BUSINESS LAW (LAW 416)

TUTORIAL QUESTIONS : LAW OF AGENCY

OCT 2022 – FEB 2023

Question 1

Ahmad instructed Lingam, a lorry driver, to deliver 1000 bottles of cencaluk from Melaka to
his customer in Kedah. While travelling on the North-South highway, a cement truck carelessly
rammed into Lingam’s lorry causing Lingam’s lorry to be damaged. About 300 bottles of
cencaluk were also broken and the content had spilled. Lingam could not proceed with the
journey as his lorry had to be towed. He decided to sell off the remaining bottles of cencaluk
to Abu who was interested to buy. Ahmad was upset when he found out what Lingam had
done. He wants to sue Lingam for the losses as he did not authorize Lingam to sell the
cencaluk. Lingam insisted that he had no choice as he was involved in an accident.

Advise Ahmad

Question 2
Laila has just opened her own bakery. While shopping for inventories for her bakery, she told
her best friend, Shila who followed her shopping that she is thinking of buying baking
equipment from the ‘Good Chef’ brand. However, as they cost about RM5,000 each, Laila
wanted to survey other brands first. Two days later, Shila found a shop that sells the Good
Chef products which was on sale. Shila ordered 3 cake mixer and 3 food processor on behalf
of Laila from the shop, Wang Wang Electrics (WWE). She asked WWE to deliver the goods
to Laila’s bakery and that Laila will pay for the goods. Laila was surprised when WWE delivered
the goods as she did not want to pay as she was not informed of the price of the goods. WWE
demanded payment as Shila had told WWE that she works for Laila.

Advise Laila.
Question 3
Leong appointed Chan to purchase equipment for his factory at a price not exceeding
RM300,000. Chan ordered some equipment from Syarikat Cemerlang (“SC”) worth
RM400,000. However, Chan failed to inform Leong that permit is required by the Fire
Department to ensure that the equipment comply with the safety requirements. When he
ordered the equipment, he used his own name and did not tell SC that he is purchasing them
on behalf of Leong. When the equipment was delivered, Leong was upset as it exceeded his
budget. He also found out that as permit was not obtained, he could not use the equipment.
SC wants payment to be made for the equipment. Chan said as he is acting as Leong’s agent,
Leong should pay since Leong has received the equipment. Leong wants to know if he is liable
as Chan exceeded the authority.

Advise Leong.

Question 4
Larry has been working in Gerhana Enterprise (GE) for ten years and has been in charge of
ordering office supplies from Office Stuff Berhad (OSB) for GE. When OSB receives the order
from Larry, payment will be made by GE when the goods are delivered. Three days ago, Larry
was retrenched from his job as GE wanted to reduce the number of workers and bring down
the operation costs. Before Larry left, he had placed an order from OSB as he normally did.
However, GE refused to pay when the goods are delivered as GE claims that Larry is no longer
authorized to order goods on behalf of GE. OSB wants to sue GE as they were not informed
of Larry’s termination.

Advise GE.
Question 5
Ikhlas engaged the services of a broker, Song Lap to get a buyer for his land at a price of not
less than RM300,000. Razuan, an interested buyer made an offer to buy the land at
RM330,000. On top of that, he promised to give Song Lap RM2,000 if Ikhlas agrees to sell the
land to him. Song Lap informed Ikhlas of Razuan’s offer of RM330,000 and Ikhlas agreed to
sell his land to Razuan. Song Lap kept the RM2,000 without informing Ikhlas. However, Ikhlas
later found out about the RM2,000 which Song Lap received and was not happy about it. He
intends to take action against Song Lap as he felt that Song Lap had not looked after his
interest.

Advise Ikhlas.

Question 6
Jamil instructed Hamid to sell artwork on his behalf. Hamid sold the artwork and collected the
purchase price of RM20,000 from the buyer on behalf of Jamil. Jamil promised to pay RM2,000
as Hamid’s commission for the sale. Jamil has not paid Hamid’s commission. Further, while
representing Jamil, Hamid had advanced RM1,000 being costs to deliver the artwork to the
buyer. Although Jamil promised to reimburse him, he has yet to do so. Jamil wants Hamid to
give him the purchase price of RM20,000 which Hamid obtained from the buyer before paying
Hamid.

Advise Hamid.

Question 7
Alan has been an agent of King Factory Bhd (KFB) for nearly two decades. Recently, the
management of KFB are dissatisfied with Alan for personal reasons although Alan has been
doing a good job. KFB wants to dismiss Alan by giving 24 hours’ notice. However, Alan has
interest in the business as Alan had advanced some money to KFB when the business was
in trouble 3 years ago. KFB has not paid Alan.

Advise KFB.