Lecture 10 of Business Law
Lecture 10 of Business Law
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This 16 page Class Notes was uploaded by Jade Notetaker on Saturday October 10, 2015. The Class Notes belongs to at Nanyang Polytechnic taught by in Fall 2014. Since its upload, it has received 16 views. For similar materials see Business Law in Business at Nanyang Polytechnic.
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Date Created: 10/10/15
Business Law BMO742 AY 2014 Semester 1 Lecture 10 Law of Agency The fundamental question thatT Agent must ask Does A have the A authority to bind P A acts on behalf of P to make a legally binding contract between P and T Principal P Third Party T If A has authority P is bound Car Dealer Described as Authorised Agent for XYZ brand cars Manufacturer sells car to dealer Manufacturer ofXYZ brand cars Dealer sells car tO CUStOIIlCl Customer Dealer is making the contract as a principal not as an agent for the manufacturer Customer s rights under the contract are against the dealer How does an agent obtain the authority to bind his Principal Actual Authority Express or implied Apparent Authority Agency by ratification Focus is on Whether P has given A permission to carry out the act in question Agent A a P gives A the perm1ss1on to carry out the act in question The permission is given orally or in writing Principal P P bound A acts on behalf of P to make a contract between P and T Third Party T Agent A P does not expressly say that A is authorised but permission is implied from the circumstances eg if P appoints A to a certain position P is taken to have authorised A to do things Within the usual scope of A s pom on Principal P P bound Focus is on Whether P has given A permission to carry out the act in question A acts on behalf of P to make a contract between P and T Third Party T Focus is on Whether A appears to T to have the necessary authority Whether P has actually given A authority is not important Agent A A acts on behalf of P to make a contract between P and T g P bound Principal Party P T 1 Representation by P to T that A is authorized 2 T relies on the representation in contracting with A Agency Create y Estoppei Freeman amp Lockyer v Buckhurst Park Properties Ltd 1964 K acted as if he were the managing director even though he was not appointed as one Company was aware but did not stop him On behalf ofthe company K engaged a firm of architects The architects provided services but were not paid When sued the company argued that K did not have the authority to engage the architects Was the company liable A ency Created by Estop Example Andy is employed as IT manager by Pixar Ltd For the last 5 years Andy has ordered software on Pixar s behalf from Ted Pixar has always paid promptly for the software ordered by Andy Andy recently resigned from Pixar Pixar fails to inform Ted about Andy s resignation Andy has ordered 10 copies of Microsoft Vista from Ted and Pixar has received the bill Pixar will be liable to pay for the software Agent does an act which is notauthonsed Principal rejects Principal ratifies adopts or transaction confirms an unauthorised act I I f conditions for effective principa is not bound ratification are met Principal bound Law treats the unauthorised act as authorised Conditions for Effective Ratification For ratification to be effective such that P and T are boundy 1 Agent must disclose that he is acting on behalf of a principal see Keighley Maxsted amp Co v Durant 1901 Principal must exist at the time the agent made the unauthorised contract Ratification must be done within a reasonable time or within the time fixed for performance Aency by Ratifiction Peter instructs Alan to buy goods on his behalf provided the goods do not cost more than 100 On Peter s behalf Alan orders goods priced at 200 from Trudy Since Alan s order is unauthorised Peter can choose to reject order Not liable if he doesn t pay for goods OR Peter can ratify Peter and Trudy bound Peter liable to pay for goods Duty to follow P s instructions Duty to act with care and skill Duty not to accept bribes What remedies are available to P ifA takes a bribe see ahesan Duty to avoid a conflict of interest Duty to account for money goods received on P s behaH 1 Right to remuneration commission 2 Right to be reimbursed for expenses and liabilities 3 Right of lien An agency relationship may be terminated by 1 By agreement of both parties 2 By revocation 3 By the death insanity or bankruptcy ofthe principal or agent The End
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