Homework Question Agency

1. Does a valid agency exist between Michelle and Nathan?

The issue here is whether being an employee of purchasing department rendered a person to be
an agent of the employer. An employee who was expressly appointed by employer and / or
implied by surrounding circumstances to do something on behalf of employer is deemed to be an
agent of the principal. In our case, as a staff in purchasing department, Michelle has the duty to
order goods on the account of Nathan and therefore she is, by implied agreement, the agent of
Nathan for procurement purpose. However, based on the fact that Michelle has to get approval
from Nathan for all orders, she is not expressly chosen to act on procurements decision on behalf
of Nathan. Despite Michelle is not by express agreement of Nathan an agent on purchasing, a
valid agency still exist between the two parties exist on the ground that it is Michelles job to carry
out such duty.

2. Does Michelle have authority to enter into contracts?

The issue concerned is whether an agent of employer has the right to make a binding contract
with a third party. A person has the right to do so if he acts within the limits of authority. If a
principal made a representation to a third party that his agent is acting on his behalf, then the
agent is deemed to have ostensible authority. Contracts Act provides that authority may be
implied from the nature of the agents activities. In our case, Oliver was informed by Nathan that
Michelle deals with purchasing in his company and this could be a representation made by Nathan
to Oliver that Michelle has the authority to act on his behalf. In addition, Michelle is deemed to
have an implied authority to enter into contracts for Nathan based on her position as a
procurement staff in the company. It is normal duties of Michelle to enter buying related
transactions on behalf of the company. To sum up, Michelle has both ostensible and implied
authority as proper representation was made and it is her usual duties to engage in transactions.

3. If Michelle is indeed an agent, has she breached or upheld any duties of an agent?

The issue her is whether Michelle has acted beyond the scope of authority given by Nathan. An
agents authority may be extended when principals holds out a person to be his agent. One of the
agents duties to principal is the action taken by agent shall not have conflict of interest with the
employer. If the sole-purpose of Michelles deployment is to find out whether the timbers are of
good bargain, then the action took by Michelle has exceeded her scope of authority. If that is the
case, however, Michelle is deemed to have not breach her duties an agent as Nathan has hold out
to Oliver that Michelle is her agent and therefore Michelle can exercise greater authority. On the
other hand, if Michelles duty to Nathan is to procure timber with reasonable price and usefulness,
then she is said to have upheld to her duties by purchasing some timber which are of very good
price for the upcoming requirement of the companys existing project. To conclude, Michelle has
upheld her duties by acting in the best interest of the company.