Corporations and Business Law: Case Study Assignment

Running head: CORPORATIONS AND BUSINESS LAW
CASE STUDY ASSIGNMENT
Name of the Student
Name of the University
Author Note

1CORPORATIONS AND BUSINESS LAW
Part A:
Issue:
The following issues are to be resolved in this case study:
 Whether the Swimming Co is responsible for the acts of Martin?
 Whether it can be claimed by the company that they are not liable for Martin’s act as
he acted without instructions?
 Whether Martin is liable for any of his actions to his employer?
 Whether Martin has caused the breach of any law if he has planned to establish his
own business.
Rules:
The law of agency is a field of commercial law that deals with contractual, non
contractual and quasi contractual relations that includes a person known as the agent who has
been authorised to act on behalf of another known as the principal to make transactions with
an outsider known as the third party. In this relation, the principal expressly or impliedly
provides authority an agent to work for him or on behalf of him under his control.
An agent when acts within the ambit of the authority conferred to him by the principal
binds the principal and makes him liable for the act done by him. This has been observed in
the famous Panorama Developments (Guildford) v Fidelis Furnishing Fabrics Ltd [1971] 2
QB 711. In this case, the principal had extended the authority of his agent expressly such that
the agent not only was authorised to act on his behalf but also to act in furtherance. Thus here
the principal is barred from denying his liability if any dispute occurred due to agent’s act.
Similar observation was found in the case of Midland Bank Limited v Seymour [1955] 2
Lloyds Rep 147 where the authority is expressly given under the common law principle by
the principal.

2CORPORATIONS AND BUSINESS LAW
Any illegal or misconduct committed by the agent will make his principal liable. But
there lies a condition for this which states that the agent is required to perform such act within
the authority he has been entrusted with. If that condition is satisfied, then the principal will
be liable to the 3rd party who can claim damages for the tort committed by the agent under the
law of tort. In the case of Deatons Pty Ltd v Flew [1949] HCA 60, (1949) 79 CLR 370, this
type of observation was found.
However in some cases, the principal can deny his liability for any wrongful act
committed by the agent. This can be considered only when the agent has acted beyond his
authority or without any authority. This was elucidated in the Shaddock and Associates Pty
Ltd v Parramatta City Council (No 1). [1981] HCA 59 case.
The agent also has a fiduciary duty towards his principal such that he acts n good faith
to ensure best interest for his principal. This was entrenched in the case of Caltex Oil
(Australia) Pty Ltd v The Dredge Willemstad (1976) 136 CLR 529. The agent is authorised to
act in accordance to the directions of his principal and any contravention if results due to
performance of the agent without the directions of his principle will let him incur personal
liability. This was held in the famous case of Liners Ltd [1910] AC 498 434 Moore and
Kettle v Woolsey and Knill (1854) 4 E & B 243 case.
In the case of Regal (Hastings) Ltd v Gulliver [1942] UKHL1, the court stated in clear
words that agent is prohibited in incurring any personal advantages in course of his
transactions as an agent of his principal provided he has the authority to do so. Similarly an
agent is barred to establish a business in competition to the business of the principal as held
in the case of Australian Competition and Consumer Commission v Flight Centre Travel
Group Limited [2016] HCA 49; 261 CLR 203; 91 ALJR 143; 339 ALR 242.