Further Agency Tutorial Questions

1. John instructs Ken to sell his car and signs a written contract to this effect. Ken
operates a car mart. John then withdraws Ken’s authority but Ken goes ahead and sells
the car to Bertie. Ken has also told Bertie that he has authority from John to sell his 2
bedroom apartment for $2,000,000.00. Bertie gives him a deposit of $200,000.00.
John has returned for his car to see Bertie driving it out of the Car Mart. He immediately
jumps in front of the car and prevents Bertie from leaving with same. Bertie also tells him
that he is purchasing his apartment and has paid a deposit for same to Ken.

Advise John of his liability to Bertie for both the car and the apartment.

2. What non-fiduciary duties and fiduciary duties are imposed on an agent? With the use
of cases, examine the duties of an agent and explain why these fiduciary duties are
imposed.

3. Kerry has a clothing store which she has operated for the past 10 years. She has
employed Meg as her assistant and she has been working at the store for the past 5 years.
Meg is responsible for opening and closing the shop and dealing with the customers and
she also orders stock for the shop.

The customers are always dealing with Meg as Kerry is constantly travelling overseas
buying goods. She has given most of the faithful customers the pieces of clothing on
credit with the consent of Kerry.

Before Kerry left for her last trip she informed Meg, not to sell and items on credit as the
recession was hitting her pocket real hard.
Michelle, a regular customer who has previously purchased clothing on credit went to the
store and purchased three blouses, two pairs of shoes and one pair of pants valued at
$50,000.00 in total. She was given the items by Meg on credit and told that she had three
months to pay.

Another customer Lori, asked Meg for a personal favour to write a letter to the embassy
that she worked there. Meg used one of Kerry’s letterhead for the store on which she
wrote the letter and signed as the Manager.

When Kerry returns, Meg informed her that she sold Michelle the clothing and when
asked for the cash by Kerry she informed her that this was on credit terms. Kerry calls
Michelle and asks her to pay for the goods immediately or return them as goods on credit
“not here anymore”. Michelle refuses to return same.

Kerry also found on the floor in the closet of the shop a spoilt copy of the letter that Meg
had given to Lori to take to the embassy. She has come to you for advice.

Advise Kerry.

4. Using the facts stated in Question 3, advise Kerry what to do when she discovered that

a) Meg has been selling the goods above the agreed price and has taken the
difference every night for the past three years;

b) Although she had expressly stated to Meg that she could order stock from
certain dealers she had told the dealers not to sell her any item which costs
over $15,000.00. Meg bought a handbag for $20,000.00 and the dealer “Bags
we have” is now requesting payment from Kerry.
.
5. Explain with the aid of cases how an agency is created by operation of law.