Commercial Law Exam Notes
COMMERICAL LAW EXAM
Agency Definition
Agency may be defined as a relationship between the principal (P) and the agent (A) whereby A has the authority to create a legal relationship between P and the third party (T). The purpose of agency is that two people can enter a valid contract with one another without having to deal with each other personally. Instead, the contract or other transaction is brought about through A who when dealing with T acts or purports to act, on behalf of P.
Authority
The concept of authority of A to act for P is central to the decision as to whether agency exists but authority does not mean that P must expressely consent to A acting on P’s behalf. The concept of authority also encompasses circustances where an agency relationship is created without the express consent of P.
Scope of agency
Distinguishing agency from other relationships is important because the term ‘agent’ may be used in commerce to describe a party who is in fact not an agent at law. In International Harvester Company of Australia Pty Ltd v Carrigans Hazeldene Pastoral Company (1958) 100 CLR 644 the High Court held that to determine whether a legal agency exists it is necessary to look at the substance of the arrangement between P and A, not just the form of the relationship such as the use of the term agent. The following are some examples only of relationship that may create a legal agency: o Employee o Broker o Powers of attorneys
An entity that purchases stock for retail may be termed a retail agent but would not be an agent at law. The retail agent in this example if the principle in their own right, as they enter the contract with the wholesaler directly (not via an agent) and they also enter the retail sale directly. Independent contractors also are not normally agents in the first instance. For example, If you were to contract with a buildr as an independent contractor to construct a shed, then the builder is not your agent as they employ their own
Agency Definition
Agency may be defined as a relationship between the principal (P) and the agent (A) whereby A has the authority to create a legal relationship between P and the third party (T). The purpose of agency is that two people can enter a valid contract with one another without having to deal with each other personally. Instead, the contract or other transaction is brought about through A who when dealing with T acts or purports to act, on behalf of P.
Authority
The concept of authority of A to act for P is central to the decision as to whether agency exists but authority does not mean that P must expressely consent to A acting on P’s behalf. The concept of authority also encompasses circustances where an agency relationship is created without the express consent of P.
Scope of agency
Distinguishing agency from other relationships is important because the term ‘agent’ may be used in commerce to describe a party who is in fact not an agent at law. In International Harvester Company of Australia Pty Ltd v Carrigans Hazeldene Pastoral Company (1958) 100 CLR 644 the High Court held that to determine whether a legal agency exists it is necessary to look at the substance of the arrangement between P and A, not just the form of the relationship such as the use of the term agent. The following are some examples only of relationship that may create a legal agency: o Employee o Broker o Powers of attorneys
An entity that purchases stock for retail may be termed a retail agent but would not be an agent at law. The retail agent in this example if the principle in their own right, as they enter the contract with the wholesaler directly (not via an agent) and they also enter the retail sale directly. Independent contractors also are not normally agents in the first instance. For example, If you were to contract with a buildr as an independent contractor to construct a shed, then the builder is not your agent as they employ their own