Real Estate Law 1

Case Study on Agency Law

Ist Case Study

Zara has been instructed by Ellie to buy a laptop for a price not exceeding RM 6,000. She
then ordered the laptop from Ajay a laptop distributor. The transaction was in her own name
for a price of RM 6,500 since that was the lowest price in the market. When Ajay delivered
the laptop, Ellie accepted it even though the price exceeded the amount she had authorised.
However, when Ajay demanded a payment, Ellie refused to pay on the ground that the said
price was too expensive and in fact it was bought by Zara herself. Ajay planned to sue both
Zara and Ellie for the unpaid laptop. While both Zara and Ellie claimed that either one of
them should be liable.

Instruction
Advise Ajay.

i. Introduction
This case is about Ellie as the principal, Zara as the agent and Ajay as the third party.
Ajay want to sue both Zara and Ellie because they refused to make a payment for the
laptop that has been bought by Zara at the price RM6500 which is exceeding
RM6000.

ii. Issues
The issue is whether Zara fulfilled the conditions of being an agent to be ratified by
Ellie because of her mistakes bought the exceeding price of laptop from Ajay.

iii. The law

Agency by ratification can arise in any one of the following situation, an agent who
was duly appointed has exceeded his authority or a person who has no authority to act
for the principal has acted as if he has the authority. According to Section 149 of
Contracts Act 1950, provides that a principle may either reject or confirm such
contract is called ratification.
iv. The law
Based on the question given, as we know Zara was instructed by Ellie to buy laptop
for a price not exceeding RM6000 and she ordered a laptop for a price RM6500 from
Ajay in her own name. this can be referred to Section 149 and case Keighley Maxted
v Durant where the principal agreed to take a higher price but later refused to take it.
It suit with Zara case without acted as an agent to Ajay, when Ellie agreed and
accepted the price even exceeded the amount she authorized, but when Ajay
demanded payment and a laptop price turned into expensive, Ellie refused to pay and
furthermore it was under Zara herself.

v. Conclusion
In conclusion, Ajay shouldn’t sue both of them because Ellie was not liable since Zara
did not express herself as an agent at the time of the transaction.