logo

Corporate Law - Assignment Sample

   

Added on  2021-06-17

7 Pages2382 Words66 Views
Running head: CORPORATE LAW0Business Law andCorporate Law

CORPORATE LAW1Question 1IssuesDid Gabby and Terence enter into a contract even though Sara did not tell Gabby thatshe works for Terence?Is Terence liable to pay to Mary even though he told Peter not to purchase any moregold? Is a contract exists between parties?Can Gordon demand the money from Terence even though Peter did not have theauthority to book orders for Terence? Is a contract exists between parties?LawAn agency is referred to an agreement which is constructed between two parties inwhich one party is the principal, and another is the agent (CSU LAW504 Modules, 2018,Topic 12). By entering into an agency agreement, the principal transferred the authority to theagent and based on such authority the agent can enter into legal agreement with third-partieson behalf of the principal. While entering into a contract, it is necessary that the agentdisclose his agency to the party of the contract. If the agent does not disclose the agency, thenthe principal cannot be held personally liable by the contracting party. However, the doctrineof undisclosed principals provided that even if the agent failed to disclose his agency, a legalcontract created between principal and the contracting party. In this case, the third-party hasthe right to make selection based on doctrine of election in which the party can enforce eitheragent or principal to perform the terms of the contract. The example of undisclosedprincipal’s liability was given in Siu Yin Kwan v Eastern Insurance Co Ltd (1994) 2 AC 199case. As per the facts of this case, a company purchase insurance policy for its employees.When one of its employees died his representatives filed for a claim, however, the insurancecompany denied the claim by stating that they contracted with the company. The courtprovided that the corporation acted as an agent for the employee and based on the doctrine ofundisclosed principal the insurance company is liable to pay the claim money to therepresentatives of the employee.The authority which enables an agent to take actions for his/her principal is divided into threeparts: actual, ostensible and authority of necessity. Each of these authorities assists the agent in performing his/her duties. The actual authority is further categories into two parts: express

CORPORATE LAW2and implied authority. In case of express authority, the principal provides the authority to his/her agent either orally or in writing (CSU LAW504 Modules, 2018, Topic 12). In case of implied authority, the principal did not directly provide the authority to the agent whereas the authority is included in the scope of the agent’s duties. This authority is given to the agent by his/her title or post, and it is referred to the authority which he/she required to perform his duties (Thampapillai, Bozzi, Tan & Matthew, 2015, pp. 142-144). The principle of implied authority was implemented by the court in Watteau v Fenwick (1893) 1 QB 346 case. In this case, Fenwick was the owner of a pub, and he hired Humble as its manager to perform its daily activities. Fenwick said to Humble that he shouldn’t purchase anything for the pub other than bottled ales and mineral water. However, Humble entered into a contract with Watteau for purchasing cigars for the pub. Watteau later find out that the real owner of the pub is Fenwick and he sued him to claim the remaining amount for cigars, however, Fenwick argued that Humble did not have the authority to purchase cigars. The court provided that Fenwick is liable to pay to Watteau because Humble had implied authority to enter into the contract on behalf of the pub because he was acting as the manager.Ostensible authority is also called apparent authority, and it is different from actualauthority. In this case, the principal did not provide an actual authority to the agent, however,he/she represent to third-parties that the agent can enter into a legal agreement on his behalf.The example of ostensible authority was given in Freeman & Lockyer v Buckhurst ParkProperties (1964) 1 ALL ER 630 case. As per the facts of this case, a director (Kapoor) wasallowed by other board members to take actions as Managing director in some situationshowever he was not appointed on the post. He contracted with architects to work on one ofthe company’s projects. Later, the board of directors argued that Kapoor did not have theauthority to act as the MD of the company. But, the court provided a judgement that theboard allowed Kapoor to act as MD in meeting of the corporation which is enough for third-parties to assume that Kapoor has the authority to act on behalf of the corporation, therefore,the contract is valid (CSU LAW504 Modules, 2018, Topic 12).ApplicationWhile entering into a contract, it is necessary that the agent disclose his agency to thecontracting parties. However, as per the doctrine of undisclosed principals, the principal canbe bound as per the terms specified in the contract even if the agent. Sara failed to tell Gabbythat she work for Terence and she entered into a contact with her. Based on the provision of

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
CSU Busines Law 504 Modules
|12
|2336
|42

Business and Commercial Law
|11
|2396
|473

Commercial and Corporation Law
|8
|2390
|79

Law of Agency in Relation to Contract
|10
|2281
|458

Corporation and Business Law - Assignment
|10
|2260
|68

Business Law: Agency, Usual Authority, and Separate Legal Entity
|11
|2376
|140