Case Study Analysis: Applying Agency Law to Real-World Scenarios

This case study analysis examines three scenarios related to agency law. The first case explores whether Coby is bound by a purchase made by his agent, Peter, who exceeded the financial limit. The analysis focuses on the concepts of actual and ostensible authority, concluding that Coby is bound due to the ostensible authority. The second case investigates if Dan can sue Paul, his salesman, for secret profits made from a sale, concluding that Dan can sue Paul based on the agent's duty to avoid personal profit. The final case determines if Barry can recover costs from Justine, finding no agency relationship and thus no basis for recovery. The analysis references legal precedents and applies legal principles to resolve the issues.

Running head: CASE STUDY ANALYSIS
CASE STUDY ANALYSIS
Name of the Student:
Name of the University:
Author Note:

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CASE STUDY ANALYSIS
ANSWER 1:
Issue:
The issue involved in the case is whether Coby will be bound to purchase as per the law of
agency.
Rules:
An agent is under an obligation to follow and comply with the directions given by the
principal and he must act in accordance to the duty which is entrusted to him by the principal. He
must perform within the authority delegated by the principal to him (Twomey et al. 2016). There
are two types of authorities which are the actual authority and the ostensible authority.
The actual authority is the one where the authority is expressly or impliedly entrusted to
the agent by his principal whereas in case of apparent authority or ostensible authority, the
principal in front of the third party shows that the agent is authorized to work on behalf of the
principal but in actual he is not, then in such situation, any act done by the agent is binding on
the principal as the third party is not aware of such absence of authority. This is observed in the
case of Ogden & Co Pty Ltd v Reliance Fire Sprinkler Co Pty Ltd, (1973).
Application:
In the present case, Coby, the plumber engages Peter to buy materials on his behalf but he
limited his transaction cost upto 1500$. But Peter made transaction of 2000$ which was beyond
the actual authority of Peter. U-Bend Pty Ltd. in good faith transacted with Peter not knowing
about the financial limit. In this case, the transaction in excess of 1500$ is valid as per ostensible
authority.

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CASE STUDY ANALYSIS
Conclusion:
Thus Coby is bound by the purchase.
Answer 2:
Issue:
The issue is whether Dan can sue Paul under Agency law.
Rules:
As per the law of agency, the conduct of an agent if deemed or considered to be within
the authority of agency, then such act will be binding on the principal to the third party with
whom the agent makes transaction. As per the law of agency, the duty of the agent is to not incur
any personal profit or secret profit.
Application:
In the given case, Paul acts as a salesman at Dan’s company. He is not an employee as he
worked on commission. Though not an employee, he works in the company of Dan. In this
regard, he can be regarded or deemed to an agent of Dan. Like any other agent, the deemed agent
is also under a duty not to gain any secret profit or benefit.
Conclusion:
Hence, Dan can sue Paul and demand the profit he gained from the sale of the BMW.

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CASE STUDY ANALYSIS
Answer 3:
Issue:
The issue is whether Barry can recover the cost from Justine.
Rules:
As per the case of International Harvester Co of Australia Pty Ltd v Carrigan’s Hazeldene
Pastoral Co (1958) 100 CLR 644, agency can be defined as the capacity or authority in which
one person called the agent acts or functions on behalf of another person called the principal
during any transaction to the third person. When there is no such transfer of authority or capacity
of the principal to the agent to act on behalf of the principal, there is no agency.
Application:
There is no such agency relation between Justine and Barry.
Conclusion:
Thus Barry cannot recover the cost from Justine.

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CASE STUDY ANALYSIS
References:
Ogden & Co Pty Ltd v Reliance Fire Sprinkler Co Pty Ltd, (1973)
International Harvester Co of Australia Pty Ltd v Carrigan’s Hazeldene Pastoral Co (1958) 100
CLR 644
Twomey, D.P., Jennings, M.M. and Greene, S.M., 2016. Anderson's Business Law and the Legal
Environment, Comprehensive Volume. Nelson Education