Commercial Law
Rights and Obligations of “The Club” Under Agency Law Regarding the Purchase of “The Machine”
An Agency Law is the capacity by which an individual or entity performs through the guidance or authority of a principal (Horling & Lesser, 2004). Occasionally, such a law applies to viable relations or pledged contracts, as seen in the case of Peter and the committee members at the Berwick Greens Golf Club Inc. The principal (represented by the committee members) has given the agent (represented by Peter) the authority to carry out financial transactions not exceeding $5000 on the committees’ behalf. However, agency law states that an agent does not possess more powers than the principal. It is important to note that an agency may form through two cases of lawful a An Agency Law is the capacity by which an individual or entity performs through the guidance or authority of a principal. cts, namely: Necessity and Cohabitation. Since the club was experiencing a shortage in revenue, the club‘s manager took it upon himself to try and save the club by bringing a new consumer good from Acme Games (an indoor golf simulation machine) to try and attract new customers to the club. According to the Australian Consumer Law (ACL), a ‘consumer’ is an individual who has purchased goods or services priced below 40,000 dollars (“Consumers’ Rights & Obligations”). In this particular case, Peter saw it right to make the purchase of the machine from Acme without the committee’s approval to increase the number of new guests to the club through the agency of necessity. Consequently, for an agency of necessity to take place, four main factors should be considered, these include;
- The agent, acting as a legal instrument in the principal’s welfares, this means that the agent performed the lawful act needed to fulfill the club’s transaction, which might otherwise be undertaken by the club’s committee member
- Entrusting an individual with other’s assets. The committee members handed Peter the responsibility of managing and handling the finances at Berwick Greens Golf Club.
- If reaching out to the committee member proves to be commercially or unusually difficult. There is a possibility that convening a meeting to discuss the future of the struggling golf club proved impossible due to the busy nature of the committee members. Thus the club‘s manager decided to act swiftly, however, going against the committee policy on expenditure.
- The need to preserve the property by incurring an immediate cost, or the profitable need for the purchase of an item or service: Peter being a manager to “the club” had the authority to conduct financial transactions for the club to an amount not exceeding 5000 dolla However, he ended up spending more than the amount allowed to add an extra entertainment facility to attract new customers and prevent the closure of the club.
It is equally important to consider the nature and range of an agent’s authority about the right to overspending above the required amount. In the case of Peter, the nature of his authority pointed towards Express Authority; this implies that the committee particularly issued the authority to the agent in written form. Nonetheless, such authority is under restriction by the terms of the contract. Additionally, section 18 of the ACL forbids an individual, in business or trade, from engaging in the false or dishonest practice (“Legislation | Consumer Law”). This ban is not partial to the supply of goods or services and forms an extensive, market-wide behavior.
Conversely, the agent could justify his action by referring to the use of Implied Authority; this refers to the right to do all that is essentially subsidiary to achieve the committee’s definite orders, this means that the club‘s manager was authorized by the law to act out of his level of authority to ensure the continuity of the club.
Additionally, among the numerous duties designated to Peter, the manager, is assigned the duty of acting in good faith, this implies that an agent has the right to enjoy a fiduciary position thus, allows the agent under a duty in any circumstance to carry on the welfares of the principal without allowing room for conflict of personal interests with those of the committee members. Thus the manager’s decision to purchase “the machine” from Acme at a price exceeding the designated budget was out of pure necessity and not for personal gain. Additionally, the agent has a responsibility not to make any undisclosed profit for themselves without the awareness and approval of the principal. As a result, an agent who collects a secret profit or commission for themselves gets dismissed indefinitely. This overall value applies unless in the case of a distinct use or approval in a definite and rational custom, which differs.
Application of the Australian Consumer Law
- Persons otherwise linked with this law. These include both the employer (the committee members) and employee (Peter)
(b) People ordinarily resident in this jurisdiction
(c) Persons conducting businesses within this authority
(d) Corporate bodies unified or listed under the law of this rule
An agent is obligated to practice sensible precautions and expertise when working or his/her principal’s behalf. The club manager is under the payroll, should responsibly and skillfully handles the purchased indoor golf simulation machine. Should the machine get mishandled and or broken down, then the manager will be liable for the losses incurred afterward. There are instances whereby the agent is barred by law from taking legal action for commission except in an instance where the legal action appears in written form signed by the accused. On the other hand, since the club manager acted on his consent without the approval of the committee members, he is accountable for any damage caused by the principal, therefore. In case the identity of the principal was not revealed to Acme Games, either the anonymous principal or the agent can prosecute or be prosecuted on the agreement unless the agreement between the agent and Acme party explicitly omits the rights of other persons than the agent to be part of the deal. According to the ACL statutes, there are specific law breaches that are adequately severe to the point of being handled as criminal offenses. As a result, criminal consents may apply when handling such cases.
The managers’ act of buying a machine worth $10,000 signifies a breach of warranty of authority. They are thus undertaking the purchase of equipment exceeding the allocated budget, by expressing the authority to engage in a transaction with Acme. The third-party (Acme games) depends on that demonstration. Thus the loss incurred by the third party is attributed to the agent’s breaching the warranty of authority. Consequently, the agent cannot defend him/herself, claiming that they acted unknowingly or mistakenly. Nonetheless, in a case where Acme games knew of the agent’s lack of authority, the agent is not held responsible for any loss or damages incurred thereof. Moreover, there are instances when ACL officials respond to complaints regarding possible breaches of the ACL; this can lead to the taking of necessary affirmative action within this area engulfed in recent urgencies.
Also, there exist several combinations of application options open to ACL supervisors; these include proof of breaching by an entity in the ACL. Thus the principle cannot be held responsible for the agents’ misconduct when the agent acts according to their consent against the authorized instruction. In this case, the agent is accountable for their tortious actions. There might be instances where the machine bought from Acme might cause injury to a user. Due to this reason, the ACL offers definite user rights for goods or services. Moreover, ACL has general rules which govern unsought sales relations. Similarly, ACL outlines basic rules for lay-by contracts based on the security of services related to product and consumer goods.
Acme’s Customer Guarantees
These include rules that relate to goods and services provided to Berwick Greens Golf Club Inc. by Acme. The sureties which relate to the supply of goods include certain guarantees, for instance, in case Acme sold a machine to Peter that was unable to meet the club’s consumer satisfaction due to being somehow faulty, Acme must repair, replace or compensate the club depending on whether the error is slight or big. Therefore, to ensure that an agent exercises sensible caution and skill, he must use the carefulness and skill in executing the required duties normally or for the right professional conduct or trade wherein the agent works. The product security law and guiding framework for consumers exist countrywide; this includes the banning of produced consumer goods or product-related services causing damage, the creation of safety standards, evoking consumer goods containing related conditions, and the compulsory recording of misfortunes in specific circumstances.
The Legal Significance of “Underinsurance” Following the Recent Bushfires.
Whenever a major disaster like the bushfires has rocked Australia, the affected residents are usually left exposed to substantial damages that exceed their insurance levels. To understand the issue of underinsurance, we first need to know what is meant by an insurance contract – this implies to an agreement whereby an insurer, pays a certain sum of money, or its equivalent known as the premium to another individual known as the insured following the occurrence of a specified occasion. Essentially, regardless of the nature of insurance, every contract requires the disbursement of money, or the equivalent through the taking part in activities such as renovating a burnt down house, by the insurer during the occurrence of a specific event such as fire outbreaks. The insured individual is obligated to reveal any change in conditions that can increase the risk covered against before every restoration of the insurance contract: ss 21(1) and 11(9). Nonetheless, through the National Debt Helpline and the Insurance Law Service, the Financial Rights Legal Centre (FRLC) has continued to provide counseling to the affected people concerning numerous fears rising from the current bushfires. However, during this early period, one of the correspondents at the FRLC states that the majority of the callers have only been inquiring about instant financial difficulties, disputes over temporary housing, or payment of extra funds.
Conversely, a lot of individuals still lack the insurance covers for their barns, boilers, or animal forage. Since most of them are not the main producers of food for the nation, they are not entitled to government aid. For most individuals, choosing a suitable insurance cover remains a challenge. There are many instances where people cannot efficiently assess a collection of market offers with multiple slight dissimilarities. These market offers could potentially prove to be vital during the time of claim. Yet, the insurance policy may enclose exclusion clauses that succeed the overall risk covered by the plan; for instance, it may omit the liability of the insurer for loss brought about by certain specific reasons. In the case indemnity principle, most insurance agreements – except life insurance – are insurance contracts that imply the insurance company approves to insure the indemnified due to the loss suffered up to the amount specified in the insurance program.
In the case of fire, burglary, and loss of profits insurance, the insured may recover the amount of their actual loss up to the ceiling stated in the policy; the insured is not entitled to make a profit out of the insurance. However, in the case of subrogation, the insurer on compensating the claim is allowed to any rights the insured has against the individual who caused the loss through neglect. The insurer thus “stands in the shoes” of the insured concerning the insured’s privileges against the person causing the damage—no subrogation in the event of illness, or personal accident insurance. A current study carried out by the Financial Rights Legal Centre established that even with a simple Key Fact Sheet provided, a good number of contributors still had no idea on how to choose suitable insurance policy bargain. Also, social economists advise that during the event of raging bushfires, people are supposed to recognize the risks faced. However, most people fail in doing so.
To meet the proper insurance coverage, economists suggest that people should accurately calculate the amount of insurance needed in reconstruction; this should include short-term housing and cleaning. Furthermore, overstated costs of rebuilding needs inclusion due to the possible need to fulfill the new codes of construction, in addition to the possible shortage of materials and labor, this will further depend on the number of destroyed homes. It is equally important for people to purchase the subsequent premium since the majority of persons tend to bargain with the continuously changing environments during their lifetime.
Following the 2013 Blue Mountains bushfires, the Australian government and the National Disaster Insurance Review made a recommendation that included a nationwide agency to manage bushfire disaster compensations and management. The agency aims to set up a reinsurance facility assured by the government to surviving residences as well as premium deductions. This move aims at curbing out these tragic occasions over time.
As a result, three key impacts expected are:
- To alert homeowners of the imminent risk of fires by evaluating the premium according to the real risk before using the discount, thus encouraging relocation or the private investment in mitigating threats at the assets level.
- To improve some of the household costs of the switch to genuinely assessed bushfires cover by the discounts while providing ample cover.
- To push through a better deal in moderating bushfires by the state to decrease their spread under the additional coverage scheme.
The Australian government was unable to maintain these sanctions. In its place, they chose to go with the cheaper sanctions of normalizing the meaning of bushfires, while expecting insurance agencies to issue Main Data Sheets to indicate everything covered in an insurance plan. Consequently, a person can hardly be caught off guard without a fire cover, nevertheless many people have, with time, basically declined the use of insurance due to its exorbitant cost. Others have let go of it owing to their valuation, stating that they are at low risk of catching the fires. Between the years 2014 and 2015, the Productivity Commission of Australia suggested the investment of over 100 million dollars to help in mitigating pre-disaster as part of the National Disaster Funding survey. However, the actual venture has tremendously dropped short of this number while remaining as a portion of the total sum disbursed on recovery and disaster response. In 2017, the Northern Australia Insurance Inquiry, the Australian Competition, and Consumer Commission, as well as another provisional report in December 2019, made over 27 endorsements with regards to insurance (“Insurance Australia Ltd V HIH Casualty & General Insurance Ltd (In Liq) And Another”). Nonetheless, all 27+ workable endorsements ready for acceleration, could not be realized for a while due to the major extent of statutes necessary in encountering the unsuccessful standard cover rule as promised by the Royal Commission Application. Also, the Federal Government’s Economic Services Treasury’s analysis of regular insurance definitions stopped due to similar causes.
References
- “Insurance Australia Ltd V HIH Casualty & General Insurance Ltd (In Liq) And Another”. Vol 18, 2007, pp. 528-561. Little William Bourke, doi:10.25291/vr/18-vr-528.
- “Legislation | Consumer Law”. Gov.Au, 2020, https://consumerlaw.gov.au/australian-consumer-law/legislation.
- Horling, B., & Lesser, V. (2004). A survey of multi-agent organizational paradigms. The Knowledge engineering review, 19(4), 281-316.
- “Consumers’ Rights & Obligations”. Australian Competition And Consumer Commission, 2020, https://www.accc.gov.au/business/treating-customers-fairly/consumers-rights-obligations.