Agency Law Analysis: Contracts and Agent's Duties in Business

This assignment analyzes two scenarios related to agency law. The first case examines whether a contract entered by Ricardo, a senior curator at Noora Norra Golf Club Resort (Gabba Pty Ltd), with Willow Landscaping is binding on the company. The analysis covers express and apparent authority, focusing on whether Ricardo exceeded his authority and if the CEO's subsequent actions ratified the contract. The second case assesses whether Jeremy, an agent of Aspirational Developments Pty Ltd, violated his duties by purchasing units without disclosing his personal interest. The analysis considers agent's duties such as disclosure, avoiding secret profits, and acting in good faith. The assignment applies relevant legal principles and case law to determine the outcomes of both situations, concluding with recommendations for each party.

1
Cover page
Name of the Student
Student ID
Word count

2
Contents
Solution 1.........................................................................................................................................3
Issues............................................................................................................................................3
Relevant Law...............................................................................................................................3
Application of Law......................................................................................................................5
Conclusion...................................................................................................................................6
Solution 2.........................................................................................................................................6
Issues............................................................................................................................................6
Relevant Law...............................................................................................................................6
Application of Law......................................................................................................................7
Conclusion...................................................................................................................................8
Bibliography....................................................................................................................................9

3
Solution 1
Issues
Whether the contract entered by Ricardo with Will Land scooping on behalf of the CEO of
Gabba Pty Ltd is binding upon the company?
Relevant Law
An agency is the kind of relationship that is established between two parties. The first party is
called a principal and the other party is called an agent. It is a kind of relationship wherein the
agent is authorized to act on behalf of the principal with an outsider and any acts that are
undertaken by an agent is binding upon the principal. There is no presence of any contractual
relationship, the only requirements is the presence of authority on the part of the agent which is
delegated upon him by his principal.1
The relationship of an agency amid the principal and the agent can be established in four
different manners. That is either expressly or by estoppel or by ratification or by operation of
law. 2 Once an agency is established amid the principal and the agent, then, the principal is
bound by all the actions of an agent. 3
Considering all the above factors, the authority of an agent can be categorised as:
i. Actual Authority – Actual authority are of two kinds:4
a. Express authority – An express authority is an authority directly delegated to an
agent. In order to create an express authority it is necessary that the principal must
either by agreement, words or deed grant an authority to the agent and is called an
express actual authority5.
1 Gino Evan Dal Pont, Law of Agency (LexisNexis Butterworths, 2008 ).
2 The Law Teacher, Contracts made by Agents (2017) < https://www.lawteacher.net/free-law-essays/contract-law/contract-made-
by-agents.php>.
3 Cliver Turner, John Trone, Roger Gamble, ‘Concise Australian Commercial law’ Thomas Reuters, 4th Edition.
4 Roman Tomasic, Stephen Bottomley and Rob McQueen, Corporations Law in Australia (Federation Press, 2002).
5 Hely-Hutchinson v Brayhead Ltd [1967]; Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd
[1964] 2 QB 480.

4
b. Implied authority – The authority that is additional to the express authority so that
the acts of the principal can be honoured appropriately by the agent. These are the
presumed authority that comes along with the express authority and is established
in Hely-Hutchinson v Brayhead Ltd (1968).
ii. Apparent Authority – A representation which is made to the third-party which
portrays that the person is the agent of the principal and has the requisite authority to
bind the principal is called an apparent authority. Acts conducted within the apparent
authority by an agent is binding upon the principal. The representation must be made
by the person who actually had the authority to enter into the contract and is held in
Crabtree-Vickers PL v Australian Direct Mail Advertising & Addressing Co. Pty Ltd
(1975).
In the leading case of Australia and New Zealand Bank Ltd v Ateliers de Construction
Electriques de Charleroi [1976], it was held that the principal who had the actual
authority must had made representation to the third party that the agent has the
requisite authority to enter into a contract thereby granting an apparent authority to an
agent. The principal of apparent authority is also analysed in Panorama
Developments v Fidelis Furnishing Fabrics Ltd [1971].
The difference amid an apparent autotype and an actual authority was rightly
analyzed in Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd.
The law is now applied.
Application of Law
The facts reveal that Gabba Pty Ltd is a company and provides one of the luxury facility in the
name of Noora Norra Golf Club Resort. Ricardo is the senior curator and ground manager at the
Resort. The Resort is facing financial difficulties and thus the CEO of the Resort informs
Ricardo that he is only authored to enter contracts on behalf of the Resort up to the amount of $
10,000.
It is assumed that the CEO of the Resort has an actual authority to enter into contract of behalf of
the company. Thus, since the CEO has the power to enter contracts on behalf of the company,

5
thus, he can delegate such authority to his agent as rightly established in Freeman and Lockyer v
Buckhurst Park Properties (Mangal) Ltd .
Under the law established in Hely-Hutchinson an express authority is delegated to Ricardo to
contract on behalf of the CEO but only to the extent of $ 10,000. Now, the authority that is
delegated to Ricardo is limited in extent.
However, Richard exceeded this express authority when he enters into a contract with Willow
Landscaping for a contract amount of $ 13,000 with an extra cost of $ 4000 (water feature). Later
CEO after considering the circumsttbces tells Willow to Proceed. Thus, by making a
representation to Willow to proceed an apparent authority is granted to Ricardo thereby
authorizing his him contract with Willow for an amount exceeding $ 10,000. As per Australia
and New Zealand Bank Ltd v Ateliers de Construction Electriques de Charleroi [1976], apparent
authority is granted to Ricardo and the acts undertaken by Ricardo within such authority is
binding upon the CEO and thus upon the company.
Thus, the contract entered by Ricardo is within his apparent authority.
Conclusion
It is thus concluded that the company must honor the contract that is made by Ricardo with
Willow as the same is within the apparent authority of Ricardo. The company must pay the bill
amount of $ 17,000 to Ricardo.
Solution 2
Issues
Whether Jeremy is in violation of his duties as an agent against Aspirational Developments?
Relevant Law
An agent is the authorized representative of his principal. The principal appoints an agent, grants
him authorities and empower him to carry out the tasks that are authorized to him by the
principal under actual or apparent authority. Any person can be appointed as an agent by the
principal including a minor. There are several kinds of agents that is, general agent, special

6
agents, and universal agents, etc. whatever may be the category of an agent there are few duties
that every agent must comply with. The same are:6
i. Duty not to make secret profits - An agent is not permitted to make any secret
profits and reimburse to the principal. In Regier v Campbell-Stuart [1939] the
agent was held liable for making secret profits.
ii. Duty to make full disclosure to the principal - Every agent must disclose any
personal interest and all relevant information that arise while carrying out his acts
as an agent. In Mcpherson V Watt (1877), the agent in order to own the property
of his principal (which he is authorised to sell on behalf of the principal) brought
the property in the name of his brother. It was held that the agent was in violation
of his duty to avoid conflicts of interest and the contract was not allowed;
iii. An agent must act as per the directions and instructions of the principal;
iv. No agent can delegate his duties unless he is specifically authorised to do so by
the principal;
v. Every agent must act in a fiduciary manner and with all good faith;
vi. Care and skill must be performed while carrying out his duties;
If an agent is found to be guilty of not performing his duties appropriately, then there are various
consequences that can be faced by him. The same are dismissal, no commission; sue for losses
suffered by the principal. The agent can be held liable towards his principal when the agent does
not comply with his duties and the directions of his principal.
The law is now applied.
Application of Law
Jeremy is the agent of Aspirational Developments Pty Ltd and he is assigned with the tasks of
selling high-rise units “off the plan”. He recently became aware that third competitor is facing
financial difficulties thus their units might become valuable.
In order to earn profits he ask his friend to arrange for funds so that he can purchase three units
and lets split the profit in two.
6 Andy Gibson and Douglas Fraser, Business Law 2014, (Pearson Higher Education AU, 11-Oct-2013 ).

7
It is submitted that Jeremy is the agent and thus he must comply with his tasks with all due care
and skills. He must not ring in nay personal gains and if there is any conflict of interest then the
interest of principal must prevail (Mcpherson V Watt).
However, by buying three units without disclosing the fact to his principal, Jeremy has made
secret profits and thus is in violation of his duties as an agent. As per Regier v Campbell-Stuartno
agent is permitted to gain secret profits and the same must be reimbursing to his principal. He is
even in breach of his duties when in return for a small payment, he informs several people who
have expressed an interest in purchasing a unit of the news.
Thus, Jeremy must face liabilities for his actions and he must reimburse the profits that are
gained by him. His services can also be terminated by Aspirational Developments
Conclusion
Jeremy is in violation of his duties as an agent against Aspirational Developments and must face
liabilities for the same.

8
Bibliography
A. Articles/Books/Reports
Gibson, Andy and Fraser, Douglas, Business Law 2014, (Pearson Higher Education
AU, 11-Oct-2013 ).
Pont, Gino Evan Dal , Law of Agency (LexisNexis Butterworths, 2008 ).
Turner, Cliver, Trone, John, Gamble, Roger , ‘Concise Australian Commercial law’
Thomas Reuters, 4th Edition.
Tomasic, Roman, Bottomley, Stephen and McQueen, Rob, Corporations Law in
Australia (Federation Press, 2002).
B. Cases
Australia and New Zealand Bank Ltd v Ateliers de Construction Electriques de Charleroi
[1976].
Crabtree-Vickers PL v Australia Direct Mail Advertising &Co PL (1975).
Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480.
Hely-Hutchinson v Brayhead Ltd [1967].
Mcpherson V Watt (1877).
Panorama Developments v Fidelis Furnishing Fabrics Ltd [1971].
Regier v Campbell-Stuart [1939].
C. Others
The Law Teacher, Contracts made by Agents (2017) < https://www.lawteacher.net/free-
law-essays/contract-law/contract-made-by-agents.php>.