The question of whether or not a particular relationship is one of agency depends on what the parties have agreed in substance, rather than the label which they choose to place upon it. A recent English judgment quoted with approval, a useful outline of the characteristics of the relationship of agency (Bowstead and Reynolds on Agency (22nd ed., 2022):

  1. Agency is the fiduciary relationship which exists between two persons, one of whom expressly or impliedly manifests assent that the other should act on their behalf so as to affect their legal relations with third parties, and the other of whom similarly manifests assent so to act or so acts pursuant to the manifestation. The one on whose behalf the act or acts are to be done are called the principal, the one who is to act is called the agent. Any person other than the principal and the agent may be referred to as a third party.
  2. In respect of the acts to which the principal so assents, the agent is said to have authority to act; and this authority constitutes a power to affect the principal’s legal relations with third parties.
  3. Where such authority results from a manifestation of assent that the agent should represent or act for the principal expressly or impliedly made by the principal to the agent personally, the authority is called actual authority, express or implied. But the agent may also have the authority resulting from such a manifestation made by the principal to a third party; such authority is called apparent authority.
  4. A person may have the same fiduciary relationship with a principal where that person acts on behalf of that principal but has no authority to affect the principal’s relationships with third parties. Because of the fiduciary relationship, such person may also be called an “agent”.

In this case, a retailer brought about insurance contracts on behalf of consumers. The retailers were able to create a binding relationship between the consumer and the insurer with the consequence that the consumer was able to claim under the insurance policy directly against the insurer. The court held it was clear that the retailers were agents acting on behalf of the insurer at least for some purposes and were not simply distributors.

South African law is similar subject to some clearer principles of contract.

An important point is that no-one has to become an agent for anyone.

[The King on the application of Assurant General Insurance Limited v Financial Ombudsman Service Limited [2023] EWCA Civ 1049]