COMMLAW 7012 Business And Corporations Law

Table of Contents


This assessment will enable you to prove your ability to engage with legal research.

1. Identify the legal issues that arise from new factual situations. 2. Analyse the applicable law to distinguish which rules are applicable. 3. Apply the law to the problem.

2. Summarize and explain the law so that a report can be prepared for a client that identifies potential liabilities arising from new factual situations


Question: Based on the facts presented in this question, it is necessary to decide if Brad entered into a valid agreement with Caltex and whether Tina is bound by such an agreement.

This is because Tina explicitly told Brad that he should not enter into any contract for petrol future purchases.

Another issue to consider is whether Paul made a secret profit while Tina was his agent.

Law: To resolve the issues mentioned above, it is necessary to apply the principles of the law on agency.

The law of agency states that an agency is an agreement between the principal and agent.

The agency agreement states that the agent has the power to sign the principal’s contracts.

This position results in the principle being bound by the agreement by law (Watteau and Fenwick 1893).

In such cases, in addition to the relationship between the principal and agent, a relationship also forms with the third party.

The actions of the agent create a legal relationship between the principal and the third-party.

In such cases, even though the agent created the contract, the law of agency states that there is no relationship between agent and third-party (Harris Hargovan, Adams, 2015).

The law of agency allows for different types of authority to be given to the agent by the principal (Freeman and Lockyer, Buckhurst Park Properties (Mangal) Ltd. 1964).

The law allows the principal to confer authority on agents in three ways.

The agent can be given authority orally or in writing to expressly grant it.

Even if the principal has not explicitly conferred authority on an agent, the fact that the agent was appointed to his current position and that some authority is associated with that position can make it clear that the agent does have implied authority (Lipton Herzberg and Welsh 2016, 2016).

In the same way, the agent could be considered to have apparent authority in cases where the principle has not conferred authority on him. However, the principal has indicated to the parties that such an agent is the authority.

It is important to note that, in the context of the authority granted by an agent, it does not have to be that the agent makes a live presentation, but that the principal must make the representation regarding the authority of that agent (Christie and Another v Harcourt & Co. 1973).

The law allows for such a representation to be made by the principal as an inaction, especially if the principal knows that third parties may believe that the agent is authorized.

The law provides that the principal is responsible for informing the third parties about the fact that the agent does not have authority.

The principal can be held responsible for any actions taken by the agent if the principle fails inform third parties about the lack of authority.

A principal may also direct an agent to follow the law of agency.

The law can consider the agent liable if the principal doesn’t follow the instructions.

In such a relationship, an agent must use their talent in a manner that is advantageous to the principal.

The agent is required to exercise due care when working for the principal in the same manner.

The agent also has a legal obligation of good faith.

The agent also has a fiduciary duty to act in the principal’s best interests.

Vermeesch & Lindgren (2011) state that the agent should avoid conflicts of interest.

If there is a conflict of interests, the agent must immediately notify the principal.

The agent must also ensure that they do not profit secretly while representing the principal (Harris Hargovan, Adams, 2015).

In Bentley v Craven (1853), the Court stated that the law allows the principal to recover any profit made by the agent.

The agent must also ensure that the principal is not privy to any important information. In the same way, the agent should be careful not to use this information to make a secret profit (Robb, v. Green 1895).

Application: In this case, on the basis of the rules and law of agency.

Tina gave Brad express authority in the past to purchase patrol for her.

After Tina’s recovery from her illness, Tina withdrew the authority and informed Brad that she would not be ordering patrol in the future.

Brad ordered 30,000 litres of patrol, even though this authority had been withdrawn.

It is important to note that even though Tina had withdrawn her authority to purchase petrol from Brad, Caltex and other third parties were not aware.

Caltex can reasonably assume that Brad was authorized to purchase patrol, and Tina will be bound by such contract.

Concerning the second question in this question, we can say that Paul made a secret profit while acting as Tina’s agent.

It was also the responsibility of everyone to inform Tina about the higher value of the car.

Paul decided that he would purchase the car and then sell it at a profit.

Paul has breached his agent’s duties in this instance.

According to law, Tina can sue Paul for this amount.

Conclusion: The contract Brad created for the purchase of Patrol from Caltex can now be enforced against Tina, even though Tina had explicitly told Brad not to order patrols in the future.

Caltex didn’t know Tina had withdrawn her authority in this instance.

Caltex could therefore assume that Brad was authorized to bind Tina.

Paul made a secret profit while Tina was his agent, and Tina can seek this amount back from Paul.

The issue: This question involves determining if Simon’s contract is binding on the other partners of this firm, George, Sara, and Mary. Particularly because the partnership agreement gives the partners the authority to enter into a contract up to $10,000. If the contract exceeds this amount, the partner must inform the other partners.

Before signing the contract.

The partnership is also bound by Simon’s contract to purchase Ute. This is especially true if the partnership was not involved in freight business.

Law: These issues can be resolved by using the rules set forth in the Partnership Act.

The Partnership Act allows the parties to enter into a partnership either orally or in writing.

The partnership agreement lists all the powers granted to the partners (Graw & Whitford, 2015).

The partnership agreement also outlines the authority granted to the partners.

It can therefore be said that a partner who has created a contract falls within the authority of such a partner can say that the content binds other partners (Robb V Green, 1895).

In this respect, the Partnership Act provides that a partner has the implied authority to act as an agent for the rest of their partners (Watteau and Fenwick 1893).

It is important to note that the implied authority granted to partners is only limited to the nature and purpose of the business.

If a partner’s actions are not consistent with the business nature, it cannot be considered binding for the other partners.

Application: According to the rules of partnership, Simon is authorized to enter into a contract for the purchase of a storage drive from SunStar Computer. The price was $12,000.

The current partnership agreement clearly states that the partners have no authority to enter into any contract worth less than $10,000. However, the rules above make it clear that the contract is binding for the partnership.

Sun Star Computer did not know of the restrictions placed on the partners’ authority when they entered into the contracts.

Sun Star Computers has the power to enforce this contract against the partnership.

Simon created the contract for the purchase of secondhand Utes. We mentioned earlier that the partnership was in the information technology business.

Simon, on the other hand had signed this contract to allow the partnership to enter freight.

These circumstances make it impossible to say that the contract for Ute’s purchase was made in the normal course of business.

This means that the contract is not binding for the partnership.

Conclusion: Based on the above, it is clear that Simon’s contract for SunStar Computer NBN purchase of 500 TB storage drive was against other partners.

This is because even though it was mentioned in the partnership agreement, a partner cannot enter into a contract worth less than $10,000. Partners must inform each other before entering into any contract that exceeds this amount.

Sun Star Computer didn’t know this limitation was in place.

This means that other partners will be considered to be bound by Simon’s contract for the purchase 500 TB storage drives, even though this contract was not within their authority.

Simon created a contract to purchase a secondhand Ute for $9000. However, this contract is still outside the authority of the partners and it is not binding on the other partners.

Because the partnership business was not related to the general nature business of the partnership, it was not information technology or freight business.

This contract does not apply to Mary, Sara, and George.

Refer to

Graw, Parker and Whitford, (2015) Understanding Business Law 7th Ed LexisNexis Butterworths

Harris, J. Hargovan and A. Adams (2015) Australian Corporate Law LexisNexis Butterworths 5th Edition

Lipton P., Herzberg A. and Welsh, M. (2016) Understanding Company Law 18th edition, Thomson Reuters

Vermeesch.R B. Lindgren. K E. (2011) Business Law of Australia Butterworths. 12th Edition.

Case Law

Freeman and Lockyer V Buckhurst Park Properties(Mangal) Ltd [1964] QB 480

B. I AND 315

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