Definition of an Agent and a Principle
In Australia, the Common Law applies in many aspects especially when it relates to defining who an ‘agent’ is. An agent is defined as an individual with the authority to affect or create legal relations that bind third parties and a principle. As such, Common Law guides the formation of an agency relationship, its operation as well as termination. The law also stipulates the duties and rights of an agent, the third party and also the agent. There are statutes which regulate the activities of agents and they mainly include the Estate Agents Act 1980, Auction Sales Act 1958, Consumer Credit Act, 1995, Goods Act 1958, Travel Agents Act 1986 and Instruments Act 1958. These legislations are all in the Victorian Legislation.
According to the Australian Law, the word ‘principle’ is defined as an individual who gives an agent the authority to perform duties on his behalf. As such, the principle empowers an agent to affect legal rights or create legal rights and duties between him and a third party. Authority and agency can be formed through the establishment of a contract which can be done orally, implied or even written. Ratification is also a method that can be used, (Foster 2017). It is also essential to note that a contact can be formed by estoppel especially in a situation where a third party believes a relationship is in existence. In some situations, emergencies rise hence the use of necessity and as such, implied or express authority is needed. Through the action of an agent, the principle becomes liable as long as the agent is acting within the confines of the contract, (Woirnaski et al. 2017).
The law of agency also highlights how a principle is liable when the contract is still in force. It is clear that the actual authority of an agent is expressly received from the principle and liability, in this case, are straightforward. On the other hand, the implied authority that is held by an agent because he carries authority from a principle hence making it a binding agreement, though less straightforward, (Schuster et al. 2018). To put this into perspective, the implied authority that is always assigned is a major element brought into light especially after the reversal of a court decision made in a South Wales Supreme Court after an appeal. Australia and New Zealand Bank Limited versus Ateliers de constructions electriques de Charleroi [1969] 1 AC 86. In this case, it was decided that a reliance on implied actual authority was right hence the ability of an agent to endorse cheques belonging to Ateliers. Initially, the Ateliers had been awarded damages after an agent had endorsed cheques made by Helios- an Australian agent.
Formation and Termination of an Agency Relationship
It is also worth noting that there are stringent rules that protect outsiders who have or make deals with companies. Such a rule includes the rule in the case of Royal British Bank v Turquand. As such, agents have the authorization to act. In this case, it was held that persons who are tasked to conduct certain businesses and duties on behalf of accompanying are in the right path as long as these acts are done in accordance with the articles of association and other regulations governing the company or business, (Wright 2017). The main issue here is whether the acts are consistent with the regular operations of the company.
There are duties that agents have to perform on behalf of principles. To start with, it is essential for an agent to act in good faith with the interests of the company being at heart. In a situation where a conflict of interests is foreseen, an agent has to stay away from them and solely safeguard the company’s interests. It is also worth noting that agents are held liable for breach of contracts. Authority is one of the strengths that an agent is conferred with, (Stewart and Silink 2018). As such, all activities and obligations he participates in a bind the principle directly, especially when these activities are done with third parties. Three forms of authority exits and they include actual authority, ratified authority, and apparent authority.
Actual authority further consists of implied authority or express authority. The consensual agreement is the main recipe for authority and as such, the main issue that may arise is whether there is a consensual agreement between the two parties, (Wilson and Pender 2018). Indemnity arises and is bestowed upon an agent when he acts within the confines or scope of his or her authority. In case an agent breaches the authority, he or she is held liable. An agent may not claim for damages in tort when he or she acts beyond the scope of the agreed employment. On the other hand, express actual authority comes in when a principle expressly tells the agent to act or carry out a duty on his behalf. In implied actual authority, an agent acts with the guidance of the authority given to him by the principle.
Apparent authority is at times called ostensible authority. This mainly guides a third party who believes that a principle’s directive should be followed even if the agent and the principal did not have any discussion about it. Here, the third party understands and knows that the agent is authorized to act on behalf of the principle, (Carney 2018). A reasonable action done by the third party is protected by law especially when it is known that a principal authorized an agent and all activities were done according to the regulations set. In some cases, a principle may create an impression whereby an agent seems to have been authorized. By proceeding with transactions, third parties are deemed to have acted reasonably. As such, this scenario is called “agency by estoppel”. As a result, the principle is estopped from refuting that he or she granted authority to the agent, (Williams et al 2018). A case in point is Rama Corporation Limited V Probed Tina and General Investments Ltd [1952] 2QB 147, Slade J where it was held that apparent authority or ostensible authority is a kind of estoppel that is mainly comprised of three factors which are presence of a representation, reliance on that representation and lastly and incidence where one’s position is changed because of the reliance. It was also held in the case of Watteau v Fenwick that principles are held liable for all acts done by agents as long as they are within the scope of their duties and authority.
Authority and Liability in Agency Relationships
Liability is a crucial element when it comes to the laws of the agency. An agent can be held liable to a third party or a principle and a principle can be held liable to an agent. In this particular scenario, the agent is liable to the principle. In this regard, the actual authority should be followed when carrying out an activity. An agent will be held liable when he or she does not inform the principle of any issues which may arise in the course of his duty, (Godwin 2018). In the course of transporting cucumbers to the market, The Great Australian Railway Company did not they deliver the goods in time until some of them got spoilt. Because of delays as a result of poor weather conditions, GARC should have informed the principle- Roger about it hence looking for a possible solution to the problem. However, losses were incurred hence the claim for damages by Roger. By putting the facts into perspective, Roger and the railway company entered into a contract and agreed to take part in it, (Abrahams 2017). The Railway Company agreed to carry Roger’s Cucumbers to the Victorian Fruit and Vegetable Market. By acting in good faith, the agent decided to sell them hence the losses that were incurred. Failure of the rail company to communicate means that Roger should be awarded damages as was in the case of Springer v Great Western Railway Company [ 1921] 1 KB 257
Implied authority is defined as a jurisdiction that an agent has so that he or she can perform duties and acts that are necessary so that the purpose of his employment contract in the organization is accomplished. In principle, implied authority enables an agent to perform all tasks that bind legally on behalf of the principle, (Thomas and Low 2017).
To start with, implied authority is not written or express. This is a form of authority that an agent has because most of the details at times miss out in the contract. As such, certain details are deemed to be part of the agent’s authority as he or she performs the duties. In most cases, agents are appointed so that they can act on behalf of a company, (Douglas 2017). While carrying out his duty, an agent may decide to have telephone conversations and make appointments with clients. As such, he is representing the company in entirety. By completing a business transaction, he is deemed to have worked according to the regulations of the company, (Dwyer and Minnegal 2018).
Forms of Authority Held by an Agent
In Australia, it is believed that managers have implied authority to carry out duties that managers are known to participate in, (Byrne 2018). it is this notion that makes third parties act knowing that managers have been given the desired power to represent the client or enter into different contracts as long as they are working in accordance to the rules and regulations that have been set in the company.
There are methods in which implied authority can be seen in our daily lives. The first example is the use of uniform. In most cases, employees or agents are dressed in uniforms which represent a company when they are interacting with the general public, (Pearson, 2017). In many cases, an individual wearing a uniform that has a logo is deemed to be fully working under authority from his or her employer. As such, the person having the company logo is said to be carrying an Implied Authority of Contract.
Liability in Implied authority exists. When an agent works on behalf of a company, the company becomes liable for any actions done by an agent, (Faturoti, 2017). In some instances, employees may make a decision which will have a huge impact on the company in form of damages. By allowing a disabled individual into a ski lift, though it is a violation, and the individual gets an injury, a liability is hence created by the employee and as a result, the company becomes liable for all damages. On the other hand, the company may state that the employee acted beyond the scope of his duty and as such, the employee becomes liable for his r her actions.
In some instances, an agent may have the habit of abusing his authority thus making the company face loses. By understanding that he or she has implied authority, one may decide to give discounts to his friends, family members or relatives. This goes as far as accepting returns without adhering to company return policies. In such a scenario, there are certain actions that can be taken against the employee or agent. For instance, em0ployees have to understand that there are regulations that have to be adhered to. As such, misuse of implied authority will be reduced. In most cases, it is essential to indicate that policies and prices that have been set should not be violated. In case there are employees who misuse implied authority, they can be punished so that future acts are deterred. Also, employees can be allocated new positions after determining that they abused their authority.
Liability in Agency Relationships
In partnerships, implied authority exists and as a result, partners make decisions on behalf of the partnership. Partners also feel that they have a strong authority and the duty to make decisions that favor the partnership. Despite the presence of implied authority, it is essential to have express authority in situations such as purchasing of assets, dispute resolution and new ventures that the partners deem fit. It is thus essential to always set guidelines for partners and agents so that lawsuits or disputes are avoided in business. By having a good understanding of what they are supposed to do, agents should be at the forefront of displaying a good image for the company.
References
Woinarski, J.C., Garnett, S.T., Legge, S.M. and Lindenmayer, D.B., 2017. The contribution of policy, law, management, research, and advocacy failings to the recent extinctions of three Australian vertebrate species. Conservation Biology, 31(1), pp.13-23.
Schuster, R., Law, E.A., Rodewald, A.D., Martin, T.G., Wilson, K.A., Watts, M., Possingham, H.P. and Arcese, P., 2018. Tax shifting and incentives for biodiversity conservation on private lands. Conservation Letters, 11(2).
Foster, N., 2017. The Bathurst Diocese Decision in Australia and its Implications for the Civil Liability of Churches. Ecclesiastical Law Journal, 19(1), pp.14-34.
Wright, S., 2017, April. Holding regulators to account in New South Wales pollution law: Part 2-the limits of judicial review and civil enforcement. In AIAL Forum (No. 87, p. 46). Australian Institute of Administrative Law.
Stewart, P.E. and Silink, A., 2017. Compensation for survivors of Institutional Child Sexual Abuse in Australia: Tortious rights and challenges for reform. Children and the Law in Australia.
Wilson, J. and Pender, K., 2018. Tolling bells and upas trees: Non-perpetrator liability in employment law. Ethos: Official Publication of the Law Society of the Australian Capital Territory, (247), p.32.
Carney, G., 2018. A Comment on How the Implied Freedom of Political Communication Restricts Non-Statutory Executive Power. UW Austl. L. Rev., 43, p.255.
Williams, A., Mushtaq, S., Kouadio, L., Power, B., Marcussen, T., McRae, D. and Cockfield, G., 2018. An investigation of farm-scale adaptation options for cotton production in the face of future climate change and water allocation policies in southern Queensland, Australia. Agricultural Water Management, 196, pp.124-132.
Godwin, D., 2018. Proving Corporations Are Agents: Problems and Solutions. AUSTRALIAN JOURNAL OF COMPETITION AND CONSUMER LAW, 25(4), pp.270-278.
Abrahams, Z., 2017. Western Australia: Determining the proper approach to whether a contractor has a right to call on bank guarantees under a construction contract. Australian Resources and Energy Law Journal, 36(2), p.15.
Thomas, G., Burmeister, O.K. and Low, G., 2017. Issues of Implied Trust in Ethical Hacking. In Proceedings of The 28th Australasian Conference on Information Systems, December(pp. 4-6).
Douglas, M., 2017. Anti-suit injunctions in Australia. Melb. UL Rev., 41, p.66.
Dwyer, P.D. and Minnegal, M., 2018. Captain Everill’s Error: Mapping the Upper Strickland River in Papua and New Guinea, 1885–1979. The Journal of Pacific History, pp.1-20.
Byrne, S., 2018. Intellectual property in Australia [Book Review]. Ethos: Official Publication of the Law Society of the Australian Capital Territory, (248), p.58.
Pearson, G., 2017. Consumer sales law in Australia. In Comparative Consumer Sales Law (pp. 23-38). Routledge.
Faturoti, B., 2017. Re-importing the concept of ‘authorisation’of copyright infringement to Nigeria from the UK and Australia. International Review of Law, Computers & Technology, 31(1), pp.4-2
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
