Business law - Solved Assignment

Running Head: BUSINESS LAW
Business Law
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Answer 1
Issue
1. There is a question of the authority of Jevan to take the responsibility to repair the guitar.
2. As the principal, what can be the duties of Jevan?
3. As the situation that has been presented here, what liabilities has been given to Jevan?
4. Is there any breach of warranty that has been made by Jevan?
Rule 1
A statement has been made by the court in the case of Hely-Hutchinson v Brayhead Ltd
[1967] 1 QB 549 that the principal has to bind with the action of the agent where there is an
Apparent Authority or Actual Authority.
The term implied authority is the individual’s authority to make a contract that is legally
bound on behalf of the organization by interacting with the public on behalf of company. A
person who carries the trademark of the organization and functions his authority according to
the organization is said to be as having an implied authority.If the agent has the limited
authority that has been done by the principal, then the third party will not be restricted from
making a claim. In the case of Watteau v Fenwick [1893] 1 QB 346, the provisions for the
implied authority has been discussed. In this case a pub owner has appointed a manager and
his role is to be the manager of the pub and some authorities, in this scenario the manager
was specifically forbidden from buying cigars. As the act was done in the common course of

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the usual authority hence such a situation occurred. Therefore, the limitations will only be
effective when the third part is informed about it.
The agent allocated certain duties to the principal which also included the duty which was
mentioned in the case of Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 that was the
duty to avoid conflict of interest. As per the case of Attorney General for Hong Kong v Reid
[1994] 1 AC 324 the duty of not making any secret profit was also included, the discussion
was also regarding the case of Robb v Green in which not misusing the confidential
discussion being an agent was used. It is the duty of an agent to comply with the instructions
which are being stated by the principal and also perform accordance to the authority, as per
the case of Kelly v Cooper [1993] AC 205. According to the case of Chaudhry v Prabhakar
[1989] 1 WLR 29 the court declared that among such duties one of which is to make sure that
the agents implement care and sensible skills in the process of completing their duties.
Whether or not an agent is able to abide by the above mentioned duties were determined by
applying an objective test by the court in the case of Calico Printers' Association Ltd v
Barclays Bank Ltd (1931) 145 LT 51.
The principal could be bind by the acts of the agent as he had the control to do so, and then
the claim would be directly made from the principal by the third parties, as per the case of
Armagas Ltd v Mundogas Ltd or The Ocean Frost [1986] AC 717. Meanwhile, when the
agent is seen to perform outside the authorities given to him, then he might be set responsible
through the principal for paying the loss they faced.

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According to the case of European Ventures LLP v Cedar Capital Partners LLC [2014]
UKSC 45 the court stated that if an individual was seen to create any impression of agency
whereas no such agency exists as per the principal in accordance to the third party permits
that in such case an individual has the right to do so.Though, such authorities in reality are
not been given, the violation of the warrant of authority is done, and the claim can be made
by the third party.
APPLICATION
According to the scenario, ‘The Thin Heads’ had an agent named Jevan who frequently gets
involved in a contract with John on the behalf of theband for the servicing of the guitar. He
was given the responsibilities of the manager of the band, the responsibilities also includes
the booking of instruments, organizing the meals and maintaining as well as repairs of the
instruments. So, the authorities which were given to Jevan is a part of express authority.
Jimbo who was also a member of the band gave a responsibility to Jevan for the servicing of
the guitar which was highly collectible. The guitar was frequently serviced by John earlier,
this time around the cost was $8800 for rebuilding the guitar completely. In this scenario it
was mentioned that Jimbo declined to pay this amount. A principal is bind by the actions
which are made by the agent if there is Apparent or Actual authority as stated in the case of
Hely-Hutchinson v Brayhead Ltd. In this case an implied authority was given by Jimbo to
Jevan. If an authority which is made for the purpose of making sure proper execution of the
actual authority is done, and no express authority is been given but falls within an agent’s

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position is said to be implied authority. As Jevan was the manager of the band it was within
his usual authority to repair the given instruments. The principal in this case Jimbo, imposed
no such limitations to Jevan, as Jevan had usual authorities of repairing the instruments thus
he repaired the guitar. The dealings between Jevan and John were likely as an agent.
Therefore, as Jevan repaired the guitar under his common authority, John being the third
party might make the band accountable to the pay the sum of $8800.
Several duties are imposed on an agent in regards to principal by the provisions under
common law, because the relationship between them is said to be fiduciary, as per the case of
Chaudhry v Prabhakar. Among the duties one of which states that an agent requires to show
care and sensible skills while performing his duties. According to the case of Calico Printers'
Association Ltd v Barclays Bank Ltd, it was stated that whether or not an agent can abide by
the duties is determined accurately. Therefore, if any sensible individual might was exposed
a much higher degree of care and skill, then the duties are said to be violated. In this
scenario, any sensible individual was there in place of Jevan then he would also have
repaired such a guitar which was of high value and collectible item. Therefore, the duties are
not been violated by him as the guitar was repaired.
As there was no violation of the duties done by Jevan in regards to the duties which he hold
in the band being an agent, so he hold no liability as per Armagas Ltd v Mundogas Ltd.

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No further violation was seen in regards to the warrant of authority made in this scenario
through Jevan. This happened as the time when an individual makes an impression of agency
though no such agency exists on the behalf of the principal in accordance with third party
permits the individual giving him the authority for doing this. Though, if existence of no such
authorities is seen then the third party is liable to get the claim against the agent, as the
violation of the warrant of authority was done. In this scenario, implied authority was seen
between the band and Jevan.
CONCLUSION
According to the scenario which is mentioned above, the actions which were made by Jevan
falls under the implied authority which he received through the principal. Meanwhile, no
such proof was found which could confirm that Jevan violated the duties he holds as an
agent. Therefore, in regards to the principal Jevan holds no such liabilities.
ANSWER 2
APPARENT AUTHORITY
Meaning
A well-known doctrine in regards to law of agency expresses the idea of the apparent
authority. Such a doctrine is used in certain scenario in which it is assumed by a sensible
third party, that the individual they require to deal with has been authorized by the principal.
It means if apparent authority is present then the principal will be liable by the acts of an

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agent even though no expressed or implied authorities are given by him. The apparent
authority raised the doctrine of promissory estoppel, because when a third party is been given
the guarantee by which he can rely for getting indulge in a contract and would violate
provisions under equity in case the principal does not accept the given authority. But, even at
places where no authorities are seen still we could find apparent authority there. Though for
this authority to be present there it requires to be an act committing an error, which in this
case was done by the principal, and if the actions which are done by the agent are based on
wrong impression then there will be no responsibility that the principal would hold.Thus, in a
scenario in which such an act has been done by an agentwhile the principal is present, and
being present he has not prohibited the third party or the agent to get involved in a
transaction then there will be an existence of apparent authority. The provisions of such a
authority might also occur in certain situations in which the principal is seen to dismiss the
agent’s authorities but has no notified the third parties regarding this.
The four elements
The four elements of a valid apparent authority have been explained in the case of the
Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480.
According to the above mentioned case it has been explained by the court that there must be
four considerations to analyse if there is any valid or legalized apparent authority that is
present in the situation. The first consideration or element is the principal who has some way
prepared a representation so that the authority is present in context. The second one is a
proper third party who is bona fide and believes that the authority has been given to the agent

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by the principal. The third party is depended on the responsibility that has been provided by
the principal t the agent in sign the contract. As per the loss that has been caused because of
reliance, the third party must have gone through some changes regarding the position. In the
abovementioned case apparent authority has been developed as the principal has prepared a
representation that agent has the authority on behalf of the organization to get in the contract.
This kind of misrepresentation has been prepared by the original authority. The contractor
was dependent on the authority and was convinced to get in the contract and because of
reliance the contractor has faced many losses.
Apparent Authority’s Legal Consequences
According to the identification of the elements the Apparent Authority has been recognized
by the courts. Due to this the principal is legally bound by the actions that has been promised
by the agent that carries the Apparent Authority. The Doctrine of Estoppel has prevented the
principal from denying that the authority that has been given to the agent by him in forming
the contract from the third party as it totally relies on the contract. However, this kind of
authority cannot be taken into consideration when the third party does not act in a good way
and they also know that the agent do not carry any authority that has been given by principal.
In the famous case named Royal British Bank v Turquand (1856) 6 E&B 327 these
provisions have been given.
Available remedies
Ratification is the primary remedy that is available with respect to that Apparent Authority.
According to the principles of the ratification, an agreement can be ratified by the principal
and has been entered into it through the agent in an unlawful manner. In situation where the

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actions of the agent have been ratified by the principle the third party form a valid contract
with the principles and the agreement becomes binding on both the parties to the contract.
Where such ratification has not taken place the third party can still hold the principal liable
for the actions of the agent. Thus it is best for the principle to ratify the contract with the third
party so that that can benefit for the transactions.

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References
Armagas Ltd v Mundogas Ltd or The Ocean Frost [1986] AC 717
Attorney General for Hong Kong v Reid [1994] 1 AC 324
Calico Printers' Association Ltd v Barclays Bank Ltd (1931) 145 LT 51
Chaudhry v Prabhakar [1989] 1 WLR 29
European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45
Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480
Hely-Hutchinson v Brayhead Ltd [1967] 1 QB 549
Henderson v Merrett Syndicates Ltd [1995] 2 AC 145
Kelly v Cooper [1993] AC 205
Watteau v Fenwick [1893] 1 QB 346