What is Mary’s Legal Position Regarding Emily’s Cake Order?

Question from sarah, What is Mary’s Legal Position Regarding Emily’s Cake Order?

Answer from AI:

Mary owns a bakery called Mary’s Cakes and operates as a sole trader. One of her designers, Brad, took an order from Emily for a custom wedding cake. Emily was unaware that Brad was acting on Mary’s behalf. When Emily found out, she wanted to cancel the order. Here’s an analysis of Mary’s legal position using the ILAC method (Issue, Law, Application, Conclusion) under the law of agency in Australia.

Issue

The main issue is whether Mary is legally bound by the contract Brad made with Emily, given that Emily was unaware Brad was acting as Mary’s agent.

Law

The law of agency in Australia governs the relationship between agents and principals. Key principles include:

• Actual Authority: An agent has actual authority if the principal has explicitly or implicitly given them the power to act on their behalf.
• Apparent Authority: An agent has apparent authority if a third party reasonably believes the agent has the authority to act, based on the principal’s representations.
• Undisclosed Principal: If an agent acts on behalf of an undisclosed principal, the principal can still be bound by the agent’s actions if the agent had actual authority.

Relevant case law includes:

• Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480: This case established that a principal can be bound by the actions of an agent if the agent had apparent authority.
• Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549: This case confirmed that an agent’s actual authority can be express or implied.

Application

Applying these principles to Mary’s situation:

1. Actual Authority: Brad had actual authority to act on Mary’s behalf because she encouraged her salespeople to develop their design skills and seek new business. This implies that Brad was authorized to take orders and design cakes.
2. Apparent Authority: Even though Emily was unaware that Brad was acting on Mary’s behalf, Brad had apparent authority. Emily reasonably believed Brad had the authority to make the contract because he presented himself as a representative of the bakery.
3. Undisclosed Principal: Since Mary was an undisclosed principal, she is still bound by Brad’s actions as long as Brad had actual authority, which he did.

Conclusion

Mary is legally bound by the contract Brad made with Emily. Emily’s lack of knowledge about Mary’s involvement does not invalidate the contract. Mary must fulfill the order or negotiate a resolution with Emily.

Recommendations

Mary should consider the following steps:

• Communicate with Emily to explain the situation and reassure her about the quality of the cake.
• Offer a compromise, such as a discount or additional services, to maintain customer satisfaction.
• Consult with a legal professional to ensure compliance with contract and consumer laws.

For more detailed information, you can refer to the [Australian Contract Law](https://www.legislation.gov.au/Details/C2016C00892) and the [Law of Agency](https://www.austlii.edu.au/au/journals/UNSWLawJl/2001/5.html).

It is advisable to seek personalized legal advice to address specific concerns and ensure all legal obligations are met.