Agency law (business organisation)222 (turtorial 2.9)

Essay by m0v0mUniversity, Bachelor'sA-, August 2006

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Identify the area or areas of law

The area of law concerns this case, which in connection with the Agency, especially duties, rights and liabilities of an agent.

Explain the principles of law

Apparent or Ostensible Authority

Where an agent is engaged to sell property, it will normally fall within the scope of the agent's ostensible authority to describe the nature and quality of the property that he/she is selling on behalf of the principal. Accordingly, if the agent's representations are untrue, the vendor will be liable to the purchaser for the less suffered by the purchaser as a result of relying on the untrue representations: Aliotta v Broadmeadows Bus Service Ltd (1988) A.T.P.R. 40 - 873.

Right to Indemnity and Reimbursement

Every agent is entitled to be indemnified against all losses and liabilities. At the same time they are also entitled to be reimbursed for all expense lawfully incurred whilst carrying out the instructions of the principal.

It is important to consider the word "lawfully" in this context, because if the agent has acted outside the scope of his/her authority or engaged in an unlawful act, or suffered loss through his/her own negligence or default, then the agent would have no claim for reimbursement.

Liability to Principal

Generally the agent incurs no liability against the principal with regard to the contract. Where an agent, however, disobeys the instructions of the principal, such an agent will be liable for any loss suffered by the principal as a result of the breach of the agency agreement. Furthermore, where the agent does not carry out the instructions of the principal, the agent will be liable to make good the damage suffered by the principal as a consequence of the agent's negligence: Mitor Investments Pty Ltd v General Accident Fire & Life Assurance...