Legal Issues In Agency: Loss In Cucumbers & Extension Of Actual Authority - Essay.

1. The Great Australian Railway Company (GARC) agrees by way of a written contract to carry Roger’s cucumbers from Perth to Adelaide via rail and then from Adelaide to Melbourne by truck via an affiliated company Big Trucks Australia (BTA). The cucumbers are destined for sale at a stall that Roger hired which was located at the Victorian Fruit and Vegetable Market. The BTA truck is delayed due to bad weather. Eventually, when the truck crossed the state border between South Australia and Victoria most of the cucumbers were bad. Consequently, GARC unilaterally decided to sell the remaining good cucumbers as it felt that the entire consignment would be unsaleable by the time it arrived in Melbourne. BTA organised for the disposal and sale of the cucumbers. When Roger found out that his cucumbers had failed to arrive at the Victorian Fruit and Vegetable Market he was informed he was still liable to pay for the fees of hiring the stall from the market. Roger now wants to claim damages. Consider all the legal issues and relevant points arising in agency from this scenario. In your response, you should consistently refer to relevant Australian case law relating to agency.

2. This question is separate from the question above. Discuss how implied authority can arguably extend the actual authority provided in agency law. In your response use relevant Australian case law to support your discussion

Whether the law of agency provides any right to roger via which he can sue GARC in relation to the loss incurred in cucumbers.

There are various ways in which an agency can come to existence. These ways include ways such as expressed authority, implied authority, apparent authority and agency by necessity or emergency. Under the agency of necessity, a relationship of agent and principle can be created if there is a situation of emergency (Davidson, Forsythe & Knowles, 2015).

According to Kubasek et al. (2015), an agency of necessity would be created validly at law if three essential conditions are satisfied.  One of the landmark cases where such conditions had been discussed by the court is Prager v. Blatspiel, Stamp and Heacock Ltd [1924] 1 KB 566. According to the provisions of the case this form of agency will only be created when there is an actually emergency or necessity indentified. Further the person who is to become the agent has to act in good faith. The potential agent in the situation must have made an attempt to get the instruction of the principal which was an unsuccessful attempt. All these have to be done in good faith.

It had been ruled by the court in the case of Biberfield v. Berens [1952] 2 All ER 237 that agency by necessity can be formed when the potential agent is made responsible for the belongings of another person, and the situation becomes such that the agent has to make a decision in relation to the goods because of an emergency and not being able to contact the principal. He must make the decision in relation to preserving the goods on behalf of the principal.

One of the major cases where provisions relating to the agency of necessity had been analyzed by the court is the case of Springer v Great Western Railway Company [1921] 1 KB 257. This case is often cited as a precedent in relation to agency of necessity. In this case the plaintiff had provided responsibility to the defendant to carry his tomatoes. The defendant had the duty to transfer the tomatoes to channel island form London. This was a two part journey for the tomatoes. They had to be carried via till London and via ship to Weymouth. However, because of unfortunate bad whether the ship had been delayed by three days.  Duing the process of delay the tomatoes were getting rotten. The delay was further increased as the employees of the defendant initiated a strike. The defendant decided that it would be best for them to sell the tomatoes without taking permission from the plaintiff. The plaintiff made a claim to recover the loss. The defendant argued that the sale was out of necessity. The court came to the conclusion that the defendants did not have the right to sell the tomatoes as they had not made an attempt to take permission of the same from the plaintiff. There would have been an agency of necessity f they would have communicated or made and attempt to communicate the plaintiff about the sale.

Law

In the case of Great Northern Railway Co. vs. Swaffield (1874) LR 9 Exch 132 it had been found by the court that all elements of agency of necessity gave been fulfilled by the defendant. In this case also there was no consent obtained from the plaintiff. However, the court held that as the defendants had made an attempt to communicate the emergency situation to the plaintiff but communication was unsuccessful. This means that the defendants had acted in good faith and a agency of necessity had been created.

The facts of the case study states that a contract has been formed between the plaintiff (Roger and the defendant (GARC) according to which the defendants are to carry the cucumbers of Roger from Perth to Melbourne. There is an express authority provided to BTA by GARC and thus all actions of BTA are binding on GARC. The cucumbers had been sold half way down the journey, which has made the plaintiff suffer losses. In the present circumstances it needs to be taken into consideration that there are various ways in which an agency can come to existence. These ways include ways such as expressed authority, implied authority, apparent authority and agency by necessity or emergency. Under the agency of necessity, a relationship of agent and principle can be created if there is a situation of emergency.

In this case there has been a situation of emergency as due to bad whether the truck has got stuck and the cucumbers have started to become rotten. However there are other factors also which needs to be considered to determine the existence of an agency of necessity. As discussed in the rules, the application of Prager v. Blatspiel, Stamp and Heacock Ltd signifies that in the present circumstances the agency of necessity would be created when there is an actually emergency or necessity indentified. Further the person who is to become the agent has to act in good faith. The potential agent in the situation must have made an attempt to get the instruction of the principal which was an unsuccessful attempt. All these have to be done in good faith. Therefore as there is a situation of emergency which has been created, the rules of agency by necessity are applicable. In addition it was the responsibility of the defendants to carry the Cucumbers to Melbourne. The creation  of agency by necessity can be further supported by the case of Biberfield v. Berens which stated that agency by necessity can be formed when the potential agent is made responsible for the belongings of another person, and the situation becomes such that the agent has to make a decision in relation to the goods because of an emergency and not being able to contact the principal. He must make the decision in relation to preserving the goods on behalf of the principal.

Application

However, the case of Springer v Great Western Railway Company does not support the claim that an agency of necessity has been created. This is because nowhere in the facts has it been stated that the defendants had made an attempt to contact the plaintiff to take his consent in relation to selling the tomatoes. As there has been no attempt or actual consent taken from the plaintiff the court will hold that there is no agency of necessity which has been created between Roger and the defendant. The facts of this case are very similar to the case in hand and thus this would likely to be the precedent case in this situation.

In addition the assertion that there is no agency of necessity between the defendant and the plaintiff can be supported by the application of the case of Great Northern Railway Co. vs. Swaffield. This is because in this case the court only found that the agency had been created because as the defendants had made an attempt to communicate the emergency situation to the plaintiff but communication was unsuccessful. This means that the defendants had acted in good faith and a agency of necessity had been created. However, such situation did not take place in the present case. Therefore there is no agency of necessity.

Conclusion

By express authority agency has been provided by GARC to BTA. However there is no agency of necessity created between Roger and GARC and therefore Roger can make a claim against GARC for the actions of BTA.

2. There are various ways in which an agency can come to existence. These ways include ways such as expressed authority, implied authority, apparent authority and agency by necessity or emergency. Under the agency of necessity, a relationship of agent and principle can be created if there is a situation of emergency (Davidson, Forsythe & Knowles, 2015). This section of the paper discussed how implied authority can extend actual authority in relation to law of agency. The discussion has been carried out in the light of Australian case laws with respect to implied authority.

Implied authority just like the agency of necessity is not provided or given, it is created trough the principles of law. According to Clarkson, Miller and Cross (2014), implied authority take place when a person has been provided with express role as an agent and does an act which falls within the scope of such role even of the act had not been expressly authorized.

In the case of Brick and Pipe Industries Ltd v Occidental Life Nominees Pty Ltd (1992) 10 ACLC 253, it had been stated by ten court that implied authority may be provided to an agent. This rises mist frequently when a particular position is provided to the agent by the principal. In this case the court stated that a director has an authority to act in an implied manner as he had been provided with a controlling shareholding and there was no attempt of any interference with respect to the assertion. In addition as per the case of Hely Hutchinson v Brayhead Ltd (1968) 1 QB 549 a person who has been provided the role of managing a business has an implied authority of getting into all contracts which can be done by a manager is such position (Glover & Doss 2017).

An agent, for instance an employee, has to be provided with implied authority for the purpose of undertaking certain activities. This can particularly take place in relation to those people who have been provided with managerial or administrative positions.  A person who is in contact which such employee has the right to assume that the employee has implied authority which is reasonably required to carry out the functions imposed by a role. In this situation the question of fact is that what actions are actually necessary. Another example can be provided in relation to a person who has not been provided a managerial role but still would be deemed to have an implied authority.. This can take place in case of a hotel waiter who has promised to serve the consumer with free Ice cream after the mean. Even when the owner can make a claim that the waiter had no right to provide the free ice-crème, it would be implied that he had the authority to do so at law because of the nature of his role (DeMott, 2018). However, an actual authority will be extend to implied authority only when it is reasonably necessary. In case a reasonable person would not assume the authority to be in the course of the role of the person no implied authority would be present. One of the most landmark cases of implied authority is the case of Watteau v Fenwick (1893) 1 QB 346. In this case the hotel owner had appointed a person as the manager of the hotel. He had not been provided the authority to purchase cigars. However he did so and the plaintiff made a claim from the owner. The court in this case stated that although the defendant owner has the right to make a claim from the agent for any loss, he is bound to pay the plaintiff for the Cigar. In case the agent would not have had a managerial role and it would not reasonable to assume that he has the authority to purchase the cigars on behalf of the principal the actual authority of the agent would not have extended to implied authority (Saintier, 2017).

It can therefore be concluded form the above discussion that, Implied authority just like the agency of necessity is not provided or given, it is created trough the principles of law. When a person has been provided with express role as an agent and does an act which falls within the scope of such role even of the act had not been expressly authorized. The question which needs to be determined in relation to implied authority being extended to the actual authority is that whether it is reasonable to assume authority with respect to the role which has been provided to the agent. In case it is not reasonable, actual authority would not be extended.

References

Biberfield v. Berens [1952] 2 All ER 237

Brick and Pipe Industries Ltd v Occidental Life Nominees Pty Ltd (1992) 10 ACLC 253

Clarkson, K., Miller, R., & Cross, F. (2014). Business Law: Texts and Cases. Nelson Education.

Davidson, D. V., Forsythe, L. M., & Knowles, B. E. (2015). Business law: Principles and cases in the legal environment. Wolters Kluwer Law & Business.

DeMott, D. (2018). Fiduciary Principles in Agency Law.

Glover, W., & Doss, D. (2017). Business law for people in business. Austin, TX: Sentia Publishing.

Great Northern Railway Co. vs. Swaffield (1874) LR 9 Exch 132

Hely Hutchinson v Brayhead Ltd (1968) 1 QB 549

Kubasek, N., Browne, M. N., Dhooge, L. J., Herron, D. J., Williamson, C., & Barkacs, L. L. (2015). Dynamic business law. McGraw-Hill Education.

Prager v. Blatspiel, Stamp and Heacock Ltd [1924] 1 KB 566

Saintier, S. (2017). Commercial agency law: A comparative analysis. Taylor & Francis.

Springer v Great Western Railway Company [1921] 1 KB 257

Watteau v Fenwick (1893) 1 QB 346.