Business Law Case Summary
LAW220
Question 1
Issues
The key issue is to determine whether Susan - Transport Manager for NSW of Ozzie Freight
Ltd is able to take legal action to enforce the contact with Gordon – ex-Sales Manager of
Heavy Trucks Ltd for the delivery of five trucks costing $950,000.
Laws
To interpret these issues, this paper will consider section 126, 128(1)(4) and 129 of the
Corporation Act 2001 (Cth) as well as the Turquand rule of internal management in common law. Section 126 stated that a firm could exercise the power to make, ratify and discharge a contract through an agent. In other words, the company will be liable for contract entered into by its agents on the behalf of the firm if the agent has been given express, implied or ostensible authority to act (Freeman & Lockyer v Buckhurst Park Properties (MANGAL) Ltd …show more content…
According to (), the Turquand rule of internal management under common law allows the third parties to make assumption that internal formalities have been consented to when trading with agents. Therefore, the company is estopped from pleading that formality has not been complied with (Royal British Bank v Turquand (1856) 119 ER 886). However, the third parties are unable to rely on Turquand rule if they have either actual or constructive knowledge that there is suspicious in the transaction (Northside Developments Pty Ltd v
Registrar-General (1990) 170 CLR 146).
The Turquand rule has been recently replaced by section 128 and 129 of the Corporation Act
2001.
Section 128 deals with entitlement to make assumption. Particularly, section 128(1) imposes that a person trading with the company is permitted to make assumptions and the firm is unable to declare in proceedings concerning the dealings that any of the assumptions are incorrect. Section 129 sets out what assumptions a third party can make about the level of authority of certain officers of companies. Particularly, in subsection (3), an individual held out by
Question 1
Issues
The key issue is to determine whether Susan - Transport Manager for NSW of Ozzie Freight
Ltd is able to take legal action to enforce the contact with Gordon – ex-Sales Manager of
Heavy Trucks Ltd for the delivery of five trucks costing $950,000.
Laws
To interpret these issues, this paper will consider section 126, 128(1)(4) and 129 of the
Corporation Act 2001 (Cth) as well as the Turquand rule of internal management in common law. Section 126 stated that a firm could exercise the power to make, ratify and discharge a contract through an agent. In other words, the company will be liable for contract entered into by its agents on the behalf of the firm if the agent has been given express, implied or ostensible authority to act (Freeman & Lockyer v Buckhurst Park Properties (MANGAL) Ltd …show more content…
According to (), the Turquand rule of internal management under common law allows the third parties to make assumption that internal formalities have been consented to when trading with agents. Therefore, the company is estopped from pleading that formality has not been complied with (Royal British Bank v Turquand (1856) 119 ER 886). However, the third parties are unable to rely on Turquand rule if they have either actual or constructive knowledge that there is suspicious in the transaction (Northside Developments Pty Ltd v
Registrar-General (1990) 170 CLR 146).
The Turquand rule has been recently replaced by section 128 and 129 of the Corporation Act
2001.
Section 128 deals with entitlement to make assumption. Particularly, section 128(1) imposes that a person trading with the company is permitted to make assumptions and the firm is unable to declare in proceedings concerning the dealings that any of the assumptions are incorrect. Section 129 sets out what assumptions a third party can make about the level of authority of certain officers of companies. Particularly, in subsection (3), an individual held out by