Issue 1: Agency Agreement and Payment Dispute

1.In this present context, Linda had purchased the goods from AFS Grocery Wholesales Pty Ltd to which the owner of John’s Supermarket had denied the payment of $45000. The issue which is involved in the case is whether AFS Grocery Wholesales Pty Ltd has any legal right in order to obtain the payment of $45000 for the goods they had delivered to John’s Supermarket.

The issues can be dealt by the law of agency and the law of contract, that relates to the law regarding liability of the principal for the acts of its agent who is acting on behalf of him, and has entered into a fiduciary contract with a third party. The law relating to agency provides that an agent can act on behalf of the principal, and represents the principal (Goldberg, Sebok and Zipursky 2016). The authority of an agent can be express or implied. In case of expressed authority, the agent cannot act beyond the scope, whereas the authority of an agent can be implied by the customs. A contract can be entered into with a third party by an agent on behalf of his principal (Sen 2015). If an agent, exercising his powers within the course of his employment, enters into a fiduciary relationship with a third party, with an intention to create legal relationship; the contract shall be enforceable by law. It shall be deemed that, the contract was entered into by the principal and the parties. Principal shall be liable for the act of the agent in this circumstance (Luntz et al. 2017). The third party can claim damages from the principal on behalf of whom the agent works.

Linda was the sales manager of the supermarket called John’s Supermarket. In the legal sense, she is the agent who is authorized to act on behalf of John to create legal relationship with the customers. The law of agency states that agent is the person with the authority to enter into a contract to create a legal relationship between two parties (Levine et al. 2016). Being a sales manager, Linda has the implied actual authority to enter into a contract due to her position. In this regard the case study of Hely-Hutchinson v Brayhead [1968] can be discussed, where it was held that agents are authorized by virtue of their position in the office to do additional tasks which are not expressly mentioned by the principal but impliedly given in their course of work (Koh 2015). Referring to the judgment of this case study it can be observed that John is bound by the act of his sales manager Linda, who has during her course of conduct, entered into a fiduciary contract with AFS Grocery Wholesalers Co Pty Ltd. Linda, due to her position, entered into the contract with AFS Grocery, and at that time, she was acting on behalf of her company. She did not mention about her failure to make contact with John. In this respect the contract was validly made between the two companies (Epstein and Sharkey 2016). 

Issue 2: Contract Termination and Legal Rights

From the above discussion it can be observed that, Linda had entered into the contract to purchase the goods from the AFS Grocery for $45000 within her capacity to enter into a contract. At the time of entering into the contract with AFS Grocery Wholesales Pty Ltd, Linda had no malaise intention in her mind. The requirement for a valid contract was maintained during the course. The offer of purchasing the goods from the AFS Grocery Wholesales was accepted by Linda, for a consideration amounting to $45000. Therefore, the contract is enforceable by the AFS Grocery Wholesaler Pty Ltd against John’s Supermarket. Out of the contractual rights, AFS Grocery Wholesalers can obtain $45000 for the goods that they had delivered to John’s Supermarket. As they have already performed their part of the contract to deliver goods to the John’s Supermarket, they are entitled get the payment of $45000. They can obtain an order of specific performance by paying the amount of money to them, or in case of non-payment of money, they can claim for damages from the John’s Supermarket.               

The issue that is involved in this situation is, whether AFS Grocery Wholesalers Pty Ltd can have any rights to claim the amount of $45000 if Lind was expressly prohibited from ordering any goods without the authority of John.

The law related to agency observes that the act of an agent can be limited or restricted by the principal. If an agent acts exceeding his authority and enters into a contract, he himself shall be bound by the terms of the contract (KOH and BULL 2016). However, the contract which was validly entered into by the agent with the third party does not become invalid or void in this respect. The contract shall deem to be entered by the agent, and be made enforceable by and against him. The principal shall not be liable for the acts of the agent who operates exceeding the scope of his authority. If the agent fails or denies performing his duties or obligation of the contract, shall cause a breach of contract (Busch, Macgregor and Watts 2016). The party, with whom he has made the contract, can claim damages from the agent for causing breach of contract. The agent shall also be liable for wilfully operating beyond his scope and misrepresent his powers and authorities to the party. 

In the general terms of a contract, a sales manager is impliedly entitled to order goods on behalf of the owner in virtue of their position (Poole 2016). If John had informed expressly that Linda had no authority to order any goods without the consent of John, Linda would have at fault for acting outside the scope of her authority In this situation, where Linda is the representative of John’s Supermarket for being a sales manager, has the authority to enter into a contract (Sharrock 2016). However, the act of the agent can be restricted by expressly prohibiting him or her from doing something. If an agent acts beyond her authority, the principal cannot be held liable for her acts. An agent is liable for a contract made in a personal capacity. By informing AFS Grocery Wholesales about the limited scope of operation of Linda, there does not exist any contractual relationship between John’s Supermarket and AFS Grocery (Knapp, Crystal and Prince 2016). In such case, Linda shall be held liable for operating outside the scope of her authority, injuries and for the breach of contract. If Linda was restricted from ordering any goods without the authority of John, she had caused a breach of contract in terms of wrongfully operating exceeding her limited authority. As in this prospect, Linda has, in her own capacity, made the agreement to perform her duties by paying $45000 to AFS Grocery Wholesales Pty Ltd; the contract is said to have formed between Linda and AFS Grocery Wholesales. Linda, not only received the order from them, but also placed them for sale, which is an intention of entering into a legal relations. In the case of Midland Bank v Reckitt, it was held that agent shall be liable for acting ultra vires (Stone and Devenney 2014). Linda, for wilfully acting without the authority to order goods without the consent of John shall be liable to the AFS Grocery Wholesales Pty Ltd, shall be liable to damages. By denying paying the money to the AFS Grocery Wholesales Pty Ltd, after receiving the order and placing them for sale, Linda has caused a breach of contract.  AFS Grocery Wholesales can sue Linda for two reasons, such as: wrongfully representing herself to be authorized to make the contract and purchase goods from the AFS Grocery Wholesales on behalf of John’s Supermarket, and causing breach of contract by failing to pay the amount of $45000 to them.

Hence, it can be concluded from the above discussion, that if Linda was expressly prohibited from ordering goods without his authority, but she still did order from the AFS Grocery Wholesales Pty Ltd and refused to pay money, the contract could be made enforceable against her. The AFS Grocery Wholesales Pty Ltd can claim damages from her for causing breach of contract. AFS Grocery Wholesales Pty Ltd can claim for specific performance from Linda, for which Linda shall be bound to pay $45000 to the AFS Grocery Wholesales Pty Ltd. Failure to this remedy can cause Linda to pay damages to the AFS Grocery Wholesales Pty Ltd, by the order of the court.

2.In the given situation, Bruno is not willing to deliver the farm to the Moreslybo Pty Ltd for the unexpected situation that has arrived. The issue which is involved in the case study is whether Bruno has any legal rights to get release from the contract that he had signed with Moreslybo Pty Ltd, in the solicitor’s office.

In this given scenario, the issues can be solved by the discussion of laws that are related to ending of a contract. Not every contract comes to an end after the work is completed. There are some other ways to get out of a contract. Cancellation or ending of a contract refers to destruction of the validity, force or effectiveness of the contract (McKendrick 2014). Cancellation puts end to a contract by discharging the parties from the obligations yet to perform (Turner 2014). The law related to contract provides certain situation in which a person can end a contract. The situations includes: agreement of cancellation between the parties, rescission of the contract, impossibility to fulfil the terms of the contract, or impracticability in discharging the performance of the parties (Fried 2015). 

An agreement to cancel or end a contract can be made between the parties in order to get out of their duties of the contract (Van Huyssteen, Lubbe, and Reinecke 2016). The agreement shall be made with the free consent and knowledge between the parties. A prior agreement can also be made between the parties, at the time of entering into the contract, saying that the parties can end the contract by giving written notice to the other party. On the other hand, if a party is adversely affected by any defective terms of contract, may rescind or cancel the contract (Ariño et al. 2014). The contract remains legally effective, if it is not properly cancelled. Rescission means the cancellation of a contract as if it never existed. The parties are restored to their status quo prior to the contract was made (Butler et al. 2013). A contract can be cancelled if it becomes impossible for the parties to fulfil the contract. Impossibility means if the contractual duties and obligations of a party cannot be fulfilled in a certain circumstances. To establish the frustration of contract, the parties have to be innocent from their side. The impossibility must be total and unexpected, for a party, which changes the situation radically to perform the obligation, without the fault of the other party. In addition to all these, there is a ground of impracticability to claim the defence of ending of a contract. Impracticability occurs when it has become impracticable for a party to proceed with the contractual duties.

 Bruno and Moreslybo Pty Ltd had signed the contract, though the consideration was not given by the Slybo to Bruno. The essential part of a contract that is offer, acceptance and consideration has not been completed in this context. The contract has been partially performed as the consideration was not given to Bruno. Without paying the consideration, the contract is not enforceable against any of the parties. Bruno can get release from the contract in several ways. In this situation, the contract between Bruno and Moreslybo Pty Ltd can come to an end, by way of, an agreement between the parties to end the contract, rescinding the contract of selling his property, the impossibility of delivering the property to Moreslybo Pty Ltd or impracticability of discharging his obligations. In the first instance, Bruno can discuss with Slybo about his inability to handover the property according to the contract. As the situation has changed, and he no more wants to sale his farm, they can make an agreement annulling the prior contract, and decide to keep the farm with him. 

By this new agreement, Bruno can retain his farm with him. The other way in which he can cancel the transaction is by rescinding the contract. They can rescind the contract and cancel the transaction as it had never existed. The parties will be restored to their position that they were enjoying before they had entered into the contract. The remedy of rescission is provide by the Australian Consumer Law for a cancelling a contract which is affecting one of the parties adversely (Ispas 2015). By rescinding the contract, Bruno can enjoy the rights in his farms prior to the contract. The contract between the parties, Bruno and MoreSlybo Pty Ltd. can be ended on the ground that it has become impossible for Bruno to sell the farm, without any fault of Slybo. In sudden return of his wife to Australia and her change in her plan to stay with him and work on the farm has made it impossible for Bruno to proceed further with the contract and sale his farm. He can communicate the impossibility to sale the farm in the current scenario, to Slybo. Impossibility of performing the essential term of the contract makes end to the contract (McElroy 2014). At the same time, the sale of the farm has become impracticable or unreasonable to Bruno in this context, as Bruno and his wife is setting up a plan to work on the farm and make regular trips to Italy if everything goes well. In such condition, he has no reason for selling the farm, and he wants to keep it with him. It would be affecting them if the contract of sell made enforceable against them. They can cancel the contract on the ground that it is impracticable to sell the farm, and release him out of the contractual obligation.

Therefore, from the above stated discussion, it can be said that Bruno has legal rights to get released from the liability from the contract with Moreslybo Pty Ltd 

Reference list

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