Case study agency law
If Pr has not notified its customers that A is no longer working for the Pr and TPS continue to work with A on the basis that A is still working for Pr, Pr may still be bound by the actions of A for reasons of estoppel. • In partnerships where a partner retires or resigns, and the continuing partners fail to notify the existing TPs of the retirement and the customers continue to do business with the retired partner, the partners are bound by the actions of the resigned partner. • Moreover, the Australian business law states that Pr is stopped from denying that A is an agent and is bound by the actions of A if the actions were within the A’s apparent authority if; • Pr had held out A to be its agent, by words or conduct • TP has relied on the representation (Pr’s holding out of A) • it is reasonable for TP to rely on the holding out of A, and • TP has done something in reliance on the representation • under the Corporations Act (Cth) (s 129(2): ¶9-470) anyone can assume that anyone held by out by the company as an agent has authority.
• According to the Australian business law, the parties Pr and A can end the agreement o mutual agreement, but this would not affect the ostensible authority on, and thus Pr, to avoid being liable to TPs, should ensure that those third parties are notified that A no longer acts for Pr • liabilities in agency law (¶11-260 – ¶11-350) • Vicarious liability of Pr for actions of A • The doctrine of the undisclosed principal Analysis According to agent liable for breach of warranty of authority, Mike acted as an agent to the company, yet he had no authority, and thus he deceived Glitz Cruisers offering him entertainment under the pretense he was on behalf of LLA. In this regard, LLA could advise Glitz Cruisers to sue mike for breach of warranty of authority by proving that Mike for failure to disclose that he had resigned from the LLA was tantamount to claiming that he had the authority.
In the case study, LLA are legally obliged to pay Glitz Cruisers the $200000 that Mike spent during a treat with his girlfriend using the MV Flash because the partners who Mike left in the company did not inform the customers, and the general public about the resignation of mike, and thus Glitz Cruisers took Mike on the entrainment trip under the assumption that Mike was still a partner of LLA and was acting within the scope of his authority. Jenn Glam knowingly decided to wait for several days before informing the public about the resignation of Mike in fear that LLA’s client would follow mike to his new firm. The decision to keep Mike on the company’s website renders them legally bound to pay Glitz Cruisers as they acted on status quo in void of formal communication on the departure of Mike that should have made immediately Mike tendered his resignation.
Glitz Cruisers, in the absence of official communication on the resignation of Mike, agreed to take mike and his girlfriend on entertainment trip with MV Flash on the premise that Mike's actions were within his authority. In this case, LLA cannot deny Mike and has to be bound by his actions and thus has to pay in full amount the money that Mike spent. However, LLA could sue Mike for not disclosing to Glitz Cruisers that he had left the company, and he was there as an individual not to as a representative of LLA. Mike knew that Glitz Cruisers assumed that he was still a partner of LLA and thus was obliged to offer him the services that the company was contracted to deliver by the company.
Mike is obligated that as a company’s partner that he acts in the best interest of the company, although he acts on pretense, even if he was still an employee’s his actions were not in the company’s best interest and thus, he is liable. Mike knew that the company was on strict budget and thus minimizing cost is the action that would have been in the best interest of the company, but unfortunately, this was not the case. He acted out of anger and with clear intention to hurt his partners by giving the company substantial unnecessary costs that potentially caused a dent in their finances. The third recommendation that was made was regarding the pre-contractual disclosure and representations.
Part IV of the insurance act received an amendment recommendation to replace the duty of disclosure in the consumer insurance contracts with a duty to take reasonable care not to make a misrepresentation to an insurer (Lucas). The fourth recommendation was regarding the unfair contract terms provisions that the commission recommend that an insurance contract is subjected to regulation by the Insurance Contract Act. The commission recommends that the primary subject matter of an insurance contract be explicitly stated to describe what is being insured. The recommendation noted that section 13 of the insurance act contains the duty of utmost faith that which insurance contract should apply in contract provisions. However, for maximum benefits to be realized, there needs to be a change to insurance regulation to bring sanity which will ensure that there is balance between the insured and the insurer.
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