Business and Corporations Law: Case of Swimmingpool Co Pty Ltd - Research Paper Example

BUSINESS AND CORPORATIONS LAW: SWIMMINGPOOL CO PTY LTD CASE STUDY Name Institution Professor Course Date 1. Is Swimmingpool Co liable for Martin’s actions? On what basis in law would this be the case? Swimmingpool Co Pty Ltd is liable for Martin’s actions. Apparently, Martin works for the company as its sales manager where he is required to quote to potential clients the cost of installing the different pools that the firm offers. Martin’s role as the firm’s sales manager is to draw up any novel contracts on behalf of the firm. He is required to deposit the monies paid by potential customers on the firm’s bank account. According to the case study, Martin is on fixed salary and his employment contract allows him to receive a bonus when he exceeds his yearly target of signing new clients. In this regard, Martin works for the company as an employee and not an independent contractor. Given that Martin is an employee of the company; the Company is liable for Martin’s actions. The Company is liable for Martin’s actions under the legal doctrine of ‘respondeat superior’. According to Schneeman (2012, p.18), ‘respondeat superior’ is a Latin word that means, ‘let the master answer’. Under this legal doctrine, an employer is subject to liability for torts of her or his employees. However, the employer is liable only if the acts are committed while the employee is acting within the scope of his employment. Under the doctrine of ‘respondeat superior’, an employer who maintains control over the way in which the agent performs his duties is responsible for the torts committed by the employee. From all indications, Martin is an actual employee of the company and not an independent contractor. More so, Martin is acting within the scope of the employer’s business because his only role is to sign new customers and quote the cost of installing the various pools offered by the company while the company provides the manpower and machinery for the construction of the swimming pools. In this regard, Martin is acting within the scope of the company’s business. Martin did his job of signing in new customers and providing the quotations as dictated by the employer. The customers were getting into a contract with the Swimmingpool Co Pty Ltd and not with Martin, the firm’s agent. Although Martin kept part of the money he collected at the expense of the customers, he represented the company and so the company should be held liable. Martin was acting on behalf of the company, and, therefore, his carelessness and misconduct should be directed to the Company that he represents. Sinking of constructed pools into the ground is an apparent risk of the business and therefore, the Company will bear that responsibility. Given that an employer is lawfully entitled to rewards of their worker’s labour, the company hold legal liability if the conducts of its employee results to harm. Companies are vicariously liable for all the actions of their employees as long as they are acting within the scope of their employment and for benefits of the firm. Actions are within the scope of employment to the degree that they link to the kind of work the employee or agent is hired to perform, take place largely in the workplace and serve the interests of the company. Apparently, the contract to construct swimming pools is between the customer and the company. The agent is not a party to the contract and therefore, it is the firm and not the agent that will be held liable for the breach of contract. More so, Martin was acting in the course of his employment and was still an employee of the firm. In conclusion, the company should be held liable because Martin was acting in the course of his employment, he was acting within the scope of business, the contract was between the Company and the client and not agent, and he fully represented the company as its employee and not an independent contractor. More importantly, the company can be said to have employed recklessness or negligence in the supervision of its activities because it holds the power to control its employees and ensure that they follow the instructions provided. 2. Can the company claim they are not liable for Martin because he has not followed instructions? Explain. Swimmingpool Co Pty Ltd cannot claim that they are not liable for Martin’s actions on the basis that he did not follow instructions. In an agency relationship, the principal can be liable for actions of the agent. This is because the principal holds the power to control the agent and therefore, he/she is responsible for the actions of the agent. For instance, when a father gives his son his car to run some errands for him, the child becomes the agent of his father. Therefore, if the child hits someone while driving his parent’s vehicle, the parent can be held liable for the child’s actions. Similarly, Martin was acting on behalf of the company, and so the company cannot avoid liability for the actions of its agent. However, there are bounds to the liability of employers for the activities of their agents in the sense that the principal’s liability is restrained to employee’s actions taken with the scope of their employment. Martin’s actions were within the scope of employment and served at least partly the interests of the employer. Given that Martin was an employee of the firm; the employer held the power to direct and control Martin’s actions, but the firm failed to do so. In this regard, the Company could have prevented the tortuous actions perpetuated by its employee or agent. While Martin can be personally held liable for his actions, this can happen in lieu of orin addition to the company. Even though Martin was not an independent contractor, but an actual employee of the firm, he can be personally held liable for his own actions because he failed to follow the given instructions from his principal. According to Schneeman (2012, p.20), an agent is liable for his torts and crimes even when his actions are within the scope of his authority and carried out at the instruction of the principal. However, the principal is also liable for the same act. The agent’s liability to the third party for tortuous actions is based on the common principle that each individual must act in the right way so as not to harm another and is independent of the agency relationship. In some occasions, a manager can be held individually responsible for his own actions, but this is generally in lieu of or rather in addition to employer liability. Therefore, the company cannot claim it is not liable for Martin’s actions. The employer’s argument that Martin did not follow instructions does not save the employer from liability. This is because the employer holds the power to control the employee. The company is partly responsible for Martin’s actions because it failed to control and supervise him to see if he strictly followed the company’s policy and instructions. Martin also remains personally liable for his actions because he acted out of personal interests. 3. Is Martin liable to his employer for any of his actions? On what basis in law would he be liable? Yes, Martin is liable to his employer for his actions. Swimmingpool Co. Pty Ltd and Martin entered into a contract. The company is the principal while Martin is the agent. Martin is tasked with providing the company’s customers with quotations for swimming pool installation and signing in new customers. Under the agency law, the principal grants power to the agent to act on his/her behalf. The agent acts under the control of employer or principal. The link amid the agent and principal is fiduciary, and the actions of the agent bind the employer or the principal. Agent owes particular duties to his/her principal while the principal owes particular duties to his agent. The agent is required to act with care, diligence and competence, comply with legal instructions given by the principal and act feasibly and avoid actions that may cause damage to the principal’s business. With respect to the case study, Martin failed to uphold his duties to his employer an aspect that brings damage to the company. In this regard, Martin is liable to the company for all of his actions. He is liable to indemnify the principal for damage that emanated from his actions. Apparently, Martin failed to discharge his roles with diligence and care and more importantly created conflict between his personal interests. Martin as part of his mandate had his employer’s business in his keeping and therefore he is accountable for any damage caused to the business as a result of failing to fulfil his mandate in accordance with the agency law. Martin injured his employer through dishonesty and negligence. According to Mann and Roberts (2013, p.588), an agent as a fiduciary owes his/her employer or principal the duties of obedience, good conduct, loyalty, duty to inform, duty to provide accounting and diligence. The agent is liable for any damage or loss she/he causes to principal through the infringement of his/her duties. Subject to agreement with his employer, Martin had a duty to the employer to act as authorised and obey all legal instructions and directions from the employer. Martin had a duty to act practically and prevent conduct that could damage the interests of the company. If the acts of the agent hold a great effect on the reputation of the principal, the agent should be held liable. A breach of the duty of good conduct makes Martin liable to the employer, and he is subject to rightful termination or discharge. Any employee who breaches the duties of good conduct, due diligence, loyalty, duty of account, duty to inform, fiduciary duty among other duties subject to agreement between him and the employer is liable to the employer for damage or loss caused to the company. 4. Has Martin breached any law if he is planning to set up his business? Explain. Martin has contravened the duty of not compete. This is because he is in the process of setting up his own firm that will compete with the Swimmingpool Co. Pty Ltd. In the course of an agency relationship, an agent must not compete with his employer or principal or act on behalf or help any of his employer’s competitors. However, after the agency ends without infringement by the agent, the agent may compete with his former principal (Mann & Roberts 2010, p.590). According to the case study, Martin is in the process of establishing his own business before he could even leave the company. He is also using the money he stole from the Company to set up his own business. By establishing his own business to compete with Swimmingpool Co. Martin, fails to protect the interests of his employer. Besides, Martin fails to prevent conflict of interests. An agent is required to act solely in the interest of his employer and not in his own interest. While the spare-time actions of Martin are no business of his employer, Martin is not required to work for the firm’s competitors or set up his own business in order to compete with his employer. Setting up his own business to compete with his employer only means that his employer’s business would be severely damaged because he will solicit customers from his employer. Martin’s actions present a breach of loyalty and trust. The fact that he is in the process of setting up in competition with Swimmingpool Co. Pty Ltd is a breach of loyalty duty and fidelity. Martin contravened the duty of not to compete, the duty of fidelity, loyalty and trust. According to the case study, Martin did not indicate an intention to compete with his employer but was actually in the process of setting up a business. Although Martin had not started to compete with his employer but was only making preparations to compete with his employers, his was a breach of the duty not to compete, trust, loyalty and fidelity as he was doing it secretly and using the monies he stole from the company. References Mann, R & Roberts, B 2013. Business and the regulation of business. UK: Cengage Learning. Schneeman, A 2012. The law of corporations and other business organisations. UK: Cengage Learning. Read More