Foundations of Business Law


The main issue is, whether the Tanya has to pay the costs of the fence which was destroyed, or as it was fault of Wesley under the agency law.

Relevant Law

The necessity of this law is to evaluate the legal relationship between agent and the principal. It also shows that kind of relationship they follow like whether it is contractual or created relationship on the basis of agreement or owner comes into relationship on behalf of another person of entity. It gives precise norms about the rights and liabilities of the master which he/she has encounter towards its agent. Agency law is necessary for the parties if either they are attempting to enforce their rights to enter into an agreement with each other (DeMott, 2018).

Agency relationship

Agency relationship is between two parties, this kind of relation is known as agency relationship. It involves one person who is the authority or other person is who is under the capacity of that person who is agent. If there is third party, then that party can be termed as principal this was very well explained in pirie street stage 1 P/L v Trotman & Anor and Steward & ors (2015) SADC 123. In simple terms it means that agency is a kind of relationship which inculcates appointing an agent, to act on behalf of person who has appointed or principal when dealing with third parties (Dimitriu, 2017).

It may arise when there is relationship in accordance with:

  • Agreement among the principal and agent, either by express agreement or implied in a variety of ways.
  • The principal’s ratification of actions which were executed by the agents (Hynes, 2017).
  • Relationship by Estoppel.

Authority of Agent

The necessary factors of the agent relationship is totally depends upon the agent’s authority. An agent should act only within the limits of their authority. Where an agent act outside the scope of their authority, the best illustration is to enter into an agreement with a third party on the behalf of the principal which are outside the boundary of their authority, the agreement will not be enforceable against the principal (Hynes, 2017).

The act covers two types of authority than an agent these are as follows:

  • Actual authority and
  • Ostensible authority.

Rights and Obligations of The Principal

The principle will be liable for the actions which are performed by the agents and these actions should be carried out according to their authority. The principal is also subject to the obligations which are there in the agency agreement. These will be performed by their nature and circumstances but common obligations of principal which includes:

  • Wages and salaries of the agent for performing duty (Klass, 2020).
  • Indemnification of the loss against agent.

Rights and Obligations of The Agent

The relationship between an agent and their principal is, much like that between a solicitor and their client, and they have fiduciary relationship. In the agency the relationship, the agent owes a fiduciary duty to the principal, which compel the agent to act only in the best interests of the principal. This type of relationship prevents the agent from acting in a manner that:

  • Conflicts with the interests of the principal
  • Causes the agent to gain an undisclosed, personal benefit by virtue of their (Klass, 2020). This type of relationship is limited to :

It complies with the conditions of agreement, acting only within the scope of authority and acting personally, that means they must not subcontract their duties to another party. The liability of agent comes when the he /she perform such kind of actions which are not under the scope of his/ her authority (Rasmusen, 2014).

Apply to the Facts

The situation was when the Tanya got a call for the replacement of her another person, due to which she went overseas. By the time Wesley was taking care of her cattle and place, so it may get harm or destroyed due some or the other factors. The fire came to the farm and destroyed the whole fencing because which cattle went to away from the farm. This situation will be further elaborated in this report under the agency law with proper judicial interpretation (DeMott, 2018). After this entire situation Wesley has corrected the fencing which was destroying and when Tanya came he showed bill to her for make it repaired from the person. In this case the Tanya will have to pay the price for the fence which is destroyed because she keeps Wesley because of that reason only to take care the farm. This concept is very well explained in the case of price v. Southern cross television (TNT9) Pty (2014) TASSC70. In this case it was explained the intention of agent was bonafide and he was not performing the act which can cause because of him. So, it is the liability of principal to give the expenses which have occurred at the time when any kind of bad consequences occurs (Rasmusen, 2014).

Conclusion on Foundations of Business Law

The main issue is about the liability of the principal which have been explained in this report. The main concept is they actions must be performed within scope of authority. Otherwise, principal will not be liable to pay the agent will have to compensate the price of causing harm to principal. There are mainly two types of authorities that are ostensible and actual authority. Any individual which is liable for the any act must be bonafide the intention of performing any act is one of the component which is adjudged in the court. Therefore, the intention of Wesley was not bad the fence has catches fire due to the nearby place or bush which was already in fire. That is the reason being in the place of principal Tanya has to pay to Wesley as he has made the fence repaired on behalf of Tanya.

References for Foundations of Business Law

DeMott, D. (2018). Fiduciary Principles in Agency Law. Forthcoming in Evan J. Criddle, Paul B. Miller and Robert H. Sitkoff, Eds., the Oxford Handbook of Fiduciary Law (New York: Oxford University Press 2018).

Dimitriu, C., (2017). Agency law and odious debts. Ethics & Global Politics, 10(1), pp.77-97.

Hynes, J. D. (2017). Freedom of Contract, Fiduciary Duties, and Partnerships: The Bargain Principle and the Law of Agency. Wash. & Lee L. Rev., 54, 439.

Klass, G. (2020). Promise, Agreement, Contract. Forthcoming in in Research Handbook on Private Law Theories (Hanoch Dagan & Benjamin Zipursky, eds., 2020).

Rasmusen, E. (2016). Agency law and contract formation. American Law and Economics Review, 6(2), 369-409.

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Law Assignment Help

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