Dng Binto & Abigail V Caterpillar Inc. Issues

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IRAC - Agency Law 

DNG Binto & Abigail v Caterpillar Inc. Issues

ISSUE  

Whether or not the contracts Abagail negotiated bind DNG Binto’s Board depend on whether Abagail had usual authority from P (express or implied through words or conduct, or apparent). A and P 's liabilities are also affected by whether the agency relationship was disclosed to the TP. Finally, Whether Abagail will be liable to P.

LAW

Creation of agency

An Agency relationship arises between two parties whereby Agent is authorised by the Principal to act on their behalf and subject A to P’s control in dealing with TP.1 This type of relationship is a consensual relationship, where both parties give mutual consent, either expressly or implication from their words or conduct.2 Accordingly, the principle of agency relationship when created, bind P for the actions of A. 1

Agency by Estoppel:

• The principal (P) has held out agent (A) to third party (TP), by words or conduct.1
• Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, Main issues: A acted as a managing director, (it acquiesced). A employed TP. When TP claimed their fees from P, P refused to pay claiming A had no authority to employ TP.  Held: because P permitted K as A, and TP had acted on this representation. Thus, K Buckhurst was bound by the contract.
• See also in Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72, the question whether one person has lead TP to believe that another person is their agent is a question of fact to be decided upon the circumstance of each particular case.

Agency by Ratification:

Arise where an agent has exceeded their authority. In order that the ratification may be effectual, the following rules apply.11 

• Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68
• Cox v Mosman [1909] QSR 45
• Marsh v Joseph [1897] 1 CH 213
• Diplock LJ in Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 at 502-503, “An actual authority is a legal relationship between principal and agent created a consensual agreement to which they alone are parties (for full case refer,1[15.210]).

Agency by Ostensible or Apparent Authority

• Panorama Developments v Fidelis Furnishing Fabrics Ltd [1971] 2 QB 711, Main issue: A, company secretary of Pr Ltd, ran up a large account in P’s name with TP. When in fact, A used the cars for his private use. Held: P was liable for the actions of A — A had no authority to bind P, but A did have apparent authority of P. Hence P was bound by such act.1 (see for full case, [15.262]).
• See also in Hely-Huttchinson v Brayhead Ltd [1968] 1 QB 549 at 583 per Lord Denning MR, 1 (see for full case, [13.260])
• Thompson v Henderson & partners Pty Ltd (1990) 58 SASR 548, The vendor of a building was held vicariously liable to the purchaser for damages because of the negligent misrepresentations made by the vendor’s agent as to the “lettable” floor space of the building.
• Corporations Act 2001 (Cth), provides that a director (A) must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they were director or officer of a corporation in the corporation’s circumstances.
• In Mitor Investments Pty Ltd v General Accident Fire & Life Assurance Corp [1984] WAR 365, Main issue: insurance broker instructed by P to obtain unqualified insurance cover against damage cause by storm and flood. Unknown to the client, A also covered excluding flood caused by sea. Fact: client suffered loss as a result but the company avoided liability by exclusion clause. Held: A was liable because of failure to exercise reasonable care and skill.1 (see for full case, [15.360]).
• Section 18 14: Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477 at 489-490, where there is an omission mention a subsequent qualification to a statement which makes the statement misleading, or an omission to mention subsequent change which has occurred where the result of the change is to make a previous statement incorrect.
• Also in Demagogue Pty Ltd v Ramensky [1992] 39 FCR 31, Main issue: Ramensky contracted to purchase land from Demagogue. The plan, annexed to the contract, referred to a “driveway” which as public road. Demagogue had been negotiating with the relevant authority to make it a driveway but failed. When Ramensky discovered this he sought to rescind the contract. Held: Demagogue’s silence constituted misleading or deceptive conduct because of the unusual circumstances surrounding access to the property.

APPLYING the law

An Agency relationship arises between two parties, whereby the Agent is authorised by the Principal to act on their behalf in dealing with TP.^[1] This is a consensual relationship, where parties give consent, expressly or impliedly from their words or conduct.^[2] Accordingly, the principle of agency relationship when created, bind P for the actions of A. 1 Hence, A and P agree on A position for P.