The law of Agency, Bankruptcy Act 1966 - Assignment Example

Name Instructor Date CASE STUDY Question 1: The law of agency is the area within commercial law with the characteristics of either a contractual, non-contractual, or quasi-contractual relationship between an agent, a principal, and a third party. The agency accords a fiduciary relationship between the agent and the principal whereby the agent holds the responsibility (as authorized by the principal) to work on behalf of the principal in the creation of legal relationships with third parties. A breach of the law of agency occurs when one of the parties acts outside of the scope of their duties and responsibilities as described in the relationship[Pau16]. David breaks the duties of agency that state that an agent must exercise loyalty towards the agent. The acts of loyalty include the specific duties not to acquire material benefits from third parties in connection with the current transactions of the principal and the misuse of the position of agency to gain an advantage. He also breaks the duty that requires the agent not to compete with the principal while still under the relationship of agency. The actions of David are not consented by Benny and constitute a breach of duty towards the contract and the principal. Benny also lies about the situation by the claim that the car was sold to another buyer, therefore, not acting in good faith and ensuring the complete disclosure of information with regard to the object of interest to the principal. The case of David and Benny is that of an agent and a principal whereby Benny is the principal and David the agent. David is a car dealer and he and Benny always attend inspections together before the selection of the cars to purchase. However, Benny is not available to attend the inspection of the $20 000 1948 Honda that has his interest. Instead, he asks David to do the inspection without him but states his maximum purchase price at $15 000. David finds that the dealer sells the car at $20 000 with an accompanying rare and exclusive package. Instead, buys the car for himself and lies about its availability to Benny saying that it was sold to another buyer before he could negotiate. From this, case, there is a breach of the agency laws that require transparency and operations free of interests of conflict. By so doing, David breaks the law of agency through the lack of compliance to the lawful instructions given by the principal, Benny. The betrayal can be deemed as fraud and should Benny know about it, he is entitled to the car because the retention of the benefit by David is unconscionable. Question 2: The Sale of Goods Act 1893 covers the rules that govern the transfer of goods from the seller to the buyer. A sale agreement becomes an actual sale contract when there is a fulfillment of the conditions of the sale or when the time elapses subject to which the next action is the transfer of the goods to the buyer. However, the sale of goods that have perished at the time of making the contract whereby the goods perished while in possession of the seller without their knowledge makes such a sale contract void[Pau16]. The case between Phil and Neptune Cake supplies consists of a scenario where there is a prior agreement of purchase. Therefore, there is an agreement of the sale of goods. The agreement stipulates that Phil pays for the Icing sugar thirty days after collection. Phil collects the goods and discovers that the icing sugar is spoilt due to heat exposure. The case does not mention a scenario where Phil is responsible for the heat exposure. The agreement to the sale of goods becomes a contract upon the time lapse of the agreed time and the delivery of the goods to the buyer. In this case, the time has not lapsed yet although the delivery has already been made. According to the Sale of Goods Act, the contract is not yet done and the agreement is subject to change at the time that Phil picks the goods. As a result, she has the right to return the goods at no extra cost whereby Neptune Cake Supplies incurs the losses for the delivery of goods that do not fit the description of the requirements of delivery. Question 3: According to the Bankruptcy Act 1966 (Cth), the property of a debtor becomes available to creditors for the payment of his debts upon the declaration of the debtor as bankrupt (s58). However, according to Section 58 of the Bankruptcy Act 1966, there is a restriction to the property that the creditors can access whereby property such as household furniture, certain vehicles, and personal injury compensation property. The declaration of bankruptcy by a debtor and the subsequent compensation action by the creditors that involves taking the property of the debtor and the subsequent equal distribution between them releases the debtor from any further liability to the creditors[Pau16]. Bankruptcy could be voluntary, forced, or deceased bankruptcy. According to the Bankruptcy Act (Cth) Section 116 and the Bankruptcy Regulations 1996 (Cth), there is a list of regulations about the extent of the access of the creditors to the property of the debtor. The regulations are numbered 6.03, 6.03A, and 6.03B[Pau16]. The property is listed as the necessary property within the household such as fridges, and furniture such as beds. The other property is that which the debtor uses to earn income that includes tools, their equipment, their plant, and reference books that do not exceed $3500 in value. The others include a car valued at a price below $7050, proceeds of damages, and funds received after the declaration of bankruptcy. Question 4: The Australian Consumer Law (ACL) provides the rights and obligations that govern the engagements of consumer transactions. Section 55 of the ACL provides a guarantee to the consumer about the fitness of the supplied goods for their represented or disclosed purpose. The fitness for any disclosed or represented purpose is the right of the consumer, failure of which the consumer has the right to take action against the supplier[Pau16]. A major breach requires a complete refund by the supplier at the choosing of the customer. The less major breaches are subject to refund or repair at the choosing of the supplier. The consumer has the right to seek redress from the relevant retailer even for for manufacturer-caused breaches. An example is the case of a customer who hopes to find a water bottle that is compatible with microwave usage and very hot water. The customer gets into a shop and sees bottles at a certain section whereby she prefers a certain bottle. The customer explains her needs to the retailer and the retailer advices the customer to take the bottle it their hands. The customer buys it and uses it for several days only to find instructions in small font that advice against microwave usage because of the risk of the leach of plasticizers. In this case, the customer is entitled a refund of or a replacement of the bottle because of the misinformed guidance by the retailer without consideration of the specific needs of the client. In this case, the manufacturers fulfill their duty to put the instructions on the bottle. However, it is better for the retailer to admit that they are not sure about microwave compatibility instead of implying compatibility without guarantee, therefore, putting the health of the customer at risk. Question 5: The filing of petitions for bankruptcy does not demand minimum wealth before the action. The debtor needs to fill documents for their petition for bankruptcy a statement of affairs. The documents are submitted to the relevant authorities within 28 days of signing and the declaration or bankruptcy takes effect the night before the official acceptance of the petition. Bankrupts end up losing most of their valuable property to the creditors. The duties of a bankrupt include the declaration of their property to the Licensed Insolvency Trustee (LIT), handing over of credit cards to the LIT for cancellation, and the disclosure of any property sold or given away. Trustees have the legal authority to recover property transferred by the bankrupt to a period of five years before the official declaration of bankruptcy[Pau16]. In this case, the debts include both secured and unsecured loans. He conducts some property manipulation before his declaration of bankruptcy by selling $20 000 worth his van at a throw-away price of $5000, repays an $20 000 debt to a family member, and pays off a debt to a friend by giving away his boat. He also leaves his low valued possessions that hold sentimental value to his father. The legal issues arising from this case are those of avoidance, especially through the sale of his car that is valued at $20 000. The car and the $20 000 in cash are reasonable amounts with regard to the repayment of his $809 000 debt. There also seems to be favoritism to some of his debtors, the friend and the family member who he repays before valuation of his property. However, it is essential to consider the timing of the actions which is before the declaration of bankruptcy. Sections 81 and 77 of the Bankruptcy Act accords the trustees the powers to examine the possibility attempts to hide assets which is subject to sanctions for fraud if discovered. However, in his defense, the actions are done before the official declaration of bankruptcy, the loan repayments paid to the family member and the friend are covered for under the act, and the assets put away are of low value and not useful to the creditors. If the case rules against his favor, it is possible for the LIT to decline the petition for bankruptcy. Question 6: The duty of utmost good faith falls on the insurer and the insured whereby the insured has the duty to act honestly in all his dealings with the insurer and the insurer acts with regard to the interests of the insured in case conflicts of interest arise. The duty of full disclosure is also a responsibility of the insurer and the insured whereby all the relevant information must be laid on the table, prior the official contract. The duty of disclosure is one of the manifestations of the duty of utmost good faith because both parties lay out the good and the bad for accurate terms of the contract[Pau16]. With regard to the duty of utmost good faith, the insurer is responsible for the practice of the duty of disclosure whereby he discloses all the relevant information required by the insured. The duty of utmost good faith and the duty of disclosure are interconnected whereby the duty of disclosure is one of the pre-contractual duties that manifest in the duty of utmost good faith. The lack of full disclosure during insurance relationships is subject to sanctions on the basis of misrepresentation through the omission of important information. However, the duty of disclosure may be violated without the knowledge of one of the parties, mostly the insured. Such comes with the lack of providing information necessary for the setting of the terms of the contract because of the actual lack knowledge of such information. It includes such information as that which concerns a chronic illness that determined whether the insurance is given or not. Works Cited Pau16: , (Latimer), Read More