Commercial Law Assignment: Agency, Remedies, and Royal Commission

This commercial law assignment addresses two key questions. The first question examines the agency relationship between Rugger Advance Pty Ltd (RA) and its sales agent, Mr. Rick Nixx (RN), in the Northern Territory. It explores RN's breaches of duty, including providing consultancy services to a competing business, and the remedies available to RA, such as damages. The analysis applies relevant case law, including Panorama Developments, Hewson v Sydney Stock Exchange, and ACCC v Flight Centre Travel Group Ltd, to establish the existence of an agency relationship, RN's fiduciary duties, and the consequences of RN's actions. The second question discusses the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, focusing on its perceived oversight of the insurance sector and the resulting non-compliance and disputes. The assignment highlights the significance of agency law, fiduciary duties, and the potential consequences of breaches in commercial contexts.

Running head: COMMERCIAL LAW
Commercial Law
Name of the Student
Name of the University
Author Note

1COMMERCIAL LAW
Question 1
Issue
Whether Rugger Advance Pty Ltd (‘RA’) has any right and remedies available against
their sole and exclusive sales agent for the SA in the Northern Territory (‘NT’) namely Mr
Rick Nixx (‘RN’).
Rule
An agency is created with the delegation made by the one party with respect to a particular
responsibility that the delegating party has to another for the purpose of acting on his behalf
for the purpose of undertaking that responsibility. In such a case, the person delegating is
termed as the principal and the person to whom the delegation has been made is the agent.
The principal is required to take liability of all the ventures and endeavours that the agent
undertake. This can be illustrated with the case of Panorama Developments (Guildford) v
Fidelis Furnishing Fabrics Ltd [1971] 2 QB 711.
The relationship between a principal and agent has been created out of a contract that
confers the agent with the power the act on behalf of the principal in return of any benefit that
the principal has extended towards the agent for carrying out the transactions and ventures on
his behalf. This relationship confers the agent with some duties. As the relationship of agency
has been created by virtue of a contract, it imposes all the duties that the parties of a contract
are subjected to. On the other hand, as the agent has been acting on behalf of the principal,
this gives rise to a fiduciary duty for the agent to be carried out towards the principal.
Fiduciary duty indicates a duty assuring trust, which includes the duty to ensure honesty to
furnish all the records relating to the transactions. The agent has the duty to refrain from
setting up any competing venture with that of the business of the principal. The transaction or
acts of an agent is require to ensure the benefits of the principal and all such acts are to be

2COMMERCIAL LAW
carried out with care and diligence on the part of the agent. This can be illustrated with the
case of Hewson V Sydney Stock Exchange 1967 87 WN NSW 422. In this case, the court has
held the agent liable for the conflict of interest that has backed his actions while acting on
behalf of the principal.
The agents are under an obligation to carry their function as an agent in accordance with
the instructions that has been extended to them by the principal. The agent must ensure
diligence and care in the furtherance of the ventures that he has been carrying out while
following the instructions of the principal. In the case of Mitor Investments Pty Ltd v
General Accident Fire E Life Assurance Corp Ltd [1984] WAR 365, it has been held by the
court that the agents are required to be held liable in a personal capacity, for any transaction
they undertake in breach of the instructions that has been given to them by the principal.
The agent has the duty to inform the principal regarding all the conflict of interest or any
other benefits that he has the prospect of accruing from carrying out the business of the
principal. In the case of Lintrose Nominees Pty Ltd v King 1995 1 VR 574, the court held
that in case the agent has failed to disclose any such existence of conflict of interest, the
principal is conferred with the entitlement of rescinding any contract that has been effected in
that furtherance.
The agent is under an obligation to reveal any profit that he has accrued in the furtherance
of the transaction that he has been carrying out by virtue of the agency relationship. It has
been held in the case of Lunghi v Sinclair [1966] WAR 172 that any profit that an agent
makes in the furtherance of carrying out the transactions of the principal is required to be
remitted to the principal and the agent will be liable for the same.
It has been held in the case of Consul Development Pty Ltd v DPC Estates Pty Ltd (1975)
132 CLR 373 that the agent has the duty towards the principal that the agent is required to

3COMMERCIAL LAW
refrain from indulging into any disclosure with respect to any confidential information
pertaining to the business of the principal.
In the case of ACCC v Flight Centre Travel Group Ltd (2016) 339 ALR 242, it has been
held by the court that the agent has the liability to pay damages to the principal for any loss
that has been caused by virtue of any competing venture of the agent to that of the business of
the principal. In this case, the court has ordered for a penalty amounting to $ 12. 5 million to
be paid by the agent for the purpose of mitigating the losses that has been caused by the
competing venture of the agent.
Application
In the present case, Rugger Advance Pty Ltd (‘RA’) is a large proprietary limited
company, with its head office and operations facility located in Berwick, Victoria. RA is a
leading manufacturer and supplier of assorted rugby union and rugby league merchandise and
equipment. Mr Rick Nixx (‘RN’) is RA’s sole and exclusive sales agent for the SA in the
Northern Territory (‘NT’). RA has for a long time been very keen to take advantage of the
growing interest in both rugby codes in the NT (which has traditionally been an Australian
Rules Football playing region). This can be construed as an agency relationship as existing
between RA and RN. This is because there is a delegation made RA with respect to the sales
for the SA in the Northern Territory (‘NT’) that RN has for the purpose of acting on his
behalf for the purpose of undertaking that responsibility. In this case, RA, who is delegating
is termed as the principal and the RN to whom the delegation has been made is the agent. RA
is required to take liability of all the ventures and endeavours that RN undertake. This can be
illustrated with the case of Panorama Developments (Guildford) v Fidelis Furnishing
Fabrics Ltd [1971] 2 QB 711.

4COMMERCIAL LAW
The relationship between a RA and RN has been created out of a contract that confers the
RN with the power effect the sales for the SA in the Northern Territory (‘NT’) on behalf of
RN in return of any benefit that the RN has extended towards RA for carrying out the
transactions and ventures on his behalf. This relationship confers RN with some duties. As
the relationship of agency has been created by virtue of a contract, it imposes all the duties
that the parties of a contract are subjected to. On the other hand, as the agent has been acting
on behalf of the principal, this gives rise to a fiduciary duty for the agent to be carried out
towards the principal. Fiduciary duty indicates a duty assuring trust, which includes the duty
to ensure honesty to furnish all the records relating to the transactions. The agent has the duty
to refrain from setting up any competing venture with that of the business of the principal.
The transaction or acts of an agent is require to ensure the benefits of the principal and all
such acts are to be carried out with care and diligence on the part of the agent. This can be
illustrated with the case of Hewson V Sydney Stock Exchange 1967 87 WN NSW 422. In
this case, the court has held the agent liable for the conflict of interest that has backed his
actions while acting on behalf of the principal.
Mindful of the increasing concerns over ongoing neck and spinal related injuries across
both rugby codes, RA recently launched its Supreme Armour (‘SA’). The SA is a specially
designed and manufactured padded vest, which is worn underneath a rugby jersey. In terms
of appearance, the SA resembles a thick singlet (or a very thin version of a flak jacket) but
which also has a padded collar, which is specially designed to protect the back neck area. The
SA also has extra and concentrated padding along the back centre, which is specially
designed to protect the spinal area. RA’s investment in the research, development, and
marketing of the SA has been considerable. Since its recent introduction to the Australian
sports market, sales of the SA have exceeded all of RA’s expectations. However, it was only
very recently that RA became aware of RN’s ‘side-business’. Apparently, RN had been

5COMMERCIAL LAW
providing ‘consultancy services’ for a fee to a Hong Kong based sports apparel manufacturer
that was trying to develop its own type of protective padded rugby vest that was very similar
to the SA. This can be construed as a breach of the duties that RN has by virtue of the agency
relationship. The agent has the duty to inform the principal regarding all the conflict of
interest or any other benefits that he has the prospect of accruing from carrying out the
business of the principal. In this case, RN has been extending services to a competing
business for a fees. In the case of Lintrose Nominees Pty Ltd v King 1995 1 VR 574, the
court held that in case the agent has failed to disclose any such existence of conflict of
interest, the principal is conferred with the entitlement of rescinding any contract that has
been effected in that furtherance. Hence, it can be said that the RN has failed to disclose the
conflict of interest that he had.
It can be said by virtue of the principle set out in the case of Lunghi v Sinclair [1966]
WAR 172 that any profit that an agent makes in the furtherance of carrying out the
transactions of the principal is required to be remitted to the principal and the agent will be
liable for the same. This will require RN to remit the benefits that he has accrued to RA.
As per the principles set out in the case of ACCC v Flight Centre Travel Group Ltd
(2016) 339 ALR 242, it has been held by the court that the agent has the liability to pay
damages to the principal for any loss that has been caused by virtue of any competing venture
of the agent to that of the business of the principal. In this case, the court has ordered for a
penalty amounting to $ 12. 5 million to be paid by the agent for the purpose of mitigating the
losses that has been caused by the competing venture of the agent. In the present case, RN
has been assisting a competing business by rendering advice. This will confer a right to RA to
calim damages from RN.

6COMMERCIAL LAW
Conclusion
Rugger Advance Pty Ltd (‘RA’) has any right and remedies available against their sole
and exclusive sales agent for the SA in the Northern Territory (‘NT’) namely Mr Rick Nixx
(‘RN’).
Question 2
The Royal Commission into Misconduct in the Banking, Superannuation and Financial
Services Industry has been set up for the purpose of making enquiry and report any
misconduct that has been occurring in the financial sector. This includes the superannuation,
banking and other financial services. It has been contended by the courts and financial
experts that the Commission has been largely confining their activities to the superannuation,
banking and other financial services sectors. They were being ignorant of the insurance
sector. The escape of the insurance sectors from their scrutiny has made several non-
compliance in the sector. This has led to several disputes that the insurance sector witnessed.
This has led to the attention of the commission been brought to this sector. The commission,
in its Final Report has made recommendations with respect to the changes and modifications
that are required to be made with respect to several aspect of this industry (Brody, 2018).
The commission in its final report has laid down four observations that they have arrived at
by virtue of the enquiry, they made in the field of insurance sector. These four observation
will ensure that different formulation of frameworks, remuneration policies and compliances
or even claims and underwriting guidelines and interactions with the clients will remain
unaffected by any alterations made in the insurance laws or any approaches taken by the
insurance intermediaries and regulators.
The first observation, in this regard, is the fact that whatever the law or the approach has been
proposed, it should not encourage or uplift any misconduct. All the concerns related to the

7COMMERCIAL LAW
insurance business are required to ensure that their activities through employees, officers,
agents or any other participants relating to the industry to undertake a behaviour, which does
not lead to any misconduct being effected. The companies and industry related to insurance is
required to prescribe stringent policies and provide for penalties and rewards with respect to
such conduct that can lead to misconduct.
The second key observation, in this regard, is recognition of the imbalances that exist with
respect to power and knowledge. This needed balanced understanding and knowledge
between the insurer and the insured with respect to several events, which are claimable. The
insurer and any representatives that are acting on their behalf is required to be alert regarding
all the imbalance that exists between the insurer and the insured. This is because, most of the
person availing the insurances fails to have informed decision about the terms and the
policies relating to the insurance. They generally do not bother to read the terms clearly
before making a decision regarding the obtaining of the insurance policy. The terms are read
by the insurance only when the time comes where they are required to make a claim. This
kind of difference in the knowledge of the insured and associates creates disputes. The
legislators have in several times tried to change the scenario by changing the same. It can be
considered that it imposes responsibility of the insurer to ensure good faith while asking the
insured to enter into any insurance policy with them. However, in the opinion of the
commission, this will not be enough to mitigate the disputes. The commission also requires
the insurance to satisfy this responsibility of good faith while dealing with the claims that has
arisen out of any dispute.
The commission, in its second observation, has contended that the interest of the insurer and
insured should be assessed before making any conduct and should ensure the interest of the
clients while formulating or recommending the policy. It also require the brokers to refrain

8COMMERCIAL LAW
from serving their own conflicts of interest. All the participants of the insurance business
needs to act and recognise the rights of all the parties in a good faith.
The fourth observation that the commission has set out in their final report is the expectation
that all the misconducts that can be identified need to be punished with utmost urgency
(O’Brien, 2019).
Any changes or alterations that has been made by the legislatures with respect to the
insurance industry need to comply with all the four observations that the royal commission
has brought forward in their final report to ensure a proper working of the insurance industry
and will strive to abolish all the disputes and anomalies that the industry has been facing.

9COMMERCIAL LAW
Reference
Panorama Developments (Guildford) v Fidelis Furnishing Fabrics Ltd [1971] 2 QB 711
Hewson V Sydney Stock Exchange 1967 87 WN NSW 422
Mitor Investments Pty Ltd v General Accident Fire E Life Assurance Corp Ltd [1984] WAR
365
Lintrose Nominees Pty Ltd v King 1995 1 VR 574
Lunghi v Sinclair [1966] WAR 172
Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373
ACCC v Flight Centre Travel Group Ltd (2016) 339 ALR 242
Brody, G. (2018). When banking eats its customers. Arena Magazine (Fitzroy, Vic), (155), 7.
O’Brien, J. (2019). “Because They Could”: trust, integrity, and purpose in the regulation of
corporate governance in the aftermath of the Royal Commission into Misconduct in the
Banking, Superannuation and Financial Services Industry. Law and Financial Markets
Review, 1-16.