Legal Issues in Glitzy Touch and Michelle Case Study

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Contents
Solution 1....................................................................................................................................................2
Issue 1(a).....................................................................................................................................................2
Applicable Law.......................................................................................................................................2
Application..............................................................................................................................................3
Conclusion...............................................................................................................................................4
Issue 1(b).....................................................................................................................................................4
Solution 2....................................................................................................................................................5
Issue 2(a).....................................................................................................................................................5
Applicable Law.......................................................................................................................................5
Application of Law..................................................................................................................................7
Conclusion...............................................................................................................................................8
Issue 2(b).....................................................................................................................................................8
Reference List.............................................................................................................................................9

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Solution 1
Issue 1(a)
Whether Glitzy Touch can sue Jack for the invoice which was raised based on the transaction
made amid Glitzy Touch and Michelle?
Applicable Law
The governing law that helps in evaluating the issue raised is agency law. There are three parties
who are involved in any relationship of agency. In the agency relationship, the principal
authorizes an agent to act for him with the outriders and the contracts that are made by such an
agent within his authority will bind the outsider and the principal. So, the agent’s acts within the
authority that is granted to him by the principal with the outsider will establish a contractual
relationship amid the outsider and the principal and is held in the leading case of Said v Butt1.2
Generally, the authority that is granted to an agent is divided into two broad categories3:
i. Actual authority of an agent – An authority is considered to be actual in nature when
the delegation of the authority is made by the principal in the name of the agent
actually. Actually implies that there should be some expression given by the principal
which portrays that an authority is delegated to an agent by the principal and is held
in Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964]. The
actual authority is normally or two kinds.
a. Express actual authority – When an express undertaking is used by the principal
for conferring authority on the shoulders of the agent, then, the authority that is
possessed by such agent is called express actual authority. The expression can be
in the form of words, gestures, textual etc and is analyzed in Construction
Engineering (Aust) Pty Ltd v Hexyl Pty Ltd4.
b. Implied actual authority – When an implied undertaking is used by the principal
for conferring authority on the shoulders of the agent, then, the authority that is
possessed by such agent is called implied actual authority. The authority is raised
1 Said v Butt (1920)
2 Michael Adams, Australian Essential Management Law, Routledge 1997.
3 Paul Latimer, Australian contract law, 2012.
4 Construction Engineering (Aust) Pty Ltd v Hexyl Pty Ltd (1985).

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impliedly, that is, which is derived from an act which the agent is also permitted
to do and is rightly evaluated in the leading case of Great Northern Railway Co.
vs. Swaffield5 and ANZ Bank Ltd v Ateliers de Constructions Electriques de
Charleroi 6
ii. Apparent authority of an agent – Now, when no authority is possessed by the agent
actually by the principal, but, the authority is granted to an agent by the principal by
making a kind of representation in front of the outsiders, then, the authority that is
assumed by the agent is called apparent authority. In the leading case of
Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd7it was held that
when the principal makes some kinds of overt acts/omissions which makes the
outsider believe that the agent does possess authority to bind the principal, then, any
act which is undertaken by the outsider with such an agent on the good belief that the
agent does have the authority then there is a valid contractual relationship amid the
parties under the apparent authority. So, the outsider can sue the principal as there is a
binding contractual relationship that is made amid the agent and the outsider8.
Application
Jack has appointed Michelle as his chef manager at Le Petit Gâteau’, the bakery café on which
Jack is the sole owner. When Michelle was appointed then he was granted with various
responsibilities and powers, that is, he was capable enough to direct the chefs and the other
assistant at the bakery, He is also capable to check everything that is moving outside and kitchen
and is also empowered to have discussions with Jack regarding the bake wares, mixes and
supplies. Now, as per Construction Engineering (Aust) Pty Ltd v Hexyl Pty Ltd these are some of
the authorities that are given by Jack to Michelle directly and by giving an expression. Thus,
these are the actual express authorities that are possessed by Michelle.
Apart from this, Jack has also granted a kind of apparent authority to Michelle. Jack normally
signs the order forms and gives the same to Michelle who then takes the signed notes to Glitzy
Touch and secures the purchases from him. Thus, by doing these acts an overt representation is
made by Jack in front of Glitzy Touch wherein he asserts that Michelle has the authority to seek
5 Great Northern Railway Co. vs. Swaffield (1874) LR 9 Exch 132.
6 ANZ Bank Ltd v Ateliers de Constructions Electriques de Charleroi (1966).
7 Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480.
8 Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics Ltd [1971].