Law of Agency Case Study

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Cover Sheet
Name of the student
Student ID
Word count

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Contents
Solution............................................................................................................................................3
Issue.............................................................................................................................................3
Law...............................................................................................................................................3
Application...................................................................................................................................4
Conclusion...................................................................................................................................5
Solution 2.........................................................................................................................................5
Issue.............................................................................................................................................5
Law...............................................................................................................................................5
Application...................................................................................................................................5
Conclusion...................................................................................................................................6
Bibliography....................................................................................................................................7

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Solution
Issue
An advice is furnished to the CEO of Golf Club Resort (company) whether the company is
required to pay the bill to Willow Landscaping?
Law
The relationship of an employer-employee or master-servant is very crucial mainly because it
decides whether the employer or the master can be held accountable for the actions of his
employee or servant.
In (NMFM Property Pty Ltd v Citibank Ltd (No 10)1, the law of agency is defined and it is held
by the court that when two people are in the relationship of principal/master/employer and
agent/servant/employee and such employee is acting on the directions and under the control of
the employer then any liability arising from such an action will fall upon the principal2.
The law of agency is based on the concept of vicarious liability wherein the employer is
accountable for his employee’s actions Scott v Davis3. The only requirement to make the
employer liable is that the employee is totally functioning within the powers that are delegated to
him. Thus, to make a person an agent of the principal, the main requirements are:4
i. The employee is within the services of the employer;
ii. The actions of the employee is directed and guided by the employer;
iii. The actions which are carried out by the employee are delegated to him by the
employer.
Now, the employer can gave power to his employee by three means. The same are:5
i. Actual express authority – An actual express authority is a kind of delegation wherein
the principal intentionally conveys powers to his employees so that the employee can
carry out work on his behalf. This kind of delegation is possible when the principal
either by way of agreement or by actions or verbally grants authority to the agent6.
ii. Actual implied authority – An actual implied authority is the authority for which the
principal does not have to make any actual efforts. But, when any tasks are allotted to
1 NMFM Property Pty Ltd v Citibank Ltd (No 10) (2000) 107 FCR 270.
2 Hassall, Douglas. "Dal Pont: Law of Agency." International Trade and Business Law Review 429, 2003.
3 Scott v Davis [2000] HCA 52.
4 MCCARTHY, LUKE. "VICARIOUS LIABILITY IN THE AGENCY CONTEXT." Vol 4 No 2 (QUTLJJ), 2004.
5 Krawitz, Alan. "Protecting Outsiders to Corporate Contracts in Australia." Murdoch University Electronic Journal of Law,
Volume 9, Number 3 (September 2002), 2002.
6 Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480.