Commercial Law Cover Page

   

 

Commercial  Law                          

Semester  2   MLL215  

2014  

Contents:   Agency  ...................................................................................................................................  1   Ratification  ...................................................................................................................................  6   Doctrine  of  Undisclosed  Principal  ..................................................................................................  11  

Contracts  for  the  Sale  of  Goods  ...................................................................................  17   Transfer  of  Property  ...............................................................................................................  19   Mercantile  Agents  .................................................................................................................................  24  

Implied  Terms  under  the  Goods  Act  .........................................................................  27   Sale  by  Description  ..................................................................................................................  28   Fitness  for  Purpose  ...............................................................................................................................  31   Merchantable  Quality  ..........................................................................................................................  33   Sale  by  Sample  &  Right  to  Sell  .........................................................................................................  35   Quiet  Possession  ....................................................................................................................................  36   Free  from  Encumbrance  .....................................................................................................................  37  

Statutory  Unconscionability  ........................................................................................  37   Section  20  ....................................................................................................................................  39  

Consumer  Guarantees  under  the  ACL  .......................................................................  43   Statutory  Provisions  ...............................................................................................................  44  

Insurance  Contracts  ........................................................................................................  52  

                                   

Misrepresentation  ...................................................................................................................  56   Termination  of  Insurance  Contracts  .............................................................................................  60   Interim  Insurance  .................................................................................................................................  62   Constructing  Insurance  Policies    ....................................................................................................  62  

           

  Commercial  Law:   Agency:   The  idea  of  agency  involves  a  relationship  between  a  person  granting  authority  (the   principal)  and  a  person  acing  pursuant  it  (the  agent).  It  exists  to  enable  two  persons  (the   principal  and  the  third  party)  to  enter  into  a  contract  or  transaction,  without  having  to   deal  personally  with  each  other.  Rather  the  agreement  is  arranged  through  the  agent.       Given  that  it  is  the  substance  rather  than  the  form  of  the  relationship,  which  is  critical  to   the  establishment,  or  otherwise  of  the  agency  relationship,  agency  must  therefore  be   associated  with  a  specific  act  that  the  agent  has  authority  to  carry  out  on  behalf  of  the   principal.           Principal   Third     (P)   Party  (T)         Agent       (A)     (Binds  T     and  P)         Capacity:   All  parties  in  the  agency  relationship  must  have  legal  personality  in  some  way.  P  must   have  legal  capacity.  A  is  not  required  to  posses  the  legal  capacity  to  enter  into  an   agreement  that  binds  P  to  TP.       Principal  –  the  principal  must  have  legal  capacity  to  perform  the  act,  which  they  are   performing  through  an  agent,  and  whatever  a  person  has  the  capacity  to  do  himself  or   herself,  they  may  do  by  an  agent.     Theoretically,  an  infant  can  lawfully  appoint  an  agent  but  the  contract  made  or   performed  by  A  on  their  behalf  will  not  be  enforceable  –  they  don’t  have  full  contractual   capacity.     Agent  –  an  agent  does  not  need  contractual  capacity  to  act  as  the  agent  for  another.     Therefore  theoretically,  an  infant  can  as  agent  bind  a  principal,  although  the  infant  must   have  sufficient  capacity  to  understand  the  nature  of  the  agency  and  give  its  consent  to   act.       Authority:   The  critical  issue  is  usually  whether  A  had  P’s  authority  to  do  an  act.  This  concept  is   central  to  the  decision  as  to  whether  agency  exists  –  yet  authority  does  not  mean  that  P   must  expressly  consent  to  A  acting  on  P’s  behalf.     • “One  must  always  ask  for  what  purpose  the  person  concerned  was  appointed   agent  and  one  must  always  look  to  see  whether  the  particular  act  was  being   done  by  the  agent  as  agent  or  in  some  other  capacity”  –  Young  J  in  Beazley  v  Seed   &  Grain  Sales  Moree  Pty  Ltd  (1988)  4  BPR  9529  at  9529.       Actual  Authority:  

Actual  express  authority  is  crated  by  a  written  contract  or  spoken  words  and  requires   the  consent  of  the  principal  and  the  agent.  It  is  authority  that  has  been  expressly  given   to  the  agent  either  orally  or  in  writing.     à  If  agency  has  arisen  by  way  of  a  contract  then  the  scope  of  the  agent’s  authority  wil  be   determined  by  construing  the  terms  of  the  contract.     à  In  some  circumstances  the  extent  of  the  authority  will  depend  upon  the  proper   construction  of  a  statute.     à  It  doesn’t  have  to  be  contractual  (no  consideration  is  required)  however  if  it  is   contractual,  normal  rules  apply.     à  Based  upon  the  substance  of  the  parties’  relationship  rather  than  the  form.         Actual  Implied  Authority:     Actual  implied  authority  is  also  founded  in  the  consent  of  the  principal  to  the  agent   acting  for  them,  and  the  consent  of  the  agent  to  do  so.  However  the  relationship  is   inferred  by  conducts  rather  than  express  words:  in  this  instance,  the  consent  is  to  be   implied  from  the  circumstances  of  the  case.  Even  without  express  agreement,  P  and  A   can  conduct  themselves  in  such  a  way  so  as  to  suggest  that  the  relevant  authority  has   been  conferred  on  the  agent  (authority  is  inferred  from  the  conduct).     à  If  a  contract  is  involved,  it  may  set  out  the  express  authority  –  but  it  may  also  serve  to   ascertain  the  extent  of  actual  implied  authority.  Actual  implied  authority  may  be   inferred  from  the  contract.     à  If  the  actual  implied  authority  cannot  be  inferred  from  the  contract  it  might  be   inferred  from  the  conduct  of  the  parties.  This  then  raises  the  question  of  how  much   ‘conduct’  is  required.       Creation  of  actual  implied  authority:   1)  Because  the  act  performed  by  the  agent  is  necessarily  or  normally  incidental  to  the   acts  expressly  authorized.   • This  is  sometimes  referred  to  as  “incidental  authority”     • It  is  helpful  to  look  at  the  contract  or  the  nature  of  the  transaction     2)  Because  the  act  is  one  that  the  agent  of  the  type  concerned  would  usually  have   authority  to  do.   • This  is  sometimes  called  “usual  authority”     • E.g.  If  A  has  been  employed  as  managing  director  of  a  company,  then  A  will  have   implied  authority  to  do  all  the  things  that  someone  in  that  position  would   usually  have  authority  to  do.     • Hely  Hutchinson  v  Brayehad  Limited  [1968]  1  QB  549   3)  The  act  is  in  accordance  with  reasonable  business  practice  applicable  to  the   particular  transaction  (customary  authority).     • Thus  an  agent  has  implied  authority  to  act  in  accordance  with  the  usages  and   customs  of  the  particular  market  or  business  in  which  the  agent  is  employed.     • Must  be  shown  the  usage  or  custom  is  notorious,  certain  and  reasonable   • Con-­‐Stan  Industries  Australia  Pty  Ltd  v  Norwich  (1986)  160  CLR  226     4)  Authority  may  be  implied  from  the  conduct  of  the  parties  and  the  circumstances  of   the  case  (very  controversial).   • Authority  can  also  be  implied  from  a  course  of  dealings  (we  are  looking  for   something  that  repeats  itself,  a  pattern  of  behavior)   • The  implication  can  include  the  whole  circumstances  of  A’s  position   • The  powers  of  A  are  not  fixed  in  time  at  the  point  of  the  initial  agreement  but  can   expand  as  P  confers  more  authority  to  A.      

*NOTE:  Crucial  Limitation:*   All  of  this  depends  upon  consent.  This  area  of  law  is  about  holding  P  to  his/her  implied   consent:  under  actual  implied  authority  the  consent  of  P  is  inferred.     There  can  be  no  consent  where  there  is  an  express  instruction  from  P  to  A  not  to  do   something.  See  Fray  v  Voules  (1859)  1  EL  &  El  839   Thus  a  contrary  instruction  will  immediately  defeat  any  argument  of  an  implied  actual   authority.       This  does  not  mean  that  it  defeats  the  argument  for  ostensible  authority:  there  is  still   the  possibility  that  ostensible  authority  can  be  found  to  exist.