Business Law: Analyzing Agency, Authority, and Third-Party Claims

This assignment analyzes a business law scenario involving a customer (Joe), a salesperson (agent), and a store (Big Screen City Ltd., the principal). The issue revolves around the salesperson's misrepresentation of the store's return policy, leading Joe to purchase a television. The assignment identifies the agent, principal, and third party, clarifying that the salesperson acted on behalf of the store and Joe is the third party. It then explains that the scenario is an example of apparent authority, where the store's conduct led Joe to reasonably believe the salesperson had the authority to make the statement about the return policy, even if it contradicted actual store policy. The conclusion asserts that Joe's rights and interests are protected due to his reasonable reliance on the salesperson's statement.

Running head: BUSINESS LAW
BUSINESS LAW
Name of the Student
Name of the University
Author Note

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Question
Issue
The issue to be discussed in the present scenario is whether there was an agent or
principal relationship and who were such along with the third party. In addition to such it would
also be discussed that what kind of authority is this particular scenario an example of and
whether Joe has the right to take any actions against the store as well as the salesperson for
misrepresentation.
Rule
The law, which governs the relationship between the principals along with their agents,
are considered to be restated by the English law. An agency relationship is considered to be
formed between the two parties where one of the parties agree to represent the other party as an
agent. The principal and the agents are considered to share a fiduciary relationship which is
based on trust and generally all the employees who deal with various parties are considered to be
agents. It can be understood from the case of Petrifond Midwest Ltd. v. Esso Resources Canada
Ltd., [1996] A.J No. 766 at 9 (Alta. C.A.) [1]. Generally, an agent is considered to owe the
principal the duties of loyalty as well as obedience along with such reasonable care and they also
need to avoid any conflict of interests along with secret profits. It can be understood from the
case of Boma Manufacturing Limited v. Canadian Imperial Bank of Commerce, [1996] 3 SCR
727 [2].
Apparent authority is considered to exist when the third party as a reasonable person
would be made to believe through the Principal’s word or through the behaviour or conduct of
the individual that an agent had been authorized to act on behalf of the principal in spite of the

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principal not having discussed the relationship with the agent. It can be understood as an
example that where one of the parties are considered to appoint another person to a certain
position which would carry agency like supremacies and those who are considered to know of
such selection are considered to presume and undertake the apparent authority to do certain
things. In this case, if a principal is considered to create a certain kind of idea that the agent had
been accredited but there has been no actual authority then the third parties are considered to be
protected as long as they have depicted themselves in a manner which was logical and
reasonable. This would also be referred to as agency by estoppel or it can also be referred to as
the doctrine of holding out. It can be understood from the case of Watteau v Fenwick [1893] 1
QB 346 [3].
Application
It can be understood from this particular scenario that the agent is considered to be the
sales person who had been acting on behalf of the principal who was considered to Big Screen
City Ltd. The third party was considered to be Joe as it has been mentioned in the above rule that
all the employees who engage with several parties are considered to be agents of those third
parties. This particular case scenario is considered to be an example of apparent authority in the
law of agency as it has been mentioned in the above rule. Joe being the third party in this
particular scenario has the right to file a claim against the store as he had acted in a reasonable
manner therefore he would be protected. On the other hand the sales person had been acting as
an agent of the store because the principal had through conduct and behavior made the third
party believe that the agent had been authorized to act on the principal’s behalf.

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Conclusion
Therefore, it can be understood from the above scenario that the agent was the sales
person and the Big Screen City Ltd. was its principal and Joe had been the third party. This
scenario was an example of apparent authority in the law of agency and the rights and interests
of Joe as a third party would be protected as he had acted reasonably.

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References
[1] Petrifond Midwest Ltd. v. Esso Resources Canada Ltd., [1996] A.J No. 766 at 9 (Alta. C.A.).
[2] Boma Manufacturing Limited v. Canadian Imperial Bank of Commerce, [1996] 3 SCR 727.
[3] Watteau v Fenwick [1893] 1 QB 346.