Business and Corporate Law

Running head: BUSINESS AND CORPORATE LAW
Business and Corporate Law
Name of the Student
Name of the University
Author Note

1BUSINESS AND CORPORATE LAW
Part A
Issue
The issue in this present scenario is whether Swimmingpool Co is liable for Martin's
actions. Another issue relating to this whether the company can claim they are not liable for
Martin because he has not followed instructions. Whether Martin is liable to his employer for
any of his actions. Whether Martin has breached any law if he is planning to set up his
business.
Rule
Agency depicts an arrangement under which a person is delegated by another person to
represent him in dealings with a third person (Fitzpatrick et al.). The transactions that are
carried out by the agent under this authorisation would make the principle, who has
delegated, to be liable for the same. The same can be illustrated with the case of Tooth v
Laws (1888) LR (NSW) 154.
An agent who has been acting in furtherance of and under the scope of the authority that
has been extended to him by virtue of the agency will bind the principal liable for such acts or
transaction of the agent to that effect. This has been discussed in the case of Panorama
Developments (Guildford) v Fidelis Furnishing Fabrics Ltd [1971] 2 QB 711. In case the
principal has expressly extended authority towards the agent to act in his behalf and the agent
has acted in that furtherance, the principal cannot deny the liability towards any dispute that
the such an action follows. The same can be illustrated with the case of Ireland v Livingstone
(1872) LR 5 HL 395. This authority is termed as express authority under the common law.
Any wrongful acts that has been committed by the agent in that furtherance will also be
treated to be the liability of the principal. However, such act needs to be committed within the

2BUSINESS AND CORPORATE LAW
scope of his authority under the agency of relationship. In such a case the third party who has
been conferred with the right to claim damages under tort law will held the principal liable
for the tortious acts of the agent. This can be supported with the case of Deatons Pty Ltd v
Flew [1949] HCA 60.
The principal, in certain cases may avoid liability of the acts committed by the agent.
However, for making such avoidance of liability, the principal must establish that the act of
the agent has been committed in excess of the authority that has been extended to him under
the contract of agency. The same can be illustrated with the case of Shaddock v Parramatta
City Council (1981) ALR 385.
The agent owes a fiduciary duty towards the principal and is required to act ensuring the
best interest of the principal. The same can be supported with the case of Hewson v Sydney
Stock Exchange Ltd (1967) 87 W N (Pt 1) (NSW) 422. The performance of the task
delegated upon the agent needs to be carried out in accordance with the directions of the
principal and the agent will incur personal liability for the such, acts which has been
performed by him in contravention of the instructions provided by the principal. The same
can be illustrated with the case of Mitor Investments Pty Ltd v General Accident Fire E Life
Assurance Corp Ltd [1984] WAR 365.
In the case of Regal (Hastings) Ltd v Gulliver [1942] UKHL 1, it has been held by the
court that the agent is restricted from making any personal profit from the transactions on
behalf of the principal unless he has been authorised to do so.
The agent is under an obligation to refrain from establishing a competing business with
that of the firm. The same can be illustrated with the case of ACCC v Flight Centre Travel
Group Ltd (2016) 339 ALR 242.