Legal Principles of Agency: Can Steve Sue Bianca for the Expenses Incurred for Alpaca's Surgery?

This article analyzes the legal principles of agency to determine whether Steve can sue Bianca for the expenses incurred for Alpaca's surgery and if Bianca can avoid liability by establishing that Steve is not her agent. It discusses the elements required to establish agency, the different forms of agency, and the rights of an agent. The article applies the law to the facts of the case and concludes that Steve is the agent in necessity and has the power to approve the surgery of Alpaca. If Bianca does not pay the legal expenses that are incurred by Steve, then, Steven can exercise his right of lien.

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Contents
Solution.......................................................................................................................................................2
Issue........................................................................................................................................................2
Applicable Law.......................................................................................................................................2
Application of Law..................................................................................................................................4
Conclusion...............................................................................................................................................6
Bibliography................................................................................................................................................7

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Solution
Issue
Can Steve sue Bianca for the expenses incurred by him for the surgery of Alpaca? Can Bianca
avoid the liability by establishing that Steve is not her agent?
Applicable Law
The raised issue is resolved by analyzing the legal principles of agency.
When one person is authorized by another person to undertake acts and omissions on his behalf
then the relationship is called the relation of agency. The person who is delegating his power to
his inferior is called the Principal and upon whom the power is delegated is called the agent of
the Principal.
When the agency is created amid the principal and the agent then an agent has the power to carry
out functions that are delegated upon him by the principal. An agent can enter into a contract
with the third parties on behalf of the principal. The third parties will consider the agent as the
represented of the principal and the acts and omissions that are carried out by the agent with his
delegated powers are binding upon the principal. No principal can disapprove the actions
undertaken by the agent with in his authority. In (International Harvester Co of Australia Pty Ltd
vCarrigan’sHazeldene Pastoral Co1, it was rightly held that the agency is a situation where in an
authority is created upon one person (agent) who has the ability to affect the relationship amid
other persons, that is, the principal and the third parties.2
The main elements to establish amid the parties are:3
i. That the agent is authorized to represent the Principal in front of the third
parties/outsiders;
ii. This agency is created by the presence of agreement. The agreement can be either in
the form of words of mouth, in written form deed) or by expressly creating agency
amid the parties. In (Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd 19644,
the court held that an agency can be established either actually by the principal or
apparently by representing the person as his agent in front of the outsiders;
iii. The acts of the agent are owned and controlled by the principal himself.
Any agency that is created amid the parties, regardless of the manner in which the same is
formulated, every such agency is comprised on the above stated elements.
1 International Harvester Co of Australia Pty Ltd vCarrigan’sHazeldene Pastoral Co . 100 CLR 644 (1958).
2 Pont, 2008. Law of Agency7. Australia: LexisNexis Butterworths.
3 Ibid.
4 Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd 1964.

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However, there is no one form of agency that is established amid the parties. an agency can be
categorized in four major forms.
The first is an agency by Actual or express authority. When the principal delegates his authority
on the shoulders of the agent expressly, that is in writing or by words of mouth then it is an
actual agency that is established amid the principal and the agent. In Freeman and Lockyer v
Buckhurst Park Properties (Mangal) Ltd5, Lord Diplock has rightly explained the actual or express
form of agency.6
The seconds is the agency created by implied authority. In the leading case of (Hely-Hutchinson
vBrayhead7, it is submitted by Lord Denning that implied author is an authority that is assumed by
the agent as his usual course of business. This authority is part of the express authority and is not
specifically given to the agent.8
The third is the agency created by estoppel. When the agency is created by the principal by
holding out the person as his agent in front of outsiders and is rightly established in the leading
case of Lysaght Bros & Co Ltd v Falk9 and International Harvester case10.11
The forth is the agency created in necessity. it is a situation when the agency is created amid the
agent and the principal because of the situation of emergency or necessity. It is a deemed agency
that is established amid the parties because of the need of the situation and time and the
circumstances in which the agent has found himself to act on behalf of the principal and is
rightly held in Bank of New South Wales vOwston12. It is a satiation wherein the agent has not under
circumstances to obtain consent from the principal and is acting in good faith and in the interest
of the principal and is rightly held in China Pacific SA v Food Corp of India13. Thus, to prove agency
in necessity, the basic requirements includes:14
a. That the agent is entrusted with the property of the principal.
b. That the property is at risk and is necessary that the agent must have assumed
property.
5 Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd . 2 QB 480 (1964).
6 Thampapillai, Vivi, Claudio and Matthew. 2016. Australian Commercial Law. Australia: Cambridge University Press.
7 Hely-Hutchinson vBrayhead. (1968).
8 Thampapillai, Vivi, Claudio and Matthew, n6.
9 Lysaght Bros & Co Ltd v Falk . 2 CLR 421 (1905).
10 International Harvester case. (1958).
11 Thampapillai, Vivi, Claudio and Matthew, n6.
12 Bank of New South Wales vOwston . LR 4 App Cas 270 (1878).
13 China Pacific SA v Food Corp of India . AC 939 (1982).
14 Miles. 2015. Thomas and Reuters.
https://legal.thomsonreuters.com.au/product/AU/files/720506676/chapter_summary_21e___ch_5.pdf (accessed April 14, 2018).

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c. That there is presence of real emergency (property is at risk) because of which
the agent has assumed agency and has undertaken actions on behalf of the
principal without seeking prior approval;
d. That the agent who has assumed agency on behalf of the principal must have
assumed the authority in the interest of the principal and there is no self good or
hidden interest of the agent.
e. That the agent is not able to contact the principal or it becomes extremely difficult
to contact the principal.
The compliance of all the above elements results in the establishment of agency in necessity.
Now, every agent is duty bound to comply with his official duties. Once the duties are comply
with then there are few rights that an agent can avail against the principal. The right includes:15
i. Right to seek remuneration – Every agent has a legal right to seek salary of the work
that is conducted by him and is rightly held in (Tian Chan Ltd v The Tower Ltd 2000)
ii. Right to seek indemnity – If the agent faces losses while incurring his duties, then, the
principal is under obligation to pay the losses.
iii. Right to seek expenses – The agent if faced with expenses while catering his duties,
then, the expenses must be paid off by the principal to the agent. The principal cannot
deny the expenses by saying that the expenses are incurred without his permission.
iv. Right to Lien – If the principal does not pay the remuneration of the agent or the
expenses or losses that are incurred by the agent, then, the agent has the right to hold
the goods of the principal and does not return the good till the time his dues does not
cleared.
The above law is now applied.
Application of Law
Steve is the owner of Mundaring (large farm). He is in the services of breeding and taking care
of Alpaca. He keeps the Alpaca in secure areas, feeds them and gave water every day and put the
Alpaca in closed areas at night. For the services, Steve charges $100. Bianca takes the services of
Steve and put Alpaca in the custody of Steve.
On the basis of the said facts, Bianca has made Steve as his agent to take care of his Alpaca and
cater the services that is assured by him. So, as per (Freeman and Lockyer v Buckhurst Park
Properties (Mangal) Ltd 1964), there is an express authority that is entrusted upon Steve and they
are in the relationship of agency.
15 Mugambwa, Harrison and Val . 2007. Commercial and Business Organizations Law in Papua New Guinea.

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However, later this agency is extended and the Steve is held to be the agent in necessity for the
act of approving surgery on the Alpaca of Bianca. This is because of the following facts:
i. As pert the facts, Steve is catering the services of taking care and feeding the Alpaca
for $ 100. Though Bianca has placed the Alpaca in the custody of Steve for limited
services only, however the fact remains that the Alpaca of Bianca is in the custody of
Steve with the approval of Bianca. Thus, the first necessity to prove the agency in
necessity is complied with;
ii. Further, when Steve was providing his services to the Alpaca of Bianca, then at that
time, there was arisen of an emergency under which Steve has to take the decision of
carrying out the surgery upon Alpaca.
As per the facts, one day, alpaca has shown the sign of pregnancy and had stopped
feeding herself. There were also respiratory issues and nasal secretions that are faced
by the Alpaca. After some time, she also contracted with fever and she started
dehydrated. Thus, the condition is much worse than expected. It was later confirmed
that the alpaca is suffering from Bovine Viral Diarrhoea (BVD) which was later
confirmed by the doctor. The doctor also confirmed that the alpaca is also five month
pregnant but the fetus is dead and he further recommended that the alpaca might not
survive if an immediate surgery is not conducted on alpaca.
Thus, all the above facts revealed that the condition of the alpaca is not normal
condition but it is a situation of emergency wherein if the surgery is not carried out
timely it will result in the death of the alpaca. Thus, this is one of the important
requirements that must be proved in order to hold Steve as the agent in necessity of
Bianca.
iii. Further, the facts reveal that Steve has tried to contract twice prior giving approval for
the surgery. Steve contacted Bianca for the first time when he gets aware that alpaca
has shown the sign of pregnancy and had stopped feeding herself. There were also
respiratory issues and nasal secretions that are faced by the Alpaca. Steve called
Bianca at the contact details that were provided by him. However the call is answered
by the house mate and she submitted that Bianca is not available for three weeks and
she does not have any contact member to go through Bianca.
Later when the condition of the alpaca is worsened, that is, she was contracted with
fever and she started dehydrated. It was later confirmed that she is suffering from
BVD, at that time also, Steve again called Bianca but could not reach her.
Thus, Steve has made each and every attempt to contact Bianca prior giving approval
to the surgery of the Alpaca.
iv. From the facts that are delineated above it is crystal clear that the only motive that is
found to be present is that Steve had tried to make all attempts so that the condition of
alpaca does not worsen and he made all attempts so that alpaca is saved. The only
intention that is present is to protect the interest of Bianca. If alpaca is save then the

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only person who is at gain is Bianca. There is no personal gain that can be achieved
by Steve by protecting the life of alpaca.
So each and every action that is conducted by Steve depicts that the sole intention was to
gave life to alpaca and there is no hidden profits that are present that is achieved by Steve by
giving permission to the surgery of the alpaca.
Thus, it is rightful in submitting that though Steve was an express agent and is only allowed
to cater few services to the alpaca of Bianca, but, this author is exceeded and Steve had
become the agent in necessity and thus is now permitted to have authority to gave permission
of surgery to the doctor in order to protect the interest of Bianca.
It is further submitted that since the actions that are undertaken by Steve are the authorized
actions under the agency in necessity, thus, Steve has the rights of an agent and under such
legal rights Steve is permitted to seek his legal remuneration from Bianca. Apart from that
Steve is also permitted to raise the expenses that are incurred by him, that is, $ 3500 while
taking care of the alpaca, the transportation charges etc, and the same must be paid off by
Bianca to Steve.
If Bianca does not pay back the expenses that are incurred by Steve, then, Steve has every
right to exercise his right of lien and must not return the Bianca till the time his dues are not
paid off.
Conclusion
Thus, Steve is the agent in necessity and has the power to approve the surgery of alpaca. If
Bianca does not pay the legal expenses that are incurred by Steve, then, Steven can exercise his
right of lien.

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Bibliography
Books/Articles/Journals
Dowler, M. 2015. Thomas and Reuters..
https://legal.thomsonreuters.com.au/product/AU/files/720506676/chapter_summary_21e___ch_5
.pdf (accessed April 14, 2018).
Mugambwa, J., Harrison A and Val H. 2007. Commercial and Business Organizations Law in
Papua New Guinea.
Pont, G. 2008. Law of Agency7. Australia: LexisNexis Butterworth.
Thampapillai, D., Vivi, T., Claudio, B and Matthew, A. 2016. Australian Commercial Law.
Australia: Cambridge University Press
Case laws
Bank of New South Wales vOwston . LR 4 App Cas 270 (1878).
China Pacific SA v Food Corp of India . AC 939 (1982).
Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd . 2 QB 480 (1964).
Hely-Hutchinson vBrayhead. (1968).
International Harvester case. (1958).
International Harvester Co of Australia Pty Ltd vCarrigan’sHazeldene Pastoral Co . 100 CLR
644 (1958).
Lysaght Bros & Co Ltd v Falk . 2 CLR 421 (1905).
Tian Chan Ltd v The Tower Ltd . (2000).