BUSINESS LAW

LECTURE TEN
CASE LIST

Ireland v Livington (1872)

The principal, P, asked his agent (A) to ship him 500 tons of sugar from Mauritius to
England. A procured 80 percent of the sugar and shipped it in one vessel. P
refused to accept the sugar, on the grounds that it was less than he specified and
wrote to A to cancel any further shipment. The question to be decided by the court
was whether Ps instructions required that the whole quantity ordered should be
shipped in one vessel.

It was held that Ps instructions could be interpreted to mean one single shipment of
500 tons or a number of shipments totaling 500 tons. P was therefore bound to
accept the sugar.

Financings Ltd. v Stimson (1962)

A car dealer acted as agent on behalf of F Ltd. to receive offers of hire-purchase, to
tell customers whether their hire-purchase proposals were accepted, to ensure that
customers effected insurance policies for the cars, and to deliver cars to customers.
Stimson obtained possession of a car before F Ltd. had accepted his hire-purchase
proposal, but he returned the car to the dealer, on the grounds that he was not
satisfied with its performance. The question to be decided by the court was
whether the dealer was a person authorized to receive revocation of the offer to buy
the car on the hire-purchase.

It was held that authority to receive notice of revocation of the hire-purchase offer
was within the dealers implied authority.

Summers v Salomon (1857)

The principal (P) employed his nephew (A) as manager to run his jewellery shop. P
regularly paid for jewellery which A ordered and then sold in the shop. A left the
shop, thus ending the agency, but obtained further jewellery in Ps name and then
disappeared.

It was held that P was liable to pay for the jewellery, because the supplier did not
have notice that As agency was ended. P had represented that A had authority
from the previous dealings with the supplier. The nephew appeared to the supplier
to have authority.
Smith v Tanrich Investment Consultant Ltd (1994)
Smith opened a margin trading account with a Forex dealer, TIC, and gave
instructions to open five sterling contracts. The dealer, acting with authority, closed
those five contracts but then, without authority, opened nine more contracts. The
price of sterling fell and Smith lost his entire investment and the profit on the sale of
the five contracts. TIC argued that Smith had not complained about TICs lack of
authority within a reasonable time and had thereby ratified the opening of the
unauthorized contracts.

It was held that when Smith was informed of the nine contracts he was not bound to
complain immediately. In the circumstances it was reasonable for a complaint to be
made within 48 hours of the transaction this was the time period within which
account holders were required to check their statements and to complain if they
were found to be inaccurate. Smith complained orally when informed of the nine
contracts and in writing the following day, he had not ratified the nine contracts and
was entitled to be compensated for his loss.

Kelner v Baxter (1866)

A company was being formed to buy a hotel from Kelner. A written contract was
made on behalf of the proposed company by A, B and C for the purchase of wine
from Kelner.

It was held that the company was not liable to pay for the wine. It could not ratify
the contract because it was not in existence when the contract was made. A, B and
C were held liable to pay for the wine.

Keightly Maxsted & Co Ltd v Durant (1901)

An agent, A, was authorized to purchase a quantity of wheat at a certain price for
himself and KM, his principal, on a joint account. A concluded a contract with D at a
higher price (and therefore, on a joint authority) in his own name and without
disclosing that he was also acting for KM. A expected that KM would ratify the
contract as being on their joint account. KM refused to take delivery of the wheat.

It was held that A had made a contract for himself and not with the authority or on
behalf of KM. The contract could not be ratified by KM so as to render him liable to
sue or be sued.

2
Richard Ellis Ltd v Van Hong-toun (1987)
Richard Ellis, an estate agent, was appointed to act on behalf of the seller of a flat at
an agreed commission of percent of the purchase price. VH read REs
advertisement for the flat and on viewing the flat was given a document which
stated that an agency fee of one percent was payable (but it did not say by whom).
VH was told that the buyer would pay. VH entered into a contract to buy the flat for
$3 million and RE claimed on percent of the price.

It was held that an estate agent cannot properly act for two principals with
conflicting interests without the explicit informed consent of both principals. VH
did not know that RE was the agent for the seller and had not consented to the agent
acting for both principals.