Business Law Livestock Supplies Company

Question: Describe about the Business Law for Livestock Supplies Company. Answer: Issue: The issue in this case is if Tom can be considered as an agent of MOO a livestock supplies company. Tom is the business development manager of MOO. The website of the company has prominently mentioned this position and on the business cards and other stationery also, the role and name of Tom has been displayed prominently. Under these circumstances, it can be said that Tom is acting as an agent of MOO. In this case, the company asks Tom to visit Ballarat and survey the business opportunities presented. For this purpose, Tom has also been given the authority to inquire regarding the details of retail premises available. But when Tom had entered into a lease agreement with Bob, MOO refuses to accept the agreement. Therefore the issue is if the lease agreement created by Tom is binding on MOO or if Bob can take action against MOO for the breach of contract. Rule: While entering into a contract, a company has to be represented by individuals although it is a separate legal entity in the eyes of law and therefore can enter a contract in its own name. However, in some cases and issues may arise if the person representing the company enters into a contract that is against the will of the company. Therefore, in such a case the issue will be in such a contract will be binding against the company, a who will be liable if any laws has been suffered by outsiders. The law of agency provides that an agent can be described as the person who has been given the authority to act on behalf of another person who is called the principal. Generally, in such an arrangement, the principle authorizes the agent execute the transition on its behalf. In such cases the law of agency provides that no financial risk is assumed by the agent in the transaction. In such a case, the agent acts for the principal and therefore, a binding contract arises between the thir d-party and the principal (Latimer, 2016). In this context, it is also worth mentioning that sometimes the agency relationship can be implied depending on the circumstances of the conduct of the party. At the same time, several duties have also been imposed on the agents by the law (LexisNexis Custom Book for University of Ballarat, 2013). For example, the agent is under an obligation to act in good faith. Another duty there is another part of the agents is that they should avoid any conflicts of interest. If any of the duties imposed on the agent have been breached, the law provides a right to the principal to sue the agent. The authority of the agent to act on behalf of the principal can be classified as actual authority and implied authority. According to the law if a particular transaction completed by the agent, falls under the scope of actual or implied authority, the principal will be considered as being bound by such a transaction (Pentony et al., 2012). When the authority has been expressly given by the principal to the agent, it is known as express authority. On the other hand, the implied authority arises as a result of the fact that the principal has placed the agent in a particular position. Therefore in Brick and Pipe Industries Ltd v Occidental Life Nominees Pty Ltd (1992), the court stated that the agent had the implied authority because he was a director of the company by controlling shares and at the same time, though efforts have been made to interfere with the assertion of authority. The law of agency provides that when as a result of the words of the actions of the principal, a third-party has reason to believe that authority has been given to the agent, generally the principle is not allowed to claim later on that authority was not present with the agent. The court stated in Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd (1964) that customary authority is present on part of the managing director to the contracts related with routine management of the corporation. This decision was made on the basis that a representation was made by the board that the director had the authority and in fact the board had the actual authority to manage the affairs of the company. However, it is worth mentioning at this point that if the party making the representation itself does not have the actual authority, the agent will also not be considered as having the authority. Application: On applying the above mentioned rules of law of agency to the facts of this case, it can be said that in this case, Tom was the business development manager of MOO. His position has been prominently mentioned on the website of MOO and also on his business card. Therefore when MOO asked Tom to go to Ballarat and explore the business opportunities presented and also to look for a suitable business premises, it can be said that Tom was acting under the authority provided by MOO. Therefore when Tom entered into a lease agreement with Bob regarding his retail premises, MOO cannot be allowed to claim that Tom did not have the authority to do so and such agreement is not binding on MOO. The reason is that in this case, as a result of the actions of MOO, the third parties have been made to believe that Tom is acting as an agent of the company and that the same time Tom, has the authority to create binding contracts on behalf of MOO. Conclusion: Under these circumstances, the conclusion in this case will be that MOO is bound by the lease agreement that Tom has created with Bob. Moo cannot refuse directly to the lease agreement and if it does so, Bob can take legal action against MOO 2. Issue: The issue that needs to be decided in this case is if Kevin is bound by the order given by Anne at (i) TPN Supermarket and also at (ii) RPG Shop. Kevin had expressly told Anne not to purchase expensive items without asking him but Anne purchased a kitchen blender for $2000 from RPG Shop where Kevin had a credit account. Kevin is so furious that he also refuses to pay for the groceries purchased by Anne from TPN Supermarket. Rule: The position under the law of agency is that when the agent has acted without authority or when the agent has acted beyond the authority provided to it, these acts does not have an impact on the legal relationships between the third parties and the principal. But in this context, it needs to be noted that when as a result of the conduct or the words of the principal, a third-party reasonably believes that authority has been provided to the agent to enter into transactions on behalf of the principal and also that the acts of the agent fall within the scope of authority conferred on the agent, the principle is not allowed to invoke the lack of authority on part of the agent against the third-party The authority that has been conferred on agent can be express authority or implied authority. The express authority of the agent arises when the principal had expressly consented that the agent will act on behalf of the principal and the agent had agreed to it. On the other hand, an agency relationship may arise between the parties where the authority can be implied (James, 2013). Therefore in case of implied authority, although the principal does not expressly provide the authority to the agent to act in a particular way but in view of the acts of the principal and the agent, it becomes clear that authority has been conferred on the agent by the principal. Therefore in such cases, the authority of the agent can be implied from the conduct of the parties and also from the circumstances of the case. Application: In the present case, Anne had been purchasing groceries on behalf of Kevin. However Kevin had told Anne that before purchasing any expensive items, and she should ask Kevin first. But Anne purchases a kitchen blender for $2000 from RPG shop. In this case, Anne had never purchased any item from RPG. Therefore, it can be said that no act has been done by Kevin on the basis of which, it could be reasonably believed by RPG that Anne had the authority provided by Kevin. Therefore in this case, Anne does not have express or implied authority to purchase anything from RPG shop on behalf of Kevin. As a result, Kevin cannot be held bound by the purchase made by Anne. Consequently, it can be said that if RPG shop brings a claim against Kevin, it is not likely to succeed. On the other hand, in case of TPN Supermarket, Anne had been purchasing groceries on behalf of Kevin in the past also. Therefore it can be said that in this case, it can be said that Anne had the authority to make the purchases on behalf of Kevin. Therefore in this case if TPN brings a claim against Kevin, it is likely to succeed. Conclusion: RPG shop cannot bring a successful claim against Kevin but a claim can be brought by TPN Supermarket against Kevin for the purchase made by Anne. 3. While in case of express and implied authority, it is considered as real authority or in other words, the authority is actually present. But sometimes when authority has not been expressly or impliedly provided to the agent, the agent may still bind the principal to the transaction created by with a third-party. Therefore in such cases it is considered that apparent authority was present on part of the agent (Crosling and Murphy, 2009). Although this type of authority is not real, but to the extent that the actions of the agent bind the principal, an agency relationship is present. The reason due to which the principal is considered to be bound by such a transaction is due to the reason that made legal of agency operates in commercial field where certainty of transaction is very significant. Consequently, the operation of the law of agency cannot be restricted to the cases where actual authority is present on part of the agent, whether it is express or implied. Therefore if commercial transactions have to be allowed to take place efficiently and quickly, placing any limits been significantly increase the cost of transactions. Therefore in such cases, the third parties will have to make inquiries regarding the authority of the agent and in case of companies; formal resolutions may need to be passed. Such a situation will considerably defeat the purpose due to which the agents are used to enter into transactions. Therefore, generally there is a need for providing some degree of discretion to the agents, for example to negotiate and to finalize the terms of an agr eement especially when the agent is a senior employee. However with the presence of such discretion, there can be a case where the agent has acted beyond the scope of authority provided to him or her. In Brick and Pipe Industries Ltd v Occidental Life Nominees Pty Ltd (1992) 10 ACLC 253, the court stated that the director has implied authority to act on behalf of the company. Another example in this regard can be given of Hely Hutchinson v Brayhead Ltd (1968) 1 QB 549, where the agent was appointed for the purpose of managing the business and it was considered that such agent had the authority to enter into contracts that are generally made by managers in similar position. In order to deal with such situations, the doctrine of apparent authority has been created by the law of agency. According to this doctrine, when it appears that the agent has the authority to bind the principal, and where the third-party has acted by relying on such appearance of authority, generally the contract created by the agent will be enforced against the principle. However there is a qualification attached to the enforcement of the contracts that have been created by agents with apparent authority. Therefore for this purpose it is necessary that on the basis of the facts of each case, it should appear that the person acting as an agent, has actual authority. Such appearance of authority should be the result of something that has been done or said by the principal or in other words, due to a representation made by the principal. In such a case, any representation made by the agent is immaterial. References Crosling, G. M. Murphy, H. M. (2009). How to study business law. (4th ed.). Sydney, NSW: Lexis Nexis James, N, (2013), Business Law (3rd ed.). Brisbane, QLD: Wiley. Latimer. P, (2016) Australian Business Law 35th Edition, Oxford University Press LexisNexis Custom Book for University of Ballarat (2013) Law in Business, Chatswood, NSW: LexisNexis Butterworths Pentony, Graw, Parker Whitford (2012) Understanding Business Law, Sydney, NSW LexisNexis Case Law Brick and Pipe Industries Ltd v Occidental Life Nominees Pty Ltd (1992) 10 ACLC 253 Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd (1964) 2 QB 480