Australian Law: Rights And Freedoms

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Australian Law: Rights And Freedoms

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Australian Law: Rights And Freedoms

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Discuss about the Australian Law for Rights and Freedoms.

This case has three parties, Fresh Farms, the agent Mr. Will and a Malaysian importer, Diary To Go. It is about actual and implied authority of Mr. Will. The laws in application here are based on the principles laid out in the Agency law. The formation of laws in many countries including Australia has been based on English law , therefore, precedents and practices from countries with similar law systems are followed in Australia as well. There are certain interpretations of law which are studied and analyzed keeping in view the current case. 
Legal considerations & precedents
Here, the complexity has arisen because the agent appointed by Fresh farms has gone out of his expressed authority to agree upon a contract with an overseas importer Diary to Go. When a company (principal) employees an agent, there are two types of authority the agent enjoys in Australian law, actual authority and implied authority. Actual authority is linked to the oral or written contract carried out between the principal and the agent. It lays out all the authority and responsibilities of the agent which have been mutually agreed upon, whereas in terms of implied authority, it is the unwritten or oral authority an agent enjoys based on the common practice. It is decided upon the common expectation in the role the agent has been hired for. It is implied that the agent enjoys authority, which has been in practice in the past on the same role. For established businesses and roles, this is quite simple to outline, however, for a newly devised role/company, this becomes problematic.
A widely studied case in this area is Watteau v Fenwick. In the said case, the principal Fenwick had hired an agent, who went beyond his actual authority and sold cigars to third party. After a dispute, the 3rd party went on to sue Fenwick. In the case, Fenwick at the time of transaction was undisclosed as such by the agent to the 3rd party. However, it was a usual practice for Fenwick to sell cigars. Therefore, the court ruled that the principal in this case was liable and it should have stopped the agent manifestly via a written contract.  The court concluded that as it was common practice by Fenwick, letting them off responsibility could potentially mean that companies may stop taking responsibility of actions of agents and in cases, make secret contract with agents to split money. The merits of this decisions are still discussed almost worldwide. However, the concept of estopped also seems relevant in this case. In conclusion, the concept is, that principal cannot object to the agreement made by an agent, if at the time the principal could have stopped agreement over the confusion of authority.
The application on current case
In light of the discussion above there are two conclusions that could be made. The answers to the questions depends on implied authority/practice. The case study does not present any evidence or discussion with regards to implied authority. Since it is a well-established business there will be other agents and their contracts/practices can be examined. In case those agents have not in the past made such agreements beyond their express authority, Fresh farms has a strong case of getting contract between Mr. Will and Diary to go, null and void, and Mr. Will shall not be entitled to the 5% commission. Furthermore, on breach of authority, Mr. Will’s contract with Fresh Farms (principal) could also be termed null and void. However, if these contracts are coming under the umbrella of common practice then both contracts between Mr. Will and Fresh Farms and the one made by Mr. Will and Diary to go will be enforceable by law.
There is another scenario where these both contracts can be null and avoid. Fresh Farms proves that it wasn’t aware/able to stop Mr. Will because of conditions which cannot be categorized as neglect or partial consent. In common terms ‘partial’ can be termed as looking the other way, when something beneficial is being conducted. Typically a case of estopped has to meet three conditions. If there are any intentional or neglect from the principal, estopped is not applied. The 3rd party has appeared to act in good faith and there is no apparent chance of any malpractice from them, estopped will not be applied. A detrimental change has occurred on 3rd party which was caused by the said agent’s apparent authority. 
In the current scenario, when there was a gap of around 6 months between the signing of contract and start of contract between Mr. Will and Fresh Farms, the application of estopped looks likely. Because of this rather long period, Fresh Farms could be found guilty of neglect or working with the agent. The Fresh Farms should have acted earlier to stop the contract but it did not until the importer has tried to end the contract signed between him and Mr. Will because it was able to obtain similar products at a lower cost.
Apparently, the chance of getting out of both contracts remains on proving that Mr. Will’s act were not common practice. His actions have not been the norm in the organization and rather he acted out of self-interest rather than on Fresh Farms’ shared interest. Estopped seems likely for the organization and all three parties i.e. Farm Fresh, Mr. Will and Diary to Go’ are still legally liable to fulfill the contents on the contract. It is a case where if a court considers the contracts null & void, it would mean that the agent could act on the impression that he is an agent of Fresh Farms and harm 3rd party clients. Court’s protection is based on the principle to emphasize on the responsibility of the principal. However, in this case the 3rd party is getting the wrong end of a bad deal due to negligence of the principal. In a legal battle, this factor may also be against Fresh Farms. To summarize, it could be stated:

Is the contract between Fresh Farms and Diary to go is valid? It is valid, unless Fresh Farms can prove Mr. Will’s act was not under implied authority as well as expressed authority.
Is Mr. Will eligible for 5% contract? This depends on the answer of the 1st If Mr. Will acted outside of his expressed and implied authority, he will not get his 5% contract otherwise he is eligible for the 5% contract.
Termination of Mr. Will’s contract will be dependent on the answer of 1st question and content of his contract with Fresh Farms. There is a need to understand the terms signed and what does it presents about breach of authority (either implied or actual). Only then a specific judgment can be made.

Australian law reform Commission, ‘Rights and freedoms under the common law’, (2014)
Davenport, Shayne and David Parker, Business and Law in Australia (Thomson Reuters (Professional) Australia, 2nd Ed, 2015)
French, Robert, ‘Singapore Where Common Law and Constitutions Meet’ (2013)
Rasmusen, Eric Bennett, ‘Agency Law and Contract Formation’ SSRN Electronic Journal
Turner, Clive, John Trone and Roger Gamble, Concise Australian Commercial Law (Law Book Co of Australasia, 30th Ed, 2015)
Watteau v Fenwick [1893] 1 QB 346

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