Issue in the law of agency is the authority of the agent

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Reference no: EM132384443

Australian Commercial and Corporations Law

Assignment 2

This assignment deals with research skills. This assessment tests course objectives addressing:
• Knowledge of relevant law,
• Application of the law to factual business situations,
• Use of critical and analytical thinking skills, and
• Defend your analysis in professional or legal settings.

1. Liability of Auditors
The course includes the study of tort law- an important area of law for business. In order to establish tort liability, the plaintiff (the person who files a case against another) is required to prove in a court of law three main elements, and these are as follows:
1) Duty of care;
2) Breach of duty of care; and
3) Loss, damage or injury

Scenario
Dave is an accountant who works for FirstRate Accounting. He prepares a financial statement for Excel Group Company Ltd. The financial statement was also submitted to First National Bank Ltd to obtain a loan for Excel Group Company Ltd in order to expand their business overseas. Dave makes negligent omissions in the financial statement that result in a loss to First National Bank Ltd that was not able to claim their unpaid loan.

Assessment tasks

Can First National Bank Ltd successfully sue Dave? On what basis it can be successful in taking legal action against FirstRate Accounting?

Will your answer be any different if Dave has knowledge that the financial statement would be submitted also to First National Bank Ltd to obtain a loan?

Please answer the question based on tort law and not contract law.

In addressing this question, please identify the research question, explain the relevant law succinctly relating to the research question, discuss your research methodology, and finally provide an answer to the question (word limit 1500 words).

2. Agency

A key issue in the law of agency is the authority of the agent. In order to bind the principle by the actions of the agent, the agent must have been acting within some level of authority. The authority of the agent comprises:
• Express actual authority
• Implied actual authority
• Ostensible authority

You have a small problem scenario, but this time dealing with agency. The same instructions apply, addressing the research question and methodology. You are simply adapting the requirements to address this new research problem.

Scenario

Sam and John are partners in Crystal Motor Pty Ltd engaged in the business of buying and selling used card. It was agreed between the partners that each is authorized to make business deals on behalf of Crystal Motor Pty Ltd not exceeding $ 20,000. Sam and without any authorisation from John bought a sport car from the Elite Car Sale Company Ltd for a total amount of $ 40,000. The seller, Elite Car Sale Ltd contacted Crystal Motor Company Pty Ltd to make the payment, but it refused to pay because it was outside the $ 40000 limit authorisation that was agreed upon by the partners.

Assessment tasks

Is Crystal Motor Company Pty Ltd liable for paying the debt? Are there any defenses that can be made by Crystal Motor Company Pty Ltd for not paying its debt?

The answer must be based on agency law and not the statutory assumptions available in sections 128 and 129 of the Corporations Act 2001 (Cth).

You should discuss relevant case law related to agency and you can briefly refer to relevant sections of the Partnership Act 1891 (QLD) or any similar legislations in other states if you wish.

Your answer should identify the research question, explain the relevant law succinctly relating to the research question, discuss your research methodology, and finally provide an answer to the question (word limit 1500 words).

Reference no: EM132384443

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