Business Law

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

1BUSINESS LAW
Table of Contents
Question 1..................................................................................................................................2
Question 2..................................................................................................................................3
References..................................................................................................................................5

2BUSINESS LAW
Question 1
In Australia common law is applied to refer to the concept of an agent who is a person
given the authority by a Principal, to form legal relation between such principal and a third
party. It is the principal who empowers the agent to form such legal relation and therefore
makes him liable to execute search legal relations as contracted by the agent. An agent is
supposed to act within the scope of his authority vested upon him by the principal. An agent
can be vested with actual authority, an apparent authority and also a ratified authority. This
paper strives to throw light on the apparent authority of the agent and the legal force of it
(Crosling & Murphy, 2009).
Apparent authority or an ostensible authority refers to a circumstance which is
indicative for any reasonable third party to believe that an agent of a principal has been
authorised to act on behalf of the principal's behalf, including the creation of a contract.
Therefore in such situation, the principal shall be bound to obey and execute the actions taken
by the agent out of necessity and emergency without having any actual authority; however,
incurring an apparent authority due to the sensitivity of the situation. The principal shall be
obliged to accept the decisions taken by the agent in the hour of emergency or necessity even
if the principal had not discussed about taking such a step or decision with the agent. For
example, when a person is appointed under the law of agency, coupled with the powers,
functions and duties of an agent, it could be assumed that such person has been entitled with
apparent authority and therefore liable to carry out things and decisions which such person is
not ordinarily interested with but may be required to do at times (Crosling & Murphy, 2009).
In case where if a principal holds the view that his agent is authorised as per the law
of agency yet no actual authorities vested on him, in such case the third party is protected as
long as it has acted reasonably. This is known as the agency of Estoppel where a principal