Analysis of the Watteau v Fenwick - Essay Example

ANALYSIS OF THE WATTEAU V FENWICK (1893) CASE al Affiliation ANALYSIS OF THE WATTEAU V FENWICK (1893) CASE The Watteau v Fenwick case is among the historical cases that have generated a lot attention among a broad range of scholars. The case involves the judgement passed by County Court and later upheld by the Queen’s Bench. In this case, the plaintiff was a cigarrete supplier, Watteau, to a hotel owned by the defendant, Fenwick at that time. Mr Humble the owner of the hotel prior to the year 1888 acted as an agent between the supplier and the hotel owner. The decision of the court to hold the defendant accountable for the actions of the agent has become an issue of interest in the legal framework. While some perceive the court decision justified by the agency law, some feel that the judges applied the apparent law while some find both laws in applicable in the situation. This has made it complex to apply this ruling in similar cases as judges cite this as unique situation and argue against its applicability. However, there appears that the judge’s motive was out of good will and that the ruling of the court was a good law. From a critical point of view, it is apparent the case provides a new and better way of solving the problems that surround agency law. The Watteau v Fenwick is one of the cases that legal analysts have termed as complex and controversial in the history of the world. This case revolves around a hotel whose owner, Humble, had temporarily assigned his interest to another party, Fenwick in the year 1888. At this time, Humble remained as the manager of the organization under an agreement with the temporary owner. Watteau, on the other hand supplied cigarretes in the club even before the time of the new contract. Notably, Humble acted as an agent between Watteau and Fenwick but Watteau was not aware of Fenwick at this initial stage. Fenwick required that Humble act an agent but limited him from purchasing anything on credit. However, Humble acted against this limit and purchased cigarettes from the supplied by credit (Rogers, 2004). When humble failed to pay Watteau on his 25 pounds worth of deliveries, Watteau sued Fenwick in the county court when he learnt that he was the rightful owner of the hotel at the time of the supply. The county court considered the issues of the matter comprehensively and took a lot of time to establish the facts that underlie the process. The court learnt that the plaintiff did not have any prior knowledge of the principal and knew about Humble, who had owned the hotel previously. Another key fact was that the defendant had limited Humble from purchasing goods on credit. In consideration of the material facts, the court decided that the Plaintiff was responsible for the debt as he was the rightful owner of the hotel at that time and that Humble only acted as an agent to the organization (Rogers, 2004). The County Judge Wills stated that “that the principal is liable of all acts of the agent within the authority confided to an agent of that character.” The defendant felt uncomfortable with the decision and appealed in the Queen’s Bench, where Lord Coleridge dismissed the appeal as soon as it was filed. The dissolution of the court sparked controversy as soon as the court of appeal dismissed the case, hence upholding the decision made the County Court. One of the major reasons for the evolving debate is the implementation of the agency law in the court. The agency law recognizes the role of the principal, the agent, and the third party within an institutional framework. In the previous cases, the court had handled the issue of undisclosed principal different from the path followed in the above case. For instance, in the case of Miles v Mcllwraith, the court decided that the undisclosed pricinpals cannot be accountable when the agents act beyond their mandate (Whelan & Dunigan, 2004). In this case, Humble acted as an agent and it was apparent that he acted against the will of the principal. Besides, the plaintiff did not know the principal until when this problem occurred. Therefore, in any case that the court sought to uphold the application of the agency in previous cases, Humble would have been responsible for the debt, and he would shoulder this burden. Therefore, critics have seen this as double standard application of the agency law, criticizing the court for not remaining consistent in the application of the law. The perception held by the majority is that the agent, Humble was legally responsible for this debt and the court should have forced him to pay 25 pounds debt to the cigarette supplier. Another group of scholars have pointed out that Judge Wills applied the law of apparent authority in terming the defendant as the responsible the agents acts. An apparent authority is clause with the agency law that assigns responsibility of an agent to the principal. The apparent authority states that a principal is liable for the acts of their agent while dealing with a third party when the agency acts in the best interest of the principal and where the agent gives an impression that he or she is acting on behalf of the principal. However, there arises a controversy in this argument as other critics find fault in this kind of application. While the judges seem to have acted on this basis, it is apparent that the facts of the case were not sufficient conditions for its application. According to the apparent authority, for an agent to convince the third part that they are working on behalf of the principal, there needs to disclosure of the principal (Seavey,1948). In this case, the third party was not aware of the existence of the principal at the initial stage as the agent acted as if he was acting on his personal behalf. From this perspective, the apparent authority was inapplicable and the judge would not have used this basis to arrive at their decisions. From this perspective, this case was peculiar and may be seen as out of the existing legal frameworks. This is the challenge that Judge Wills experiencing while handling the case. The case was double sided and did not fill the condition of the apparent authority. There is evidence that the application of the law in this case transferred all contract risks to the principal while leaving an opportunity for agents to exceed the contract limits. Although the court recognized that Humble and exceeded his duty by purchasing cigarettes on credit, it was determined to protect him and to put the principal at compromising situation. Therefore, this marked a time when the agency law was overturned by the court, leading to a different perception of the law. In law, the court is expected to rule not only from the formulated laws but also from the history or similar experiences (Munday, 2008). However, this case deviated from the rulings in previous cases, and presented a challenge to further application of the agency laws within consequent cases. Due to the complex nature of the case, other judges have either decided to ignore this ruling or to isolate their cases to avoid such a controversial application of the law. For instance, in the case of Jerome v Bentley, Judge Donavan was unwilling to follow this ruling as basis for decision making. Donavan stated that “it is difficult to apply such reasoning” in the view that Jerome did not act as an agent in the case. The reluctance of the jury to apply Wills’ ruling expresses the controversy that arose after the court made this decision. Only one outstanding case in which the court used the rational of Wills in Watteau v Fenwick case (Mann and Roberts, 2013). Kihan v Parry case upheld the idea that third parties had the right to sue the principals once they establish that the agent worked on behalf of the principal. Besides states such as Canada have completely disregarded this exemption of the law citing inconsistency in case handling within the UK court systems. However, UK has considered introducing this decision within it legal framework to ensure that it actionable in future court decisions. A more reasonable approach to understand the nature of Watteau vs Fenwick is to evaluate the possible consequences of either option that were available to the jury at the time of the case. The alternative in this case was to hold exempt the principal from this accountability, which would see the plaintiff lose the case. The impacts of such a situation are that it would open a loophole where the principals would engage insolvent agencies who would act without disclosing the identities of their principals. As a result, it would be hard for the third party to make claim and the other two parties would share such interests. Therefore, Willis decision was only reasonable at a time of need and when safeguarding third party rights was crucial. The rationale for his decision making is to prevent instances of fraud when the principle and the agent can collaboratively hatch plans to steal from third parties (Montrose, 2001). As various scholars note, while the criteria for holding the principal liable to third party claims is vague, the outcome was the best and had a good reasoning at hurt. In fact, the case represents the outcomes of cases that present dilemmas to the judges. As a matter of fact, law amendments come as a result of such deviation from laws when the need arises. Erich (1919) is among scholars who have come up with suggestion that the agency law has a number of problems. One of the challenges of the framework arises from handling of issues of apparent authority within cases such as one handled by Wills. For instance, the claim of the law that principles are not liable in instances where the there is no disclose at the time of contract may be an inefficient way to handle such cases. In such instances, it is hard for the court to establish the terms of the contract especially when such agreements are made informally. In view of these challenges, it is better if the law is reformed to ensure that it protects the right of the most vulnerable parties within the contract. From a keen observation, the law of agency has overlooked the vulnerable third parties and sought to protect the principals and agents. Therefore, in spite of the controversy that Wills decision sparked, it clear that it presented an opportunity to promote justice for all parties and precisely to protect the vulnerable contract parties (Lan & Heracleous, 2010). Reforming the law would present an opportunity for the law to impose liability on stakeholders within a contract and to define a new relationship between principals, agents, and third persons. The Canadian law system has found fault in the determination of the case and have completely rejected the inclusion of this case as a basis for future case determination. The law Canadian law courts rejected this case on the basis that lack adequate logic that a principal can be held unaccountable for actions of their agents even when there is undisclosed identity. The argument is that the case provides protection for third parties but does not protect the principal from fraudulent actions of the agent. For instance, an agent may exceed the limits provided by the principal for his selfish gains. In this case, Humble would have failed to pay cigarrete knowing that the principal would be liable in case of any court proceeding. The Canadian law provides that the best law is one that safeguards the interest all the parties within an agency contract to ensure that no one has a risk of loss (Collier, 2000). Therefore, a law that only seeks to protect the third party from the actions of the other parties is biased and cannot be regarded as good law. On this basis, the court has found it fare to omit this case in the future court proceeding. From a critical point of view, Watteau vs Fenwick case is peculiar and was complex in its handling. The law presented a dilemma to Wills that was hard to resolve due to the brevity of the agency law. From a close look, the case did not satisfy the conditions for apparent authority and the undisclosed principal authority would have been a worse angle to judge the case. Therefore, the judge was faced with a challenge on whether to uphold the law or to focus on the end result of the judgment. While this law has attracted a lot of controversy, it is clear that it was crucial in identifying the gap that existed within the law. The agency law did not anticipate situations when the law would support unjust actions against third parties or even the agent. Besides, the law did not provide a basis on which the court would identify a limitation in the express duties of an agent. As it were, it was hard for the court to establish that the principal had prohibited the agent from acting on his behalf while purchasing cigarettes. From this perspective, it would be crucial to reform the law by harmonizing the rights of the agent, the principal, and third party. A reform would involve providing a clear basis in which a court cam determine precisely the duties that a principal has assigned its agent (Erich, 1919). For instance, there would be value in ensuring that the law requires a formal writing of the role of an agent in such an agency contract. This way, it would be possible to leverage the challenge presented by this case in reforming the law. In conclusion, Watteau v Fenwick case is a controversial case that presented a need for law reform. Since the time it was decided, it has sparked a lot criticism from a wide range of scholars. In this law, judge Wills overturned the law on undisclosed principal terming a disclosed principal as one liable for the actions of an agent who acts beyond his duties. Although Fenwick and Watteau did not know each other at the time when the former supplied cigar to the hotel, the principal was deemed accountable for the actions of his agent. While the decision of the court attracted criticism due to its ignorance of the law, it is clear that the judge acted with end in mind and the impact of his action was meant for the good. His main aim was to protect the third party from any form of fraud where the law may provide the agent and the principal and opportunity to defraud third parties due to lack principal disclosure. While the case did not uphold the agency law, it opened an opportunity for law reform. Reforming the law in line with the decision of the court in this case would ensure that the interests of all the three parties within a contract are protected. Bibliography Collier, J, 2000, Authority of an Agent—Watteau v. Fenwick Revisited. The Cambridge Law Journal, 44(03), 363-365. Erich, C, 1919, A Problem in the Law of Agency, 4 Marq. L. Rev. 6 Top of Form Furmston, M. P. 2001, Principles of commercial law. London: Cavendish. Lan, L, & Heracleous, L, 2010, Rethinking agency theory: The view from law. Academy of Management Review, 35(2), 294-314. Mann, R, and Roberts, B, 2013, "29: Relationship with Third Parties". Business Law and the Regulation of Business (11th ed.). p. 607 Montrose, J, 2001, Apparent Authority of an Agent of a Company, The. LQ Rev., 50, 224. Top of Form Munday, R. J. C. 2008, Agency: Law and principles. Oxford: Oxford University Press. Bottom of Form Rogers, K. M, 2004, A Case harshly treated? Watteau v Fenwick re-evaluated. Hertfordshire law Journal. Seavey, W, 1948, Agency Powers. Okla. L. Rev., 1, 3. Whelan, J. W., & Dunigan, T, 2004, Government Contracts: Apparent Authority and Estoppel. Geo. LJ, 55, 830. Bottom of Form Bar, Christian von, Ulrich Drobnig, and Guido Alpa. The Interaction of Contract Law and Tort and Property Law in Europe A Comparative Study. München: Sellier, 2004. Bar, Christian von, Ulrich Drobnig, and Guido Alpa. The Interaction of Contract Law and Tort and Property Law in Europe A Comparative Study. München: Sellier, 2004. Bar, Christian von, Ulrich Drobnig, and Guido Alpa. The Interaction of Contract Law and Tort and Property Law in Europe A Comparative Study. München: Sellier, 2004. Bar, Christian von, Ulrich Drobnig, and Guido Alpa. The Interaction of Contract Law and Tort and Property Law in Europe A Comparative Study. München: Sellier, 2004. Bottom of Form Bottom of Form Read More