The Operational Law between Siddo and Vera
From the facts given, it can be inferred that the law that is operational between Vera and Siddo is the law of contract. This can further be narrowed down to the law of agency. Panganiban J in the case of Pryce Corp vs Pagcor stated that so longest the contract has not been termited the parties are bound by the terms of the contract. The law of contract binds contracting parties as per the terms and conditions of the contract. It is only the contracting parties that are stating their rights and obligations between each other and the law allows them to contract the way they want. The law of agency is basically underpinned under the law of contract and it solely operates like the contracts. For the law of agency, there is the principal and the agent whereby there is an agreement between the two individuals that the agent will perform tasks and duties in accordance to the instructions advanced by the principal. DeMott (1997 p.1035) writes that an agent is tasked to act reasonably in good for faith for the benefit of the principal as I will be discussing in the subsequent paragraphs. The agent is only allowed to act within the scope of the instructions given. Where the agent has acted outside the scope of the instructions given the principal would either ratify that transaction or he may refuse to ratify. The principal can sue the agent for breach of contract or for the tort of negligence when and if he contravenes the terms of agency. There are various statutes and case laws that address emerging issues in the law of agency or the contractual relationship between the parties involved. The key statutes are Auction Sales Act, Estate Agent Act, Consumer Credit Act, Travel Agents Act, Goods Act and Instruments act. I will discuss the facts given vis-à-vis case laws and applicable statutes.
(Mc Carthy 2004 p. 2) reiterates that the law of agency is underpinned to the law of contract. In other words agency law come into existence vide an agreement between the principal and an agent whom he authorizes to act on his behalf. However the court in the case of Yasuda Fire & Marine Insurance v Orion Marine Insurance, differed and it stated that agency is a creature of contract. In the foregoing circumstance it can be established that there is a contractual relationship between Siddo and Vera. Vera is the principal because it is her who is instructing while Vera is the agent since he is the one being instructed to act with a third party in accordance to the terms or instructions herein. It is therefore prudent for us to look various ways upon which agency can be created especially in light of the facts before us. Agency is herein created actually or expressly since the principal gives exact instructions to the agent to act in the specified manner as illustrated by the court in the case of Ex. Soil Recycling, Inc. v. Intercargo Ins Siddo. The court held that an agent requires an express or actual authority an agent in order to bind his acts to the principal. Siddo who is the agent in this case is supposed to act within the scope of the instructions given otherwise he would not be deemed to be acting for Vera who is herein the principal. It is evident that the agent has acted contrary to the given instructions and has not acted within the scope of the instructions and thereby as things stand the agent is deemed not to have been acting for the principal. In the case of Williams v A & W Hemphill Ltd, the House of Lords stated that where the agent has acted outside the scope of the given authority, the master would not give effect to the mischief of the agent. In light of the above, the principal can bring a course of action against the agent.
The Principle of the Law of Contract and Agency
In addition to the above, an agency can be created impliedly. In light of the prevailing circumstances between Siddo and Vera it can be argued that agency has been created impliedly. An implied authority refers to a situation when an agent is acting reasonably in fulfillment of his actual authority as stated by the court in the case of ANZ Bank Ltd v Ateliers de Constructions. Therefore when an agent reasonably deems appropriate, he is supposed to act as though he is doing so vide the express instructions he received. In such an instance an agent ought to be acting only in the best interest of the principal. The case of Australia and New Zealand Bank v Ateliers de Constructions explains an instance when implied authority was assumed by the agent. In this case the agent was authorized to receive cheques for the principal. The agent obtained a cheque and he placed it to his account since the principal did not have an account in Australia. The issue to be determined by the court was whether the agent acted within the scope of the given express instructions or impliedly. The court found that the agent had acted impliedly in fulfillment of the laid down instructions and in the best interest of the principal. The court held that although there was no actual authority to act as such, the agent had authority to act impliedly and hence he rightly acted within the scope of his work.
Notwithstanding Siddo’s contravention, Vera can ratify the acts of the agent even if it does not fall within the purview of the advanced instructions. In the case of Koenisblatt v Sweet the court held that when the principal ratifies a transaction it is as if the agent had authority to do what he did; this is to say ratification acts retrospectively. Ratification also ought to be in relation to an existing principal as determined by the court in the case of Jones v Hope. The court has as well determined the issue of undisclosed principal in the case of Keighley, Maxted & Co v Durant. The vendor in this case had altered the contract to match that one of the principal and the issue before the court was whether the alteration of the contract could be ratified and the court held that an agent cannot seek ratification where undisclosed principal is involved. Ratification is a sole discretion that lies with the principal. (Mc Carthy 2004 p. 11) explains that where the principal has ratified a transaction of an agent, he would be bound to such an act. There are a number of considerations that would determine whether the ratification by the agent is flawed or not as evident in the case of Siddo and Vera. First, the principal would consider whether the agent was acting on his behalf and the third party ought to have known that the agent was actually acting for the principal and lastly the principal should be having a capacity to contract. An agent therefore cannot seek a ratification from a client who is a minor as provided by the Minors (Property and Contracts) Act 1970 (NSW) of Australia or persons with mental disorders. Importantly, it is a requirement of the law to ensure that full disclosure is made to the principal prior to ratification being given as was stated by the court in the case of Mitor Investments Pty Ltd v General Accident Fire and Life Assurance Corporation Ltd. In this case a broker sold a hotel that was on the banks of an inlet. The two parties agreed that the broker would take insurance that would cover damages that might be sustained due to flooding. The insured on being provided with a schedule of insurance took the appropriate policy that would cover flooding but excluded damages that might be occasioned inside the hotel. When there was flood that caused damage in the hotel the insured sought to recover as against the insurer and the insurer refused to indemnify. The broker had herein failed to advise the insured on the appropriate insurance policy to take and the court found him liable for failing to make disclosure to the insured on the insurance policies. The broker who is herein the agent never made aware to the insured, the principal, the essential facts at the time of ratification and he was found liable. The House of Lords also in Caparo Industries plc v Dickman also determined the issue of disclosure. In this case the court gave four conditions which must be proved before the principal can claim as against the agent for negligence. First there has to be trust and fiduciary relationship between the parties, the party advising has to assume risks, the party being advised has to rely on the information tendered, and that the reliance ought to be reasonable. This case is a true reflection of the finding of the court in the case of Mitor Investments Pty Ltd v General Accident Fire and Life Assurance Corporation there above.
Agency Creation: Express and Implied
Generally, there are several remedies that the principal can recover as against the agent when he does not perform in accordance to the instructions given or when he unreasonably exceeds the authority given. The principle can ratify the contract and thereafter claim as against the agent. Ratification herein would legitimize the acts by the agent but the principal maintains the right to sue under the law of contract. Law teacher in discussing the principal of retroactivity highlighted that ratification ought to be done within a reasonable period of time. Reasonability is also to be determined by the court depending on the prevailing circumstances of the case. The principal might therefore refuse to ratify an act if according to him time has lapsed. Vera in this instance would be required to ratify the sale of the painting within a reasonable time. There are several remedies that the principal can claim from the agent. The first remedy is a claim for damages from the agent for lack of prerequisite skills in discharging his mandate, secondly pertains an instance when the agent obtains secret profits in the transaction thereby depriving the principal an advantage and lastly the principal may just refuse to ratify the agent’s transaction thereby the agent would be deemed to have been acting on his own behalf as was held by the court in the case of Williams v A & W Hemphill Ltd. In the issue of the secret profit the court held in the case of Andrews v. Ramsay and Co where the principal recovered from the agent the secret profits that the agent had obtained.
As referred to in the previous paragraph, the principal can recover damages where the agent acted unreasonably or where he did not have requisite skills or he where he negligently acted hence disenfranchising him. The relevant course of action that Vera can bring against Siddo would be a breach of contract. This is basically because the agent failed to perform in accordance with the terms of the contact agreed upon. The principal would thereby obtain damages for the losses she incurred. This can as well be explained by the case of Mitor Investments Pty Ltd v General Accident Fire and another, whereby the broker, an agent herein for the principal was held liable for not advising on the appropriate insurance policy. The court has also determined the issue of secret profits in the case of FHR European Ventures LLP and others v Cedar Capital Partners LLC and it held that such profits belong to the principal. Finally, as highlighted to in the previous paragraph, one of the remedies available to the principal is refusal to ratify a transaction by an agent. The agent herein would be deemed to be the principal and his acts would not be binding to the Vera. However, this remedy is not advantageous to the Vera since she stands to lose if she does not ratify this transaction.
Ratification as a Remedy for Unauthorized Actions by Agents
Kirschenbaum who is an attorney has argued that it is possible to sue an agent for the tort of negligence. This has further been explained by the court in the case of Anns v Merton London Borough Council where the matter before the court pertained a negligent oversight of a building that was being constructed. The court held that the principal could recover damages due to the poor oversight by the firm. It is noteworthy that the Vera can as well bring a suit on tort of negligence against the Siddo. The reason for this cause of action is that the agent failed to take reasonable care in the prevailing circumstance hence causing damages and loses. The agent owes the principal a duty of care and in this case is to abide by the instructions and act in the best interest of the principal. The agent is also expected to act in good faith. It is evident from the facts provided that the agent has actually breached the duty that he owed the principal and has not acted in the best interest. As a result of the breach of the duty of care the principal has suffered losses.
In conclusion, it is evident from my discussion above that the law of contract is intertwined with the law of the law of agency. The facts herein discussed pertain to the law of agency. Agency has been expressly created in this instance since the principal has expressly instructed the agent to act. There is also a creation of agency impliedly. The act of selling the paint at a lower price as I have argued above can be classified to be creation of agency impliedly. Ratification can also be classified as a way through which agency is created. In the facts provided if Vera approves the acts of the agent whether expressly or impliedly there would be a ratification. However, the agent ought to be careful in transacting on behalf of the principal since he is only permitted to act within the scope of instructions given by the principal. When the principal deems that the agent has acted unreasonably and without a good faith he can institute a legal proceeding against the agent. The courses of actions that the principal can bring include breach of contract and for tort of negligence whereby the principal would obtain damages as against the agentl. However, Vera should consider ratifying the sale of paint and thereafter he can sue. For ratification to be absolute, the court would usually consider a number of factors including; the capacity of the principal, the presence of the principal, the disclosure by the agent of all material facts and whether the time that has lapsed is reasonable or not. Generally the agent ought to act in the best interest of the client; therefore any act that is not of an advantage to the principal would be dismissed. Therefore from the aforementioned discussion it is evident that Vera can claim as against the agent for breach of contract and/or for the tort of negligence.
Andrews v. Ramsay and Co  2 KB 635
Bridge, M., Governmental Liability, the Tort of Negligence and the House of Lords Decision in Anns v. Merton London Borough Council"(1978). McGill LJ, 24, p.277.
Australia And New Zealand Bank, Ltd. V. Ateliers De Constructions Electriques De Charleroi.  1 Lloyd's Rep. 463.
DeMott, D.A., 1997. A Revised Prospectus for a Third Restatement of Agency. UC Davis L. Rev., 31, p.1035.
Ex. Soil Recycling, Inc. v. Intercargo Ins Siddo
Chevalier-Watts, J., 2014. FHR European Ventures LLP v Cedar Capital Partners LLC.
Freeman & Lockyer (A Firm) v Buckhurst Park Properties (Mangal) Ltd  2 QB 480 at 502
Hedley Byrne & Co Ltd V Heller & Partners Ltd (1964) AC 465 (HL)
Jones v Hope (1880) 3 TLR 247
Keighley, Maxsted & Co. v. Durant, 1901 A.C. 240 (1901).
Kirschenbaum and Kirschenbaum, Can Principal Sue Its Agent For Negligence – viewed on https://www.kirschenbaumesq.com/article/can-principal-sue-its-agent-for-negligence-may-6-2016
Law teacher, Secret profit can be defined as a bribe, viewed on22 September 2017 https://www.lawteacher.net/free-law-essays/contract-law/secret-profit-can-be-defined-as-a-bribe-law-essay.php
McCarthy, L., 2004. Vicarious liability in the agency context. Queensland U. Tech. L. & Just. J., 4, p.1.
Minors (Property and Contracts) Act 1970 (NSW)
Penn Central Transp. Co. v. New York City, 438 U.S. 104, 98 S. Ct. 2646, 57 L. Ed. 2d 631 (1978).
Pryce Corporation (Formerly Pryce Properties Corporation), vs. Philippine Amusement and Gaming Corporation [G.R. No. 157480. May 6, 2005]
Williams v A & W Hemphill Ltd1966 SC (HL) 31, 44,
Yasuda Fire & Marine Insurance Company of Europe Limited v. Orion Marine Insurance Underwriting Agency Limited, 1995 All E.R.3 211 (1995).
To export a reference to this article please select a referencing stye below:
My Assignment Help. (2022). The Law Of Contract And Agency: Essay On Facts, Cases, And Statutes.. Retrieved from https://myassignmenthelp.com/free-samples/law00720-legal-studies/commercial-and-law-of-agency-file-A99C37.html.
"The Law Of Contract And Agency: Essay On Facts, Cases, And Statutes.." My Assignment Help, 2022, https://myassignmenthelp.com/free-samples/law00720-legal-studies/commercial-and-law-of-agency-file-A99C37.html.
My Assignment Help (2022) The Law Of Contract And Agency: Essay On Facts, Cases, And Statutes. [Online]. Available from: https://myassignmenthelp.com/free-samples/law00720-legal-studies/commercial-and-law-of-agency-file-A99C37.html
[Accessed 28 November 2023].
My Assignment Help. 'The Law Of Contract And Agency: Essay On Facts, Cases, And Statutes.' (My Assignment Help, 2022) <https://myassignmenthelp.com/free-samples/law00720-legal-studies/commercial-and-law-of-agency-file-A99C37.html> accessed 28 November 2023.
My Assignment Help. The Law Of Contract And Agency: Essay On Facts, Cases, And Statutes. [Internet]. My Assignment Help. 2022 [cited 28 November 2023]. Available from: https://myassignmenthelp.com/free-samples/law00720-legal-studies/commercial-and-law-of-agency-file-A99C37.html.