Business Law Scenario Analysis

Question: Whether an agent has the right to act in excess of authority and if not, then would his act bind the principal and the third party? Answer: Law: Creation of Agency: Agency can be created by the following ways: Express Appointment. Apparent agency. Agency and Authority: An agent is to create a contract between principal and the third party for which the agent must have authority of some kind(s) and the agent must act within the limits of that authority. Application: According to the law of agency an agent derives its authority either expressly or impliedly from the principle. An agent is therefore supposed to act within the limits of his authority. In the present case, Mrs. Ivanov had expressly authorised Anna to act as her agent and had mentioned the scope of her authority by directing Anna the quantity, quality and the price at which the material is to be bought. Anna had in this case bought the material from Liu Cloth at a higher price than what she was authorised for. Here, Anna had acted beyond the limits of her authority, but her act can be justified as there was a necessity to do so, and she did it after taking all due diligence in reaching Mrs. Ivanov. In this situation the emergency and the time of necessity gave Anna an authority in excess of what she already had. This could also be termed as creation of a new agency by necessity. Conclusion: Here Mrs. Ivanov and Anna has a principle and agent relationship where Anna is authorised to deal with the third party for a certain quantity and quality of merchandise at a price that is not to exceed $20 per metre, but Anna could only buy it for $21 per metre as the prices had increased. Here she exceeded her authority but that was due to an emergency and the act was done in good faith by Anna, hence she fulfilled her duties as an agent and her act binds Mrs. Ivanov and Liu Cloth in a contractual relationship. Situation 2 Issue: Whether there exists any contractual relation between the principle and the third party when the agent acting under the express instructions of the principle did not disclosed the principle before the third party? Law: Effect of the Agency Contract: Where the agent makes a contract on behalf of the principal, it is the principal who is bound, not the agent. The agent has no personal liability. Unnamed principal rule: where the agent discloses that s/he is an agent but does not name who his/her principal is, again the principal is bound under the contract, but not the agent, Undisclosed principle rule: where the agent does not disclose that s/he is acting for an agent at all. When and if the third party finds out he/she can choose either the agent or the principal as the party to be bound by the contract. The third party cannot choose both. Application: Anna had bought the material from Harris Fabrics under the instructions of Mrs. Ivanov without disclosing who the principle was or even that Anna was an agent of some principle. Here the law that is attracted is that the act of Anna shall be legal as she was acting under the authority that was granted to her, however the consequences of her act would fall on the principle, i.e. Mrs. Ivanov. Even Harris Fabrics has the right to sue either of the two and not both of them, if they come to know that Anna is an agent of Mrs. Ivanov. Further, if there is any problem with the material then Mrs. Ivanov does not have the right to sue Harris Fabrics as there was no contractual relationship formed between Mrs. Ivanov and Harris Fabrics. In the case of Said v Butt, the plaintiff did not have good terms with the defendant who owned a theatre. Plaintiff then sends his agent to buy the tickets, but the defendant does not allow the plaintiff to enter the theatre despite having a ticket. It was held i this case that there was no contract with plaintiff. According to the defendant he had entered into a contract with the agent without knowing that he was merely an agent. Hence it was considered that Identity is a vital factor. Conclusion: therefore there is no contractual relationship between Mrs. Ivanov and Harris Fabrics as the agent did not disclose that she was an agent and the consequences of which are that Mrs. Ivanov cannot sue Harris Fabrics for any problem in the material. Situation 3 Issue: Whether the risk of a good is also transferred from the seller to the owner along with the ownership of the good? Law: Sale of Goods Act Section 22: Unless otherwise agreed the risk stays with the seller until ownership passes. Application: As per section 22 of the Sale of goods act, when the ownership of a good is passed, its risk is also passed over to the purchaser, unless a contrary agreement has been made. Here, the risk of the Land Mower passed to Mrs. Ivanov when it was delivered to her, as she agreed to the terms of the company. Mrs. Ivanov had bought the mower from the salesman at Bens Garden Centre Limited, who had informed her that they cannot take any guarantee of the product and also that the company does not have a refund policy. Conclusion: Hence, Mrs. Ivanov has no right to get a refund of the mower as she has taken up the ownership as well as the risk of the land mower. Situation 4 Issue: Whether the driver of the truck would be liable for negligence? Law: Tort of negligence is a law of tort that involves harm caused by carelessness which is not an intentional harm. Three element of tort of negligence: Duty of care. Breach of that duty. Damage caused due to the breach. Employer is liable for the tortious acts of employees done within the course of their employment General defence: Volenti non fit injuria to a willing person no harm is done. Application: according to the common law of tort, as held by the house of lords that the manufacturer are obliged to observe a duty of care to its customers. Similarly in this case also, the Mighty Movers Limited had a duty of care towards Mrs. Ivonov while towing her van which they had breached and caused damage to Mrs. Ivanov and hence they are liable for negligence. Here, the mighty movers cannot take the defence of knowledge or Volenti non fit injuria, as they had informed that the risk was of the owner which was written on their flier. For the defence of Volenti non fit injuria it is necessary to examine if the injured person knew about the risk and also that they had given their consent to take the risk. In this case, Mrs. Ivanov did not know about that the onus of the risk was on the owner, and by the time she got to know about it her van had already been towed. Hence, the driver is liable fro negligene and therefore, as he was the employee of Mighty movers, the company is liable for the acts done by the employee during the course of his employment. Conclusion: therefore, mighty movers is liable to pay damages to Mrs. Ivanov for the loss she has suffered, due to the negligence of the driver and the company is liable to pay it as the driver was acting during the course of his employment.