Commercial Law Report: Agency Obligations in a Business Context

This report examines the agency obligations of Leegall Lore & Associates (LLA) in relation to Glitz Cruisers, focusing on a scenario involving a departing partner, Mike High. The report delves into the common law of agency, defining the roles of principal and agent, and outlining the duties of an agent, including following instructions, acting in good faith, and maintaining confidentiality. It explores different types of authority—express, implied, and apparent—and how they apply to the case. The analysis applies relevant case law, such as ACCC v Flight Centre Travel Group Ltd (2016) and Hely-Hutchinson v Brayhead Ltd (1968), to determine LLA's liability for Mike High's actions after he resigned but was still presented as a partner. The report considers the application of the Partnership Act 1891 and 1963, particularly regarding partner accountability. The conclusion assesses LLA's potential obligations and liabilities, considering apparent authority and estoppel, and the remedies available to LLA. The report highlights the importance of clear communication and the potential consequences of failing to inform clients of changes in a firm's partnership structure.

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

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Table of Contents
Issue.................................................................................................................................................2
Rules................................................................................................................................................2
Application......................................................................................................................................5
Conclusion.......................................................................................................................................8
Reference.........................................................................................................................................9

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Issue
The main issue in this case is whether LLA has any obligation under the agency law
issues towards Glitz Cruisers.
Rules
Under the common law agency can be described as a relationship between two parties in
which one of the parties authorises the other to be acting on his behalf for negotiation with
another party. The authorising party is called the principal and the party to whom the
authorisation has been given is called the agent.
The agents are seen to be having certain duties towards the principal in accordance to the
nature and terms of the agency agreement. These duties include-
 following the instructions of the principal;
 act in the interest and good faith of the principal as discussed in the case Lintrose
Nominees Pty Ltd v King [1995];
 making full disclosure of any personal interest for exercising of due care and skill
according to the as has been discussed in the case Mitor Investments Pty Ltd v General
Accident Fire & Life Assurance Corp [1984];
 maintaining confidentiality for any information that has been received from the agency
relationship.
The breach of duty of an agent is seen to be discussed in the High Court case ACCC v
Flight Centre Travel Group Ltd (2016).

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Under the Partnership Act 1891 every partner can be seen as a principal and an agent for the
other partners in the firm. Three Types of authority can be seen as created by way of the agency
relationships. These three types of authorities’ are- Express authority; implied authority and
apparent authority.
An actual express authority can be defined as the specific powers expressly conferred to any
agent by the principal under the common law of agency to be acting on behalf of the principal
either orally or in writing. An Express authority includes the conduct of an agent in course of a
business. As seen in case Freeman & Lockyer v Buckhurst Park Properties Ltd [1964]. This was
further discussed in the case Pirie Street Stage 1P/L v Trotman & Anor and Steward & ors
[2015].
An implied authority can be described as the jurisdiction of the agent to be performing acts
that are necessary in reasonable way for the accomplishment of the purpose of the organisation.
As seen in Hopcroft v Edmunds [2013].
Any situation where original third party would be recognising the authority of the agent the
principal would be bound by the actions of the agent even if there has been no actual whether
express or implied authority present. This type of authority is called apparent authority. As seen
in the case Hely-Hutchinson v Brayhead Ltd [1968]. The question of what would have been
understood by any reasonable person for the words of the principal and agent and the
circumstances had be answered in the case Paribas Carriers Ltd v BNP Paribas [2004].
In certain situations when the principal finds out that the agent has acted without any
authority from the principal, the principal can claim for the ratification of the particular
transaction. This was discussed in the case Keighley, Maxsted & Co. v Durant [1901].

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If an agent can be seen is acting within the scope of the authority given to them by the
principal then, the principal would be liable towards third party for any breach in the duty of the
agent, then the agent is seen to owe towards the principal.
In case the principle can prove that the agent has acted outside their authority then the
agent would be held liable towards the third party for the breach of his duty.
If there is a breach of the duties owed by the agent towards the principal, then the
principle under the common law of agency can claim for certain remedies, such as, rescission,
refusing to pay commission to the agent, suing the agent for damages and suing agent for the
recovery of the commissions. This was discussed in the case Hospital Products Ltd v United
States Surgical Corporation [1984].
Under the common law of agency both the principal and the agent is seen as responsible
for informing any third parties, who has been interest vested, for the termination of the agent
principal relationships.
The principal would be liable by way of estoppel for any unauthorised act of the agent is
the principal had previously created any impression on the third party by their conduct which
would prove to the third party that the authority has been given for any act to the agent by the
principal.
During the course of the business any fraud or Misrepresentation caused by an agent
would be making the principal liable for it.
The principal can be seen having the right for the intervention and requiring third party to
be performing the contract. In such situations the third party has the right to be suing either the
agent or the principal or both.

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Under section 12 of the Partnership Act 1963 a partner in a firm is accountable to the
firm for informing about any benefit that has been derived by him without any consent or
authority of any other partners in the firm, that can be seen as concerning the use of the property,
name or business connection of the partnership firm by the partner.
Application
In the current case it was saying that Mike High is a prominent and highly sought after
family lawyer and is a partner in the legal firm Leegall Lore & Associates (LLA). The other hand
It is seen that LLA provides generous corporate entertainment for its electric line details and the
entire staff at the end of each year in which entertainment such as chartering huge luxury yacht,
the MV flash from Glitz Cruisers. It is further seen that mike had been approached by another
law firm to leave the current law firm is working with. As he got a most lucrative offer which he
found too good to be refusing Mike was seen as resigning from the firm. As Mike was highly
sought after the managing partner decides to keep the news secret for the best of LLA as it was
feared that the clients would be following him to his new firm. As a result the details of Mike
were still seen to be remaining on the firm’s website.
In the fortnight between leaving LLA and starting at World Leg Mike decides to go away
for a few days with his girlfriend. As Mike has been subject to animosity that had been displayed
to him by the other LLA partners after he resigned from the company he became resentful and
started pondering about the excessively long hours he had to work in LLA and all the clients that
LLA generated because of his highly successful law practice and high profile. Mike was seen to
be chartering the yacht, MV Flash, along with the full crew which included a masseuse, a
personal trainer, a doctor and one Michelin chef. Mike and his girlfriend were seen as spending

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the weekend on the cruise. The budgetary committee of the LLA received an invoice for
$2,00,000 from Glitz Cruisers.
Applying common law agency it can be seen that LLA had authorised Mike for acting as
an agent on behalf of it. Under the common law agency can be described as a relationship
between two parties in which one of the parties authorises the other to be acting on his behalf for
negotiation with another party. The authorising party is called the principal and the party to
whom the authorisation has been given is called the agent.
Applying the judgment of the case ACCC v Flight Centre Travel Group Ltd (2016) in this
scenario Mike has certain duties towards the farm in nature and terms of agreement of the
agency. These duties are- following instructions of the principal; act in the interest and good faith
of the principal; making full disclosure of any personal interest for exercising of due care and
skill according to the standard; maintaining confidentiality for any information that has been
received from the agency relationship.
Applying the judgement of the case Pirie Street Stage 1P/L v Trotman & Anor and
Steward & ors [2015] in the given scenario it can be held that mike had been given actual
Express authority in the course of the business when he was a partner in the firm. An actual
express authority can be defined as the specific powers expressly conferred to any agent by the
principal under the common law of agency to be acting on behalf of the principal either orally or
in writing. An Express authority includes the conduct of an agent in course of a business.
By applying the judgement of the case Hopcroft v Edmunds [2013] it can be decided that
there was no implied authority given to Mike. An implied authority can be described as the

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jurisdiction of the agent to be performing acts that are necessary in reasonable way for the
accomplishment of the purpose of the organisation.
Applying the judgement of the case Hely-Hutchinson v Brayhead Ltd [1968] it is seen
that LLA had hidden the fact from its clients that mike had left the firm hence the firm can be
said to be acting as if Mike has the authority to act on behalf of the firm. Any situation where
original third party would be recognising the authority of the agent the principal would be bound
by the actions of the agent even if there has been no actual whether express or implied authority
present. This type of authority is called apparent authority.
The LLA can ask for the ratification of the contract when they found out that Mike had
acted without their express or implied authority by chartering the luxury yacht, the MV Flash.
However it is seen in the case that the news of Mike leaving the firm was not published
by the LLA so they had been acting as if Mike had authority to be acting on their behalf, so Glitz
Cruiser can held them liable for the actions of Mike.
LLA has the responsibility upon them to be proving that there had been a breach of duty
performed by Mike and he had not been acting under the authority of LLA. This was discussed
in the case Hospital Products Ltd v United States Surgical Corporation [1984].
Under the common law of agency LLA can claim from Mike for certain remedies, such
as, rescission, refusing to pay commission, suing for damages and suing for the recovery of the
commissions.
Under the common law of agency LLA and Mike is seen as responsible for informing
any third parties, who has been interest vested, for the termination of the agent principal

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relationships. As none of them informed the clients about Mike’s resignation hence LLA would
be responsible for the actions of Mike as an agent.
LLA would be liable by way of estoppel for any unauthorised act of Mike if LLA had
previously created any impression on the third party by their conduct which would prove to the
third party that the authority has been given for any act to the agent by the principal. Here by not
informing any of its clients about Mike’s resigning LLA can be seen as creating an impression
that Mike is acting under the firm’s authorization.
Applying section 12 of the Partnership Act 1963 it can be seen that Mike is
accountable to LLA for the benefit he derived from Glitz Cruisers by using the firm’s
connections with the Glitz Cruisers. Under section 29 of the Partnership Act 1891 a partner in a
firm is accountable to the firm for informing about any benefit that has been derived by him
without any consent or authority of any other partners in the firm, that can be seen as concerning
the use of the property, name or business connection of the partnership firm by the partner.
Conclusion
Thus it can be concluded from the above discussion that LLA has obligation under the
agency law issues towards Glitz Cruisers.

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Reference
ACCC v Flight Centre Travel Group Ltd (2016)
Freeman & Lockyer v Buckhurst Park Properties Ltd [1964]
Hely-Hutchinson v Brayhead Ltd [1968]
Hopcroft v Edmunds [2013]
Keighley, Maxsted & Co. v Durant [1901]
Lintrose Nominees Pty Ltd v King [1995]
Mitor Investments Pty Ltd v General Accident Fire & Life Assurance Corp [1984]
Paribas Carriers Ltd v BNP Paribas [2004]
Partnership Act 1963
Pirie Street Stage 1P/L v Trotman & Anor and Steward & ors [2015]
Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41