Case Study Analysis

Running head: CASE STUDY ANALYSIS
CASE STUDY ANALYSIS
Name of the Student:
Name of the University:
Author Note:

1
CASE STUDY ANALYSIS
ANSWER 1:
Issue:
The issue involved in the case is whether Coby will be bound to purchase as per the law of
agency.
Rules:
An agent is under an obligation to follow and comply with the directions given by the
principal and he must act in accordance to the duty which is entrusted to him by the principal. He
must perform within the authority delegated by the principal to him (Twomey et al. 2016). There
are two types of authorities which are the actual authority and the ostensible authority.
The actual authority is the one where the authority is expressly or impliedly entrusted to
the agent by his principal whereas in case of apparent authority or ostensible authority, the
principal in front of the third party shows that the agent is authorized to work on behalf of the
principal but in actual he is not, then in such situation, any act done by the agent is binding on
the principal as the third party is not aware of such absence of authority. This is observed in the
case of Ogden & Co Pty Ltd v Reliance Fire Sprinkler Co Pty Ltd, (1973).
Application:
In the present case, Coby, the plumber engages Peter to buy materials on his behalf but he
limited his transaction cost upto 1500$. But Peter made transaction of 2000$ which was beyond
the actual authority of Peter. U-Bend Pty Ltd. in good faith transacted with Peter not knowing
about the financial limit. In this case, the transaction in excess of 1500$ is valid as per ostensible
authority.