Roxy's Liability and Rights under Agency Law

This article discusses the issue of Roxy's liability and rights under Agency Law in the case of ordering dresses from Zala Clothing. It explains the concept of agency and the different types of authority, including express, implied, and ostensible authority. The application of these concepts to the case is analyzed, and it is concluded that Roxy will be held liable for the payment of the dresses.

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BSL165 FOUNDATIONS OF
BUSINESS LAW
4/14/2019
Student’s Name

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Issue
The issue of the case is to check whether Roxy is liable to pay the amount mentioned in bill raise
by Zala Clothing. Further to check what are the rights and liabilities of Roxy under Agency Law.
Rules
In the world full of commerce, a person cannot do everything by his/her own and therefore the
same requires other people to act on behalf of him/her. Agency structure helps such people. An
agency is a relationship where one person acts on behalf of others. The person who acts on
behalf of others is known as agent and the person on behalf of whom an agent act is known as
the principal (Dictionary.law.com, 2019). There are three parties in an agency structure always
namely agent, principal, and third party. The lead feature of an agency relationship is that the
principal is liable for the act of agent towards the third party. The agent has authority to act on
behalf of the principal and in this manner, the same bounds to the principal for his/her conduct.
Here this is necessary to state that an authority given under agency may be expressed or implied
one. Express authority is the one which a principal state to agent orally or in writing
(Schneeman, 2009). On the other side, implied authority is the one, which is necessary to
perform the express authority (Upcounsel.com, 2019). For instance, if a person has express
authority to buy good on behalf of the principal then entering into a contract with a seller would
count as implied authority as it is necessary to buy goods. Watteau v Fenwick [1893] 1 QB 346 is
an important case to study here. In this case, the owner of a pub (principal) appointed a person on
the position of pub manager. The principal gave all the authorities to the person, which a pub
manager usually has. He clearly restricted the authority of the agent to buy cigars on behalf of

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the pub. In the decision of this case, the court stated that agent had implied authority to buy
cigars as he was acting in the capacity of pub manager and for the purpose of this job, buying
cigar was a usual act. The court stated that a third party in such situation could not check the
level of authority given by the principal to the agent and it was implied that manager in his role
had enough authority to do the act. Here this is necessary to mention that court secures the right
of the third party where an agent acts in a usual way but had no actual authority because a third
party cannot be aware of the true situation (Swarb.co.uk, 2019). Nevertheless, when a third party
has knowledge of no authority or less authority and still enters into a transaction with an agent
then such party cannot be held the principal bound.
In addition to express and implied authority, one another type of authority also present there
which is known as ostensible authority. In cases of this authority, the principal does not intend to
provide authority but he/she represent as the agent has authority. In the case of Freeman &
Lockyer v Buckhurst Park Properties [1964] 1 All ER 630, it has been held that principal
becomes liable towards third part if because of representation of the same third party believes on
the authority of the agent (Webstroke.co.uk, 2019).
Application
In the case, Roxy was the owner of the boutique and employed Maggy as the senior salesperson.
In order to retain her in the organization, he promoted Maggy to the position of manager. Now
being the manager of the business, Maggy was required to act on behalf of Roxy and her
business, nevertheless, she had no express authority to take business decisions including ordering
any stocks for the business. It means no express authority was there. Roxy, principal of the case
was used to introduce Maggy to other people as her manager. In addition to this Roxy also

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encouraged Maggy to join the fashion shows where other managers were used to gather. The
issue of the case started when one day Maggy went to a fashion show and met Greg, a person
who was a retail representative of Zala clothing. After a lengthy discussion with Greg, Maggy
ordered some dresses on behalf of the business owned by Roxy. The dresses valued at $55000.
After few days Roxy became aware of Maggy’s conduct of purchase stock for business and
another fact the seller Zala clothing had no return policy.
In order to check the rights and obligation of Roxy under agency law, this is to state that she will
be held liable to make the payment of bill raised by Zala clothing. Applying the provisions of the
case of Watteau v Fenwick, Maggy had implied authority as she was acting in the capacity of
manager. A third party had reason to believe that being the manager of the business, Maggy had
the right to order stock for business and the same could not check that in actual Maggy had no
such right. Here Zala clothing had no knowledge of no authority of Maggy and therefore they
can held principal i.e. Roxy liable for this transaction. In addition to the implied authority,
ostensible authority was also there. Roxy herself was used to represent Maggy as her manager all
the time and was sending her to fashion shows. This conduct of Roxy was given a belief and
understanding to third parties that Maggy has authority to take the business decision. Applying
the provisions of Freeman & Lockyer v Buckhurst Park Properties, Roxy will be liable towards
the third party.
Conclusion
Because of the existence of the implied and ostensible authority, Roxy will be liable to make the
payment of $55000.

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References
Dictionary.law.com. (2019). Search Legal Terms and Definitions. Retrieved From:
https://dictionary.law.com/Default.aspx?selected=2370
Freeman & Lockyer v Buckhurst Park Properties [1964] 1 All ER 630
Schneeman, A. (2009). Law of Corporations and Other Business Organization. USA: Cengage
Learning.
Swarb.co.uk. (2019). Watteau V Fenwick: Qbd 1893. Retrieved From:
https://swarb.co.uk/watteau-v-fenwick-qbd-1893/
Upcounsel.com. (2019). Define Implied Authority: Everything You Need to Know. Retrieved
From: https://www.upcounsel.com/define-implied-authority
Watteau v Fenwick [1893] 1 QB 346
Webstroke.co.uk. (2019). Freeman and Lockyer v Buckhurst Park Properties [1964]. Retrieved
From: https://webstroke.co.uk/law/cases/freeman-and-lockyer-v-buckhurst-park-properties-1964