Agency, Actual, implied, Capacity,Rights PDF

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Commercial Law Topic 1 and 2 Classes: 2 x 1hr 50 min per week 1 x 50 min similar per week Assessment: - 20% online multiple choice questions - 80% Exam (2 hours open book) Unit topics: - focus on contracts using an agent - sale of goods contract - statutory implied terms - contracts involving staturoty unconscionability - consumer protection against unfair contracts - consumer guarantees - person property security Actual Authority 1) Actual express Authority:  Actual authority requires the consent of the principal and the agent  Actual express authority may be conferred in writing or by words  A director may be autherised to act in certain matters on behalf by its articles.  If agency is created by a power of atterne, the deed will be strictly constructed: Tobin v Broadbent (1947) 75 CLR 378. 2) Implied  Implied authority is consent of the principle to the agent acting for them, and the consent of the agent so to do are inferred from the relationship between them  In Mullins v Miller (1882) 22 Ch D: an agent was autherised to lease a property, there would be implied authority to describe the roperty to prospecutve lessees.  This can be contrasted in Fairmede Pty Ltd v Von Pein {2004} ANZ COnvR 382, Where the agent was autherised to sel property bit did not have implied authority to make representations as t how vendors would respond to requests for extensions time under the contract.  Actual implied authority in an agent to enter a particular transaction cannot exist where there are express directions from the principal to the agent to the contrary: Fray v Voules (1859) 1 EL & EL 839.  It may be inferred that an aget was impliedky autherised to perform similar type tasks in the future: Powercor Australia Ltd v Pacific Power {1990} VSC 110. Constructive authority 3) Apparent authority 4) Representation 5) Reliance 6) Detriment 7) Limitations 8) Limitations 9) Corporations

Nature of agency:  Agency is a set of legal relationships governed by common law principles Where an agency relationship exists:  The Agent has the authority to legally bind (a)  The principle in relation to; (P)  A third party (T)

Binds The Nature of agency:

Example of this relationship: EG: you (P) say to your friend (A) ‘Buy me a Subaru up to $20000’. Your friend (A) signs the contract with a third party (T) RESULT: 10) A (Your Friend) has bound P (You) contractually to T (Third party 11) Other rights/ duties that can be created/affected by an agent:  Pay or receive money for P  Make or receive representation on behalf of P  Impose liability on P for tortious acts of A

Sources of an agents authority:

Principal will only be bound by acts of the agent which are within the agent authority: Two exceptions: 1) Where the principal has held the agent out as having such authority 2) Where the principal later ractifies those acts 12) If an agent performs an act but lacks authority to do so then then the agent may be liable to the principal for breach of duty to principal and to the third party for breach of warranty of authority Why Agents and use of the term agent: The aim of the appointment of an agent is the performance of a service for the principal: what the principal finds it impracticable, inconvenient or difficult to do for himself, he proposes to do through another’. 13) Agents are used where one person has the authority to create legal relations between the principal and third party: International Harvester CO of Australia Ltd v Carringans Hazeldede Pastoral Company (1968) 100 CLR. 14) Commercial convenience (salesperson) 15) Necessity (Corporations) 16) Expertise (Real Estate, insurance) Bailment: 17) Delivery or transfer of procession of chattel with a specific mandate which required the identical item either be returned to the bailor or to be dealt with in a particular way by the bailee 18) The bailee has no power to make contracts on the bailors behalf nor can he mke the bailor liable for any acts he does. Employees: 19) Under control of the employer 20) May also be an agent- not always 21) Bottomley v Harrison (1952) 1 All ER 365

Categories of general agents:  Brokers- legal agents for only one of the parties and not entrusted with possession of goods  Factors- entrusted with procession of goods to sell in own name  Commission Agents- appointed to buy or sell on behalf of principal  Del credere agents- extra duty to principal in ensuring the principal gets paid

 Powers of attorney- principal confers authority on agent to perform certain acts and is reglated by statute. Scope of Agency: Distinguish between agency and other relationships: 22) Look at substance of relationships- not label Subtance over form 23) International Harvester Co of Australia Pty Ltd v Carrigan’s Hazeldene Pastoral Company (1968) 100 CLR 644 24) Just because agent for one purpose, does not mean agent for all pirposes

International Harvester Co of Australia Pty Ltd v Carrigan’s Hazeldene Pastoral Company (1968) 100 CLR 644

In this case, Agency is a word used in the law to connote an authority or capacity in one person to create legal relations between a person occupying the position of principal and third parties. But in the business world, its significance is by no means thus restricted In Petersen v Moloney (1951) 84 CLR 91: “ An agent is a peron who is able, by virtue of authority conferred upon him, to create or affect legal rights and duties as between another person, who is called his principal and third parties.”

Scope of agency: An agent is in a fiduciary relationship with their principal and as such is under the obligation assumed by all fiduciaries: Hospital products Ltd v United States Sergical Corp (1984) 156 CLR 51. - If appointed by a contract, they are obliged to act in accordance with the terms and contions of that contract and will breach the contract if they exceed that authority invested in them -

When assessing whether A was agent of P ask: “Was A the agent of P for this act” NOT “was A the agent of P”: Toll (FGCT) Pty LTD v Alphapharm PTY LTD (2004) HCA 52 25) Must relate to an act 26) Principal must have legal capacity to perform act autherised to the agent 27) Agent must have authority for this act: Peterson v Moloney (1951) -

Toll (FGCT) Pty LTD v Alphapharm PTY LTD (2004) HCA 52 28) The court held that the agent had authority to contract with the carrier and t agree upon rates of freight, terms of payment and such other standards of terms and conditions as were required by the carrier. Beazley v Seed & Grain (1988)  

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An agent, authorised to sell certain land, prepared a written record of an oral agreement between vendor and purchaser and sent copies to both the purchaser and the vendor. Vendors argued the written record constituted a written memo signed by them. Issue: Was there an enforceable contract? Held: It is never sufficient to say of a person that he is an agent. One must always ask for what purpose the person concerned was appointed agent, and one must always look to see whether the particular act was being done by the agent as agent or in some other capacity. AT THE TIME HE SENT THE LETTER, THE ‘AGENT’ WAS NOT ACTUALLY AN AGENT FOR THIS ASPECT OF THIS PARTICULAR TRANSACTION.

Although Prima Facie there was a stong case that a contract has come into existence, the contract was oral and would only be enforceable if there was a note or memorandum in writing signed by one of the registered properietors.

Capacity to principal: - Principal must have the legal capacity to perform the act through agent: Christie v Permeman, Wright & CO Ltd (1904) 1 CLR 693. - whatever a person can do themselves can be done through an agent - S124 Corporations Act provides that a company had legal capacity as a natural person - All persons of sound mind can be an agent - agent does not need contractual capacity- Watkins v Vince (1818) 2 Stark 368

AGENT (substance)? P HAS CAPACITY? A IS OF SOUND MIND? A HAS STATUTORY CAPACITY? 29) Power an agent has (or appear to have) to act for P in relation to T 30) May be actual or constructive:

Authority to agent- introduction: Equitcorp Finance v Bank of New Zealand (1993) 32 NSWLR 50 set out the basic concept of actual express authority: 31) P must grant, and A must accept, authority to perform certain tasks for P 32) Must be consensual agreement (consent the basis) 33) Can be created by written contract or spoken words

Equiticorp Finance v BNZ also addressed the question of actual implied authority: “ Where the question is whether the agent has implied authority to act in a particular way, the court directs its attention to the conduct of the parties in order to decide whether the inference of authority should be drawn.” Principal’s Duties and Agents Rights: An agent had no right to receive remuneration other than from their principal unless there is a contract expressed or implied to that effect: Smith v Stallard and French {1919} WALR 19 and 20. Lein:  Agents are entitled to be indemnified in respect of losses, liabilities and espenses incurred in the performance of the funtions as agent: RE Clune; Ex parte Verge v Isabella Nominees Pty Ltd (1999) 14 ACLR 261 Indemnity:  An agent has the right to be reimbursed for all expenses and indemnified against all losses and liabilities incurred by them while acting within the scope of their authority: Anglo Overseas Transport Ltd v Titan Industial Corp (Uk) Ltd {1959} 2 Lloyds Rep 152. The agents Liability to the Third Party:  An agent who contracts in writing in their own name is not exonerated from personal liability merely because the other contracting party was aware that they were acting in their cacapity as an agent: Basma v Weekes {1950} AC 441.  If an agent does contract personally though on behalf of their principal the agent is personally liable, and may be sued in their own name on the contract: Cooper v Fisken (1912) 18 ALR 155. ...