LAW6000 Business and Corporate Law Assessment 2 - Case study analysis

Question 3 ( 25 marks)

Francis collects music related merchandise, in particular she is a big fan of Kiss (American glamrock band) and Status Quo (English boogie band) merchandise. Francis appoints Rick as her agent and instructs him to purchase three specific Kiss related items from Allan, another collector of Kiss merchandise. Francis gives Rick a limit of $25,000 to spend, which Rick promptly deposits in his own personal bank account to “keep it safe” until it is needed. Francis also instructs Rick to keep the purchase of the three items confidential. Rick is very pleased about his appointment as Francis’s agent and tells three of his closest friends on the proviso the friends do not share any information with anyone. However, two of these friends work in the music industry and immediately tell their employers. Rick approaches Allan and introduces himself as Francis’s agent. Following negotiations it is agreed Allan will sell the three Kiss items to Francis for $32,000. When Francis is informed of the contract, Francis flatly refuses to pay and says:

“Rick never had the authority to make any contracts involving this amount of money. I simply will not pay this amount of money for those three items.”

Allan states the contract stands, wants to proceed with the sale and demands payment in 7 days or he will start legal proceedings for breach of contract. When Rick was inspecting the items, he noticed Allan also had 3 original Status Quo albums which Francis has always wanted for her collection. Rick also facilitates an agreement where Allan will sell the albums to Francis for $45,000.

Required:

Part A ( 20 marks)
Using the IRAC legal problem solving process give your conclusion on whether:
(a) Allan can enforce the contract for the three Kiss items with Francis.
(b) Francis is bound to go ahead with the contract to purchase the Status Quo albums from Allan, and the consequences for Rick if Francis is not bound to the purchase.

Part B ( 5 marks)
Describe the ways in which Rick is in breach of his common law duties as an agent, and any consequences of such breaches.