Agency Law and Damages

This assignment delves into Australian commercial law by analyzing various case laws and statutes related to agency relationships. It specifically focuses on the liabilities of agents and principals, explores different types of authority (actual and implied), and discusses concepts like ratification and estoppel in the context of agency law. The goal is to understand how these legal principles apply in real-world commercial scenarios.

Australian Commercial
law

Table of Contents
INTRODUCTION...........................................................................................................................1
QUESTION 1...................................................................................................................................1
QUESTION 2...................................................................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................6

INTRODUCTION
Commercial law which is often referred as business or corporate law is a set of rules and
regulations developed by the government. This law focuses on commerce, trade, sales and also to
individuals who participate in those activities. Australian commercial law is a collection of
various rules and policies which governs companies. This law has a main statute as Corporations
Act 2001 which is administered by the Australian Securities and Investment Commission. In this
project report, case scenario related to commercial law is discussed along with relevant case
studies and statute. The main aim of this report is to analyse the situation of case study and apply
knowledge to justify judgements related to those cases. Australian law of agency is considered in
this project report (Corones, 2014).
QUESTION 1
Case scenario:
According to the given case scenario, Roger a cucumber vendor hires The Great Railway
Company and agrees on a written contract to carry cucumbers from Perth to Adelaide by train
and then from Adelaide to Melbourne via truck. Due to bad weather, GARC decided to sell the
remaining good cucumbers before arriving at Melbourne. This decision taken by GARC is
unilateral, due to which Roger has claimed for damages as he was still liable to pay for the fees
of hiring and stall from the market.
Analysis:
Australian commercial law is a set of statutes and regulations which is focused on trade
and the parties involved in trade. From the above case study, it has been analysed that Roger is
the principal in this case, whose products are carried. The Great Australian Railway Company
(GARC) is the agent who has entered in the contract with principal. Besides principal and agent,
there is a involvement of a third party also which is hired by agent and that is Big Trucks
Australia. By analysing all the aspects of this case, it has been identified that rules and
regulations of “Law of agency” will be applied. Since, this case is related with carrying the
goods from one place to another, statute which is followed is “Travel Agents Act 1986”. The
purpose of this act is to provide licensing to travel agents and regulate their operations
(Hanrahan, Ramsay and Stapledon, 2013).
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Legal issues which are raised in this case are, The Great Australian Railway Company is
a agent of Roger which has a actual authority that is imparted expressly by the principal. This
agent has hired a third party that is BTA, is the agent hold any right to appoint a third party.
Another legal issue which is raised in this case is unilateral decision of GARC. Under this
decision, agent decided to sell the products by their own in order to protect the whole
consignment from unsaleable state, were they has any right over the products. Third issue which
is raised from the case study is BTA which is a third party who has organised disposal and sale
of cucumbers, are they liable to pay any damages or not. Another issue is Roger's cucumbers had
failed to arrive at the Victorian Fruit and Vegetable market, but he is still liable for fees of hiring
stall from the market. Due to these issues, roger claimed for damages due to which main issue
raised that is he liable to claim damages or not (Howells and Ramsay, 2018).
Relevant points arising in agency from the above case scenario may include following
points. According to Law of Agency, GARC is a agent of Roger which has Actual authority.
Another point to be considered is that GARC is a ordinary agent and not special due to which
they only holds general authority.
Recommendation for Judgement:
After analyses Law of agency and Travel Agents Act 1986, it has been analysed that
Roger can claim for damages but only from GARC and not BTA. Referring to rules and
regulations of agency, Roger can successfully get claim for damages of his cucumbers. Reasons
for above statements are:
 Roger has hired GARC as agent which implies an actual authority due to the actual
authority agent is empowered to enter into a contract with third parties(TBA) unless
intention is not bonafide. Even after actual authority, agent can not take any decision
unilateral due to which there is no liability on the third party (Lee, 2012).
 GARC does not holds any power to conduct any business transaction. In the given case,
agent sales the products of principal due to which all the liability is implied on agent.
 Another reason for above judgement is Law of agency according to which if an agent has
acted without actual authority, the principal is not bound because the agent is liable to
indemnify the principal for any resulting loss or damage.
Relevant case study:
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In the case of Armagas Ltd v Mundogas, Agent falsely represented to the third party that
he has specific authority from principal to enter into a business transaction due to which
principal has to bound by agent's action.
After analyses of this situation, court of law passed a judgement stating as Third party
was falsely represented specific authority, due to which no liability of damage will be applied on
third party only agent will be liable to pay all damages (McKendrick, 2015).
QUESTION 2
Law of agency is an area of commercial law which deals in contractual, quasi contractual
and non contractual fiduciary relationships. This law includes relationships between principal,
agents and third parties. This law applies to the jurisdiction of Australia and other various
countries. According to this law, Implied authority is a kind of authorisation that is not expressed
in words or written as a contract. Under this authority, an agent is assumed to have an actual
authority in front of third party. For example, a friend of principal owner of a grocery shop sells
few products to the third party; assuming that he is the owner. Third party does not has any
liability over damages from those products against implied agent (McQueen, 2016).
Actual authority refers to specific powers which are given to agent by principal. This
authority is also refereed as expressed authority as the word of powers are expressed by the
principal in the form of written contract. When compared to implied authority, agent has all the
rights to conduct necessary transactions for effective performance of duties. Along with powers,
agents also holds liabilities of misconduct of transactions. For example: An owner of a grocery
store hires an agent to sell goods, then agent holds all the rights to sell principal goods but will
also be liable for all misconducts (Schultz and Mitchenson, 2016).
Implied authority can extend the actual authority, only when there is participation of third
party. According to Law of Agency, third party is an individual or group of individual which
comes into a contract with agent assuming that they has an actual authority expressed by
principle. Implied authority can be extend to actual authority when third party mistakenly
assumes that the party is agent of principle. For example: Relative of principal owner of a
business is mistakenly assumed to be their agent by a third party, in this case implied authority
provided by principle is extended to actual authority. Difference between these two authorities is
minor but the effect is considerable. While actual authority requires a contract in writing, implied
authority is based on the assumption of third parties. The reason behind implied authority is
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agent by estoppel. This concept is related with the relationship where no formal agency
agreement is in effect. In this case, a principal gives an appearance of agency relationship.
In order to understand the concept of these authorities, relevant case law is Law of
Agency. This law has a wide jurisdiction and is followed by various organisations including
Australia. This law is concerned with the relationship between Principal and Agent. This law
states that agency is a relationship which subsists between the principal and the agent who has
been authorized to act for him or represent in dealing with others. This law states that an implied
authority can be extended to actual authority in various situations. Few of those situations are
discussed below:
By necessity – In this situation, an implied authority is extended to actual authority when
there is a major need. An agent goes beyond their powers by intervening on behalf of the
principles in an emergency. In this situation agent does not need any instruction from principal as
it is considered as impractical to communicate with principal (By estoppel, 2018).
By estoppel – In this situation, a person is cannot be bound by a contract made on their
behalf. If a person acts as a agent to the principal in order to provide benefit then the person will
be known as agent by estoppel. If there is any misconduct then that agent is not liable for any
damages.
Ratification by the principal – This situation states that principal has hired agent and
provided actual authority but after termination of that agent, that authority can be extended as
various third parties has not any information about that termination. For example: principal
owner of a shop, agrees to consider an individual as his agent only because the agent can bring
customers towards their shop. There is no written or oral contract between these parties but both
the parties are liable for any damages caused to third party because of their products
(Thampapillai, 2015).
By act of the parity – In this situation, both agent and principal agrees to provide
authority to agent without any written contract. This case is only justifiable unless there is no
harm caused to third party.
By operation of law – If any principal is considered as bankrupt or insolvent, then
implied agent has the actual power to be answerable to third parties.
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CONCLUSION
From the above project report, it can be concluded that Law of Agency is used to analyse
case studies provided. Main aim of this report of understanding of Australian commercial law is
fulfilled by evaluating various case laws and statutes. From the first question, it has been
concluded that agent will be liable for principal party' losses and third party will not be liable for
any losses as the decision was unilateral taken by agent. Implied and actual authority is also
discussed in this report which provides understanding about agency relationships.
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REFERENCES
Books and Journals:
Corones, S. G., 2014. Competition law in Australia. Thomson Reuters Australia, Limited.
Hanrahan, P. F., Ramsay, I. and Stapledon, G. P., 2013. Commercial applications of company
law.
Howells, G. and Ramsay, I. Eds., 2018. Handbook of research on international consumer law.
Edward Elgar Publishing.
Lee, R., 2012. Law and regulation of commercial mining of minerals in outer space (Vol. 7).
Springer Science & Business Media.
McKendrick, E. and Liu, Q., 2015. Contract Law: Australian Edition. Macmillan International
Higher Education.
McQueen, R., 2016. A Social History of Company Law: Great Britain and the Australian
Colonies 1854–1920. Routledge.
Schultz, T. and Mitchenson, J., 2016. Navigating sovereignty and transnational commercial law:
the use of comity by Australian courts. Journal of Private International Law. 12(2).
pp.344-378.
Thampapillai, D., 2015. AGENCY LAW. Australian Commercial Law, p.135.
Online
By estoppel. 2018. [Online]. Available through: <http://netk.net.au/Contract/07Estoppel.asp>
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