solved.
Auctioneers
In general, the auctioneer is an agent for the seller in inviting bids. Be warned that there may be extensive terms and conditions at an auction and, depending on the type of goods for which you are bidding, your rights can be restricted.
Some examples
BUT
There is a duty for agents to ensure that the advice they give you is correct.
POINTS TO NOTE
This is a simple, general view and particular agency situations may be different.