Question 1
In this scenario, Adam functioned as an agent representing the artist, Pauline. He served as a third party to the principal, Pauline. To examine this set of circumstances, a closer look at the legal context of Australia is required. A huge part of the Australian legal system is based on common law system acquired from the English legal system. To this end, determining the outcome of this scenario may well be based on the principles of common law.
In the said case, Adam was commissioned to sell Pauline’s painting at between ,000 and ,000. However, the painting was sold for much lesser than what was indicated in the agreement between the principal (Pauline) and the agent (Adam). At this point, the painting was sold for ,500 which is considerably far from what has been earlier agreed on. Nevertheless, it has also been stated in the case that the principal seeks a speedy disposal of the merchandise and should be notified if an offer to purchase the artwork for much less than the minimum amount agreed on.
In looking at the said fact, the analysis would be based on the basic principles of agency law. At this context, it is assumed there was a contract between Adam and Pauline and that the directive provided by the principal that she be informed of an offer much lesser than the minimum of twelve thousand dollars is not followed by the agent. Specifically, there is no written approval of the said offer.
Based on the said information and assumptions, it appears that Adam has failed to comply with several elements of his part of the contract. This essentially entails a breach on the contract that both principal and agent have agreed upon. To elaborate much further, the agent failed to inform the principal of the low price offered by a Tania and eventually sold the piece of artwork to the said third party. He had done this despite the fact that the principal has not given him the authority to sell the painting for the said price. Adam has failed to provide the principal information that appeared to have been critical to the decision to sell the merchandise. In this context, the agent failed meet the standards of reasonable care, skill, and diligence required and expected from him by the contract. This places Adam in a position where he is liable to Pauline. In this manner, he may be answerable to the remainder of the amount they have agreed upon. This means that Adam is liable to pay Pauline the remaining ,500 in order to satisfy the minimum amount, given that Pauline sought legal actions on the misdeeds of his agent. It is also important to note that Tania, being the third party, has no legal responsibility to Pauline since it appeared that the third party has dealt only with the agent.
The key information on this scenario is whether Adam has communicated his intention to purchase the said piece of art to Pauline. This is information critical on the case of Pauline considering the fact that she expects the piece of art to as much as ,000. Nevertheless, it has also been stated in their agreement that she is willing to accept an amount as low as ,000 since she needs the money. Assuming that Adam indeed communicated to Pauline his intentions of buying the painting himself, then he have already shown intentions to bind legal ties. If Pauline responds positively to this situation, then a totally different contract is on imminent. The principle of offer and acceptance should be highlighted in this category.
Offer and acceptance are among the initial steps in any transactions. For clarity and coherence, the concept of an offer will be discussed separately with the concept of acceptance. An offer should be unambiguous, comprehensive, and communicated to the other party. Thus, certain information disseminating materials that advertises the product to the public is not considered as an offer. An action that is deemed not an offer is portrayed in (1893) wherein the correspondence is made through telegram. Moreover, the Privy Council noted that the offer was not binding since the mere statement of the lowest price to which the defendant was supposedly seeking to sell does not imply a clear indication of a contract between the two parties. The transaction was just a mere transfer of information. Moreover, once an offer is completed, it could still be withdrawn in any period before the acceptance. However, if the offer is under seal, it could never be revoked. Similarly, it is also possible for an offer to terminate provided that the cut-off date for the acceptance has transpired. On the other hand, an acceptance is the action that the other party undertakes in order to validate a contract. Thus, an acceptance denotes that the other party indisputably agrees with the terms of the contract. According to (1992), the process of acceptance is twofold. The first one is the fact of acceptance and the other is the communication of acceptance. The offeror is able to dictate the stipulations of the acceptance. Offers could place precise conditions on acceptance and the acceptor is compelled to follow.
Based on the discussions above, it appears that the scenario implies that Pauline indeed sold the artwork to Adam, thus he did not commit any breach if she accepted the offer from Adam to purchase it at the minimum amount. The acceptance of offer releases him from any fiduciary duty from Pauline. The sale of the said artwork makes Adam the owner of the object and is allowed to sell is at any price. And in so doing, he ceases to be liable to Pauline.
The discussions in this scenario still revolve around the contract between the principal and the agent. A contract comprises a “meeting of the minds”. In this context, it is stated that before a contract is signed and enacted, both parties have already established their purposes for joining the contract. In this scenario, the agent has found a buyer for the piece of artwork, which is what is expected by the principal. It has been sold within the price range in which the principal has indicated to the agent. The problem in this setting is revealed when the third party decided to give Adam an extra thousand dollars for his services since she thought of it as a highly considerable bargain.
The relationship involving Pauline and Adam comprise a fiduciary relationship, it has its foundation in common trust and assurance. This means that any of the party involved should not take advantage of the other. And as stated to the agency principles, the agent considering his duties to the principal should not engage in activities that will compromise his loyalty to the principal. In this case, the acceptance of the extra money as a token of appreciation is considered a failure in the fiduciary duty of the agent. It is this seeming attempt to gain privately on the agency relationship that triggered this failure. With this failure of the duty, a breach of contract is present.
Similarly, the Fair Trading Act of 1992 has similarly taken into account such unconscionable acts. (Article 13.1) Specifically, Article 18 of the said piece of legislation particularly noted that offering gifts and other prizes to the parties involved as an unfair practice. In the context of the case, the offer of an extra thousand dollars should be accounted to the principal by the agent.
Question 2
In the context of Albatross, they could well push through with their contract with Canary. Based on the facts on their situation with Budgie, it is indeed true that an offer was made. However, because of several circumstances resulting to the swift receipt of Albatross’ intention to create contractual relations, Budgie failed to reply in time. At this instance, it appears that the action relevant in here is the intention of Albatross to bind legal ties with Budgie. An offer was sent but the acceptance was too late.
In cases similar to this one, it is normally a general rule that the offer could be revoked any time the oferror wants to, provided that an acceptance has yet to be given. In this case, there has yet to be an acceptance on the part of Budgie since Albatross has sent the revocation of the offer fifteen minutes before the acceptance was sent in post. Albatross need not to worry about the issue of the Postal Rule considering the fact that they have communicated the withdrawal of the offer prior to the posting of the acceptance.
Moreover, Budgie could claim something against Albatross considering that they are covered by Electronic Transactions Act of 1999. According to Section 14 of the said Act, the message has indeed been sent to Budgie since the electronic communication they sent through fax has left the control of the sender and has actually been received in the information system of Budgie. In the said Act, Section14.4 clearly stated that the electronic communication will be received when it comes to the attention of the receiver. This means that the communication of the revocation need not be read by the receiver to be considered communicated in this context. This reveals that Albatross has indeed taken the appropriate actions to address their situation with Budgie.
On their situation with Canary, their agreement has been merely taken place through instantaneous messages. Though the agreement is theoretically complete with the communication of offer and acceptance, it is recommended to Albatross to seek a meeting with Canary in order to place their agreement in paper. In this manner, a more concrete representation of the agreement will be made. In the same manner, they could jointly agree on installing the specific stipulations in the agreement, aside from the initial offer of ,000 per annum. Moreover, it is also recommended that Albatross install specific clauses in the contract pertaining to the specific actions to be taken by both parties once a breach may take effect.
The claim of Budgie appears to be very weak at its face value. Nevertheless, they may have a case if they do intend to acquire court actions against Albatross. In their perspective, it appears that they have acquired the offer at a late date. This is not their fault, as it was the responsibility of the offeror given that they have made considerable errors that became detrimental to the creation of the contract. The point of this matter is that an offer was indeed made and communicated to them by the offeror.
And being interested in the offer, the company sent a reply the instant it have viewed the offer on November 6. As was instructed in the offer, the acceptance was made through post. In looking at this situation, it appeared that Albatross was indeed expecting the acceptance to come through mail. And with this stipulation in the offer, the Postal Rule is applicable. The claim of Albatross that they have not heard from Budgie seems to be inconsistent considering it was only several days since the offer was made. Budgie could claim that there was no time limit stated as a stipulation in the offer. ( (1866) LR 1 Ex 109) Similarly, they could have used other means of communication to verify whether the offer was indeed communicated to them. In this manner, they could have been informed that their letter was misplaced in the mail. ((1879) 4 Ex D 216)
Another claim that Budgie could take is the termination of the offer. Though it is a general rule that the offeror could revoke the offer given that the acceptance has yet to be sent, ((1880) 5 CPD 344) the revocation was not properly communicated to Budgie. The company could also use the Electronic Transactions Act of 1999, particularly Section 14. Since the offeror have used an instantaneous means of communication to convey the revocation of the contract, Budgie could claim that they have not read the message after the acceptance has been posted. They could claim that the message may have been indeed sent through fax but they have failed to deal with it considering they were not expecting any message from Albatross from such medium. As stated in the said Act, it should come to their attention that a message was communicated. Given their situation with Albatross, they could not have reasonably expected the said company to make use of the fax machine as they have vehemently stipulated in their offer that communication must be made through post.
As their Albatross had rejected their offer, Canary may have been forced to accept the counter offer of the Albatross. If they feel that they have been disadvantaged by the counter-offer or felt that they have been forced into the contract, they could claim for economic duress. ( (I [1989] 1 All ER 641)
Nevertheless, if they feel that the agreement may benefit them and felt that they have been treated fairly, they should set a meeting in order to establish specific conditions ( (1876) 1 QBD 410) and possible warranties for the implementation of the contract. ((1876) 1 QBD 183) In this manner, both parties’ interests are secured and specific courses of action are agreed upon once breach of contract take place.
References
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