International Harvester Co of Australia Pty Ltd vs. Carrigan's Hazeldene Pastoral Co
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When it comes to the facilitation of commercial transactions, the relevance of the legal concept of agency cannot be overstated. In this text, I will amongst other things define agency and how it arises. Further, I will in addition to highlighting both the drawbacks and benefits of an agency relationship also give examples of agency relationships (both informal and formal).
Agency and How it Arises
In International Harvester Co of Australia Pty Ltd v Carrigan's Hazeldene Pastoral Co (1958), agency according to Fisher and Fisher (1998, p. 16) was defined or described as "a word used in law to connote an authority or capacity in one person to create legal relations between a person occupying the position of principal and third parties." As Turley (2001) notes, two persons are involved in the creation of an agency relationship. These include the agent and the principal. An agent according to Ong (2007, p. 62) is "someone who acts on behalf of another person, the latter being known as the principal." On the other hand, a principal in the opinion of Melbon and Bishop (2006, p. 186) is "an individual or business enterprise on whose behalf the agent acts on." Agency law as Tomasic, Bottomley and McQueen (2002, p. 215) note facilitates contracts between two people in a way that does not require the principal to be "directly involved in the actual process of negotiating and concluding the terms of the contract."
An agency relationship can arise in several ways.