Orville Duna BBA2 (D) Agency Tutorial Qu#3 pg) QUESTION In March 2005, John, a collector in vintage vehicles, appointed Louise, a dealer in vintage cars, to sell his 1969 Morris Oxford, Louise advertised the vehicle in the newspapers and printed brochures, which fisted the specifications of the car, including its ‘ownership history through the years, She also advertised the car on her website John was quite keen on getting the car sold so that he could use the proceeds to purchase spare parts for his 1960 ‘Speedo’ motorbike. Louise knew that the value of the Morris Oxford is far greater than John’s asking price of ‘$1.2 M so instead of accepting the many offers to purchase at John’s asking price, she kept the car on her premises to advertise her business. In April, she accepted an offer of $1.9M from Henry, but she paid over to John only $1.2M, which is the gum he had expected to receive. Henry, the purchaser of the car, had been told buy Louise that John had been the sole owner of the car, that it had a mileage of 50,000 and that the brake discs were new. In, fact John bought the car from a retired lecturer in 1990, had not refitied brake discs since then and Louise had arranged for the mileage on the car io be altered by her chief mechanic, Henry discovers that the brake discs are old, that the mileage of the car had been altered and that the car was therefore worth far less than the sum he paid, Henry is furious and drops in to see John at his home, only to find him quarrelling with Timothy who claims he paid Louise $1M for the bike and has come ta collect the 1960 ‘Speedo’ bike. Joha maintains that he gave Louise no authority to sell the bike. Advise John on his liability to both Henry and TimothyOrville Dunn BBA2(D) Agency Tutorial Qu#3 pe? AGENCY. In advising John, there are some relevant issues to be identified. Was there an ayeney relationship created between John and Louise , how was the agency relationship created, what type of agent was Louise being appointed as, the type of authority that Louise displayed, whether or not John will be liable for tort, fraud or misrepresentation committed by Louise, were there any duties breached by Louise and if so what remedies ‘may be pursued against the agent. An agency is the relationship that exists between two persons, where one called the agent is considered in law to represent the other, called the principal, in such a way as to affect the legal position of the principal with regards to strangers entering into the relationship by the making of contract or the disposition of property. ‘An agency is created by the mutual consent between principal and agent, An ‘express agency is created when the principal details all the terms of the agency to the agent, All elements ca valid contract must exist in an agency relationship. Such as offer, acceptance, capacity, consideration, legality and consent ‘There are various types of agents. A special agent is one who has authority to do a patticular act or series of act with very limited scope, The special agent has less power than a general agent. A professional agent is one who represent themselves to the public as having expert knowledge in a particular field and offer to act as an agent for anyone. Express authority consists of the instructions a principal gives to an agent regarding the extent of the agent’s powers and limitations on them. Parties dealing with ayents of express authority must take note of the agent’s limitations, if the third party is, not aware he must ask. Such as in the case of {WHYTE V LUCAS’ where a firm of estate agent claim to act on behalf of the owner of a particular property though that person had denied them permission to act on his behalf, When the owner sold the property to a certain party who wes introduced through the estate agent they claim there Commission. It was held that the estale agent had no entitlement to the commission as the property owner had not agreed to their acting as his agent, ‘implied authority is where an agent appointed by a principal and acting in a particular capacity, has the authority to make those contracts which are necessary or normal incidents of the agent’s activities, Such as in the case of WATTFAT V BENWiL A’ woere the manager of a public house was instructed by D, the owner, not to purchase tobacco on credit. P, who was not aware of this restriction sold tobacco to the manager, and the manager was unable to pay for it, P then successfully sued D. It was held that the purchase of tobacco was within the usual authority of a manager of a public house, and it was this authority upon which the seller was entitled to rely. ‘A person who professes £0 act as an agent, and either has no authority from the alleged principal, or has exceeded his authority is liable in an action for the breach of warranty of authority at the suit of the third party he professed to make the contract with. As in the case of ‘YONGE V TOYNBEE" where a solicitor was conducting litigations on behalf of a client that had went insane. After this happened, but before the solicitor heard of it, he took further steps in the action, As a result the other party to the litigationOrville Daun BBA2 (BD) orial Quits incurred further costs. It was held that he could recover these costs from the solicitor since the solicitor had continued in itis actions after the agency had been ended by the ient’s insanity. It made no difference that the solicitor acted in good faith and with reasonable care. “The prineipal is liable for any tort, fraud or misrepresentation made by the agent while acting within the scope of his authority, whether actual or apparent. If the agent cannot be said to be acting with some form of authority, he will be personally liable to the third party. As iliustrated in the case of ‘LLOYD V GRACE SMITH AND COMPANY” where the defendants were solicitors who employed a managing clerk to do conveyancing. The managing clerk fraudulently induced P to convey two cottages to him by representing that this was necessary to sell the cottages. The clerk then resold the cottages and absconded with the sales proceeds. The solicitors were held liable on the grounds that by allowing him to perform conveyancing transactions they had given him apparent authority to act as he did, He. was acting within the scope of his employment even though his act was fraudulent. Both the principal and the agent have duties to carry out to each other. There will bea breach in duties if they are not followed. The agent must carry out the lawful instructions of the principal, as in the case of ‘TURPIN V BILTON’ where an insurance broker in return for'a fee, agreed to effect insurance on P’s ship. He did not do so and the ship was lost. It wad held that the broker was liable to P. ‘The agent also has fiduciary duties. They are to make full and prompt disclosure of all material facts! The agent must not make secret profits or take bribe, as in the case of {LUCIFERO V CASTEL’ where an agent appointed to purchase a yatchffor his principal, bought the yatch himself and then sold it to his principal at a profit, the principal being unaware that he was buying the agent’s own property. The agent had to pay his profit to the principal. ‘When the agent does not fulfill his required duties appointed by his principal or when there is a breach in the agents duties, there are remedies available to the principal 80 as to give the principal some form of compensation, In the situation where John appoints Lquise to sell his 1969 Morris Oxford, this Louise his agent as she had the requirements to do on behalf of John, the principal. By paying Louise for the ci, Henr, becomes a third as he makes a contract with John’s agent, Louise. Timothy becomes a third p (1) million dollars for a bike The agency created between John and Louise was that of express agency. This is evident in that John had only one specific reason to do business with Louise, which is the simple detail to sell his car Louise is considered a special agent as well as a professional agent. She is justified as a special agent seeing that she was told specifically what to do by John, sell the car as this is what she was appointed for. She is justified as a professional agent due to the fact that this is a field that she has expertise knowledge in and knows much of. She is a dealer in vintage cars, this being her specialty. Express authority was given to Louise when appointed to sell John’s car. Louise was told by John, the extent of power she had when appointed to sell the car and was not will maiOrville Dunn BBA2 (D) Agency Tutorial Qu#3 ped merely eppointed to do something with the car, which would bring far less limitations to the authority of Louise with regards to the car. Implied authority was shown by Louise upon being appointed to sell the 1969 Morris Oxford car. She knew that upon being appointed to sell the car, she would have to formulate a way of such, by doing further actions that was not expressly told, so as to sell the car. As shown where Louise advertised the vehicle in the newspapers and printed brochures, which listed the specifications of the car, including its ownership history through the years and she also advertised the car on her website Louise committed a breach of warranty of authority when she conducted business by selling John’s bike to Timothy. She was given expressed authority to sell the car but this does not give her the implied authority to sell the bike as the two of these are very much unconnected, her authority would have been far exceeded in selling the bike. It cannot be said that Louise is acting on apparent authority as John did nothing to give Timothy the impression that he wanted Louise to sell his bike for him such as even giving the title to Louise. Also because express authority was given to Louise, the law stipulates that Timothy should have asked on the direct authority given by the principal upon er cring into a transaction with Louise, therefore John could not be liable, The doings of Louise in selling the bike with no authority from John, will make her liable to Timothy for the bike The principel, that is, John, is responsible for any tort, fraud or misrepresentation done by Louise so as to seli his car. This is so because John had given Louise the express. authority to act on behalf of him personally. When Louise told Henry that John had been the sole owner of the car, that it had a mileage of 50,000 and that the brake disks were new, she deceived Henry by misrepresenting the information as well as committing fraud. Louise committed breaches in her duties to the principal. She did not obey the lawful instructions of John, which was to specifically sell his 1969 Morris Oxford car but instead she also sold his bike which is not on terms with the instructions given to her. When Louise actually sold the car for 1.9million and she was told to sell it for 1.2 million, again she disobeyed instructions given. Louise also committed breach in her duties by keeping to herself secret profits of 0.7 million upon selling the car for 1.9 million. John was given the 1.2 million which he had indicated but this withheld profit that Louise confiscated caused for a breach in her duties Louise also did not make full and prompt disclosure of all material facts, so where Louise got the many offers to purchase the car at John’s asking price and does not inform him of this, she is in breach. John will be able to recover the secret profits from Louise, this being a remedy. for the breach of duty. Louise would have to give to John the extra 0.7 million which she acquired from the sale of the car. John may also bring an action for breach of contract and ask for appropriate remedy for breach, This can be done where Louise sells his bike without authority. In advising John on his liability to Henry and Timothy, John will be liable to Henry for damages done to him seeing that Louise is his agent. On the other hand JohnOrviite Dunn BBA2(D) Agency Tutorial Qui’3 pgs \ will not be fiable to Timothy for the damages done to him, but the agent, Louise, will be liable for them