Steve is an alpaca breeder and carer. He owns a large farm in Mundaring, Western Australia. As part of his services, Steve charges alpaca owners $100 per week to care for their alpacas. For this amount Steve ensures that the alpacas are kept in a secure enclosing and feeds them as well as provides fresh clean water each day. At night Steve locks all the alpacas in his large barn. One morning Steve notices that one of the pregnant alpaca is off its food and displaying respiratory problems and producing nasal secretions. Steve attempts to call the alpaca’s owner, Bianca, by calling the contact number left by Bianca when she registered her details. The telephone is answered by Bianca’s housemate who explains that Bianca has gone to Ecuador for 3 weeks and is uncontactable for that period. Steve starts to explain to Bianca’s housemate about the alpaca’s condition but she hangs up and Steve is unable to get through again. Steve decides to keep an eye on the alpaca and the next morning the alpaca is a lot worse and had contracted a fever and was dehydrated. Steve fears that the alpaca may be suffering from a disease known as Bovine Viral Diarrhoea (BVD) and he again tries to telephone Bianca but the phone goes unanswered. Steve rings the veterinarian who attends and confirms that the alpaca is suffering from BVD and had a prenatally infected five-month-old foetus, which had already died, and needed to be aborted via emergency surgery. The veterinarian seeks Steve's permission and Steve agrees, knowing that without this surgery the alpaca will die. The alpaca is transported to the veterinarian’s surgery. The surgery is a complete success and the alpaca is back with Steve 3 weeks later. One day after this Bianca returns to collect her alpaca. Bianca is very pleased that the alpaca is alive but refuses to pay the extensive veterinarian’s bill and transportation costs adding up to $3500 and claims that since Steve authorised the surgery, he should be liable for its payment.
Required: Advise Steve if he is liable for this $3500 bill or is there something Steve can argue to avoid this liability? (20 Marks)
Restrict your analysis to legal principles and cases covered in Agency Law only.
Facts and Issue
Alpaca was given in S’s custody by B, was suffering from disease, where surgery was the only option. S in the view to save the life of alpaca, authorised the surgery to be done, on failing to contact B on several attempts. Surgery was successful. B, refused to pay the costs for surgery
Whether, S, was liable to pay the costs for surgery and also, whether, S can avoid his liability.
Rule of Law
In the relationship of agency, the principal authorises the agent, and becomes liable for the action of the agent to the third party in the course of the business.
In the present facts of the case, S was hired by B to take care of the Alpaca, and due to the fact, that, there arose the emergency conditions, S had to take the decision to perform the surgery on the animal, without actually being authorised to do so by B. So, the authorisation is a major element in here, since the law of agency is solely based on the authorisation so given by the principal to its agent. To determine whether there existed the relationship, of agency between S and B, there is the test, which needs to be deployed. The bailment is also a legal relationship as was held in case of Pioneer Container"(KH Enterprise (cargo owners) v Pioneer Container (owners)(Pioneer Container), 1994 which is developed between the two parties, when accepts the possession of the goods or things, with a proper knowledge, that it belongs to someone else, and is liable to duty of taking care of the goods the bailor has entrusted upon the bailee, i.e. the one who is accepting the possession, this duty to take care was mentioned in case of Coggs v. Bernard (1703) , by the bailee is demonstrated along with the delivery was explained in Gamer’s Motor Centre (Newcastle) P/L v. NatWest Wholesale Australia P/L (1987) 163 CLR 236. Furthermore, the bailee is also responsible for the damage, if any is borne upon the bailee. Whereas, in the principal and agent relationship, the test lies in the authority so provided by the principal was held in case of Lister and others vs. Hesley Hall Ltd. 2001 , and the Court held, that, an employer can only be held vicariously liable to the act or the actions so done by the employee or the agent, the act so done by the agent must be authorised, and the unauthorised act so done by the employee or the agent, cannot in no way thrust the vicarious liability on the employer. Thus, the underlying idea is that, the action or the act of the employee so done must be for the business or rather in connection the employment. So, when the agent acts on his on will, then the action so done cannot and should not be held to be an authorised task so to devolve the responsibility to that on the employer so concerned, was held in case of Randal Craig Jacobi and Jody Marlane Saur v Boys’ and Girls’ Club of Vernon and Harry Charles Griffiths, 1999 . Court in Canadian Pacific Railway Co v Lockhart, 1941 , held that, for making the employer responsible for any kind of action so taken, by the employee, it is inevitable to prove that, that particular act was actually authorised by the employer, and furthermore, there must be an existing connection between the authorisation done by the employer to that of the act of the wrong doing so done by the employee was held in case of Bazley v. Curry , 1999. Basically, an independent act on the part of the employee, must not be treated in such a way, that there was actual authority so made by the employer. Again, on the other hand, on application of the improper mode for doing an already authorised act, the situations become difficult, and thus, that authorisation so given by the employer, must be distinct so as to make it separate, in order to highlight the improper mode of acting by the agent based on the authorisation so provided by the employer Plumb v Cobden Flour Mills Co Ltd, 1914
But, again, the court in Woolcock Street Investments v CDG Pty Ltd, 2004 , placed the doubt on the decision as was held inBryan v Maloney , 1995 , and held that there must be no uncertainty for establishing a duty of care, but further held that, the proximity as was held in Bryan v Maloney , 19959need to be established with the necessary and the significant closeness Chan v Acres , 2015 .
As the creation of the agency, solely rest on the authorisation so made by the employer or the principal, so, it can be either apparent or can also be actual. The scope of the actual authority was determined in case of Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd  , and the court held, that actual authority solely rests on the authorisation which is only expressed. Again, on the other hand, the agent must have the actual authority when they in their capacity represents a third party was identified in Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) . But, when the third party relies on the things said or done to them based on the authority, then the principal cannot ignore their responsibility, was held in case of EGYPTIAN INTERNATIONAL FOREIGN TRADE CO. v. SOPLEX WHOLESALE SUPPLIES LTD., AND P. S. REFSON & CO. LTD. (THE "RAFFAELLA")  . In a similar view, the Court in Armagas Ltd v Mundogas SA('The Ocean Frost'), 1986 , held that, if the authority is specific, then the estoppel gets applicable and the principal cannot deny the consequences. So, there must be some ratification, which was held in case of Firth v Staines (1897) , and subsequent to that, Courts in Keighley, Maxstead & Co v Durant  , followed the same principle as laid down in case of Firth v Staines (1897)15, which was further endorsed by Crowder v McAlister  and the court was of the view that, ratification makes the principal liable, unless some other the person in making of the contract so in question, professed that their action as solely based on that, and nevertheless, the ratification so desired muse be made without delay and is solely subject to the reasonable time to be taken in it was held in case of Prince v Clark (1823) . Again, the Courts in Ireland v Livingstone (1872) , held that actual authority has the binding force on the principal along with the implied authority as was highlighted in Hely-Hutchinson v Brayhead Ltd  . With a similar view, Rama Corporation Ltd v Proved Tin and General Investments Ltd  , was taken in to consideration and it was held that, when there is a reliance so placed by the third party, then there cannot be any escape so as to devolve around the fact that the liability cannot be shredded. Furthermore, the agents are dutybound to act in good faith and with proper due diligence was held in case of Rossetti Marketing Ltd v Diamond Sofa Co Ltd  , so that the authority so vested on them by the principal can be maintained. As there are no statutes who are in to defining the words, good faith, so it is accorded that, one must act so as to upheld the bonafides within their own action, was held in case of Simpson v Grant & Bowman Limited  , and also, within themselves and their act or actions must reflect thebest interests which is required in furtherance to a transaction was held in Npower Direct Ltd v South of Scotland Power Ltd  .
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So, if all the ratios, that are mentioned above are made applicable, then S is under presumable circumstances an employee, since he takes payment for the services he provides. Thus, the relationship of agency is established as against them and hence they are not into bailment, since an agent, i.e. S, have some legal obligation and also have the authority to represent the principal, here B. As it transpires from the fact that, S, did his duty extremely well and have went for to spend certain amount of money in providing the life- saving treatment of an Alpaca, so the duty to care is obvious, and he have also acted in good faith and his action only suggest the due diligence he exercised on having the Alpaca operated for saving the life. Furthermore, he sought permission from the principal, which was again denied due to the non- availability of B. So, it is prominent that S, exercised, his duty to take care in such a way that it saved the life of the Alpaca. So, under no circumstances it can be said that, he surpassed or have overridden his jurisdiction, and also the fact that, he had not outstepped the authority. The fastness in his action is only due to the fact that, there was no time at all, and if he would not have acted in the way he did, it would have cost the life of that animal. So, he served his very own duty as an agent, with the best possible recourse. Thus, the expenditure so, borne by him, based on getting the surgery to be done on the animal, must be compensated by B, since under no circumstance she can deny her responsibility as a principal. Hence, B is liable to perform his obligation as a principal and in so doing, he must pay the amount so spend on the surgery to S. Furthermore, S can establish his liability as against the duty so performed by him, in taking a step forward to save the life of the animal, he is in possession with, so left on to him by B.