QUESTION 3

QUESTION 3

PRINCIPAL	Villien
AGENT	Cherry
THIRD PARTY	Frank
TYPE OF AGENT	Special (one type of contract only)
METHOD OF APPOINTMENT	by operation of law -necessity	A serious emergency arose (damage to roof) Agent was unable to contact Principal for instructions (sunning herself in Phuket) Agent had been entrusted with the Principal’s property Agent was acting in the best interests of the Principal, not for her own convenience
OUTCOME	All four criteria for valid agency by necessity have been met, therefore Villien is liable to Frank

QUESTION 4

PRINCIPAL	Sho-yee
AGENT	Daniel
THIRD PARTY	Daniel/Daniel’s brother
TYPE OF AGENT	Special
METHOD OF APPOINTMENT	Express
OUTCOME	Whilst Daniel could argue that he followed the Principal’s instructions, he certainly failed in his duty to act in good faith. More specifically, he acted as a third party without the knowledge of the Principal.

QUESTION 5

PRINCIPAL	Brian
AGENT	John
THIRD PARTY	Wholesalers
TYPE OF AGENT	Really crap (but very special)
METHOD OF APPOINTMENT	Implied (or apparent, ostensible etc.)	Brian has allowed John to contract on his behalf previously with this third party. As there have been no instructions from Brian to the third party that John’s authority has been revoked, Brian continues to be liable for his agent’s actions.
OUTCOME	Brian is liable and would be estopped from denying the agency.

QUESTION 6

PRINCIPAL	Patrick
AGENT	New owners
THIRD PARTY	Liquor Limited
TYPE OF AGENT	Special
METHOD OF APPOINTMENT	Implied	Patrick has implied, by failing to remove his name from the business, that he is still responsible for contracts entered into for the hotel. (Remember novation?)
OUTCOME	Patrick is liable to Liquor Limited

QUESTION 7

PRINCIPAL	Nightclub owner
AGENT	Bec
THIRD PARTY	Insurance Company
TYPE OF AGENT	General
METHOD OF APPOINTMENT	Tricky one!! Not expressed (because Principal didn’t give authority on this particular occasion). Possibly implied (in that as a general agent it’s to be presumed that Bec has unspecified authority to enter into a range of contracts on behalf of the principal, and that this type of contract would seem to be reasonably within the scope of her employment. Added to this that she had entered into an insurance contract on the principal’s behalf on one previous occasion. It’s likely, however, that the insurance company would argue that as Bec had only entered into the original insurance contract after being expressly instructed by her principal that the same expressed instructions would be required a second time. They would probably go on to say that the one previous contract doesn’t establish a pattern). The safest answer is by ratification in that Bec has exceeded her specified authority but the principal would doubtless be very happy to ratify this contract thereby obliging the insurance company to honour the claim
OUTCOME	Insurance company coughs up

QUESTION 8

PRINCIPAL	Peter
AGENT	Andrew
THIRD PARTY	Sellers
TYPE OF AGENT	Special
METHOD OF APPOINTMENT	Expressed
OUTCOME	Option 1 Andrew has acted in good faith and followed instructions reasonably. He exceeded his authority by $20, and this is an insignificant sum when compared to the $1,800 for which he had actual authority. Peter pays. Option 2 Andrew failed to follow instructions in relation to the stereo, even though it could easily be argued that he was acting in Peter’s best interests. Peter would only be liable for the dining setting. (This is not my preferred answer, but it will suit the tight-arses among you)

QUESTION 9

PRINCIPAL	The issue in this case is whether the contract can, in fact, be ratified. One of the requisite criteria for ratification to be valid is that the agent must purport to be acting on behalf of a known principal. As Daniel purchased the sheep in his own name, and did not disclose the existence of the principal he would be liable to the seller.
AGENT
THIRD PARTY
TYPE OF AGENT
METHOD OF APPOINTMENT
OUTCOME

QUESTION 10

PRINCIPAL	Original owner
AGENT	Ship’s captain
THIRD PARTY	New owner
TYPE OF AGENT	General
METHOD OF APPOINTMENT	by operation of law -necessity	Important to note that the contract in dispute is not for the repairs to the ship, but for the sale of the ship. A serious emergency arose. (Needed to pay for repairs, or ship and cargo would have been impounded) Agent was unable to contact Principal for instructions (No method of quick communication back then) Agent had been entrusted with the Principal’s property Agent was acting in the best interests of the Principal, not for his own convenience
OUTCOME	Contract is valid.

QUESTION 11

PRINCIPAL	Sam
AGENT	Wife
THIRD PARTY	Credit card provider
TYPE OF AGENT	General
METHOD OF APPOINTMENT	by operation of law - cohabitation Spouses are liable for each others’ purchases of goods and services which are deemed necessary. Necessary goods and services are defined as those that are deemed fitting to maintain their current standard of living. In order for Sam to avoid liability for this purchase he must prove: that he had forbidden his wife to pledge his credit the goods were beyond his means that he had informed merchants not to provide his wife with goods or services. The question of whether a diamond ring is necessary can’t be addressed without an ugly display of emotion on my part, so we’ll move on to the issue of expense. Given Sam’s crummy salary, the ring is probably a bit expensive, but as the credit repayments are likely to be around $10 per month it might be deemed within his means…..blah blah
OUTCOME	Whatever

QUESTION 12

PRINCIPAL	Lee
AGENT	Kate
THIRD PARTY	Seller
TYPE OF AGENT	Special
METHOD OF APPOINTMENT	Express
OUTCOME	If Kate kept the money she would be breaching her fiduciary duty to the principal.

QUESTION 13

PRINCIPAL	Bart
AGENT	Tommy
THIRD PARTY	Sellers
TYPE OF AGENT	Special
METHOD OF APPOINTMENT	Express
OUTCOME	Tommy has certainly failed to act in good faith, and even if there was no expressed instruction to purchase thoroughbred race horses, this was certainly implied.

QUESTION 14

PRINCIPAL	Dale
AGENT	Doris
THIRD PARTY	Buyer/s
TYPE OF AGENT	Special
METHOD OF APPOINTMENT	Express
OUTCOME	While it’s very clear that Doris failed to follow instructions, she may argue that she was acting in good faith. Her chance of succeeding with this argument is so slim that there has yet to be an instrument invented that could measure it.

QUESTION 15

PRINCIPAL	Very sneaky trick question!!! No contract = no agency
AGENT
THIRD PARTY
TYPE OF AGENT
METHOD OF APPOINTMENT
OUTCOME

QUESTION 16

PRINCIPAL	Sally
AGENT	Transport company/driver
THIRD PARTY	Stables
TYPE OF AGENT	Special
METHOD OF APPOINTMENT	by operation of law -necessity	A serious emergency arose. (Can’t leave horsey to roam the streets at night – might have a nightmare!!!!) Agent was unable to contact Principal for instructions Agent had been entrusted with the Principal’s property Agent was acting in the best interests of the Principal, not for his own convenience
OUTCOME	Sally pays for stabling

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