WA Homework Question - Can Employer Sue the Employee for Misrepresentation?

[Robertocruz]

Can somebody give me some idea how to approach this law question? Is this a breach of contract? Negligence under tort or good faith and misrepresentation?

Q1. R is the senior curator and ground manager at Noora Norra Golf Club Resort, a luxury facility in WA owned by Gabba Pty Ltd. Noora Noora has been under financial pressure since the Global Financial Crisis affected the flow of Japanese tourists. The CEO cut budgets and informed R that he could not enter into any contracts valued at over $10,000.

Despite this instruction he proceeded to negotiate a landscaping contract with Willow Landscaping that was valued at $13,000. An associated water feature cost an extra $4000. When work commenced the CEO asked R what was happening. R informed him of the landscaping project but did not mention the water feature.

After considering the circumstances, the CEO tells Willow to proceed. However, the CEO is surprised to receive the bill for $17,000 when the work is completed. Advise the CEO whether the company is required to pay the bill.

(You can assume that the CEO has actual authority to enter into contracts of this nature on behalf of the company)

 

[Rod]

You supply the answer and we'll comment.

No free rides given here.

 

[Tim W]

Rather than post the question, and wait for us to write your entire answer
(which would be unethical on our part, and academic misconduct on yours),
if you would care to post what you have got so far, we may be in a position to assist.

 

[Robertocruz]

Rather than post the question, and wait for us to write your entire answer
(which would be unethical on our part, and academic misconduct on yours),
if you would care to post what you have got so far, we may be in a position to assist.

Hi, Tim, I was not looking for a complete answer, but some direction to start. I feel there are two sides to the case. Employer has vicarious liability under the agency contract ( is clear CEO gave ratification to Ricardo for landscaping contract )But, the CEO was induced to enter into contract with company W because of the facts that were misrepresented by his own manager R. (As manager did not inform about the extra cost of worth $4,000).


An agent may be liable for their tortious act (such as negligence) if they fail to act within the scope of their actual (whether expressed or implied) or apparent authority.

 

[Rod]

What unit are you studying?

The question seems like a basic agency question regarding authority rather than a torts question.

 

[Robertocruz]

What unit are you studying?

The question seems like a basic agency question regarding authority rather than a torts question.

Hi, Rod, I am doing BSL 165 foundation of Business Law.

CEO gave permission to willow Landscaping, by ratification there is an agency creation between Company and Ricard hence, company is liable to pay the bill. R was told not to enter into any contracts worth $10000 or over but negotiates a landscaping contract worth of $13000 with an additional water treatment cost of $4000. he informs CEO only about the $13000 but not mention about $4000.

Is this not tort of negligence? Can the company sue R for economic damage?

 

[Rod]

CEO gave permission to willow Landscaping, by ratification there is an agency creation between Company and Ricard hence, company is liable to pay the bill.

Liability is correct but I do not see ratification as the reason why the CEO is liable. Ratification may have occurred, but this is not why the CEO has to pay, though should be discussed. The CEO would likely have to pay regardless of ratification. Identify why (hint: Estoppel).

Ricardo was told not to enter into any contracts worth $10000 or over but negotiates a landscaping contract worth of $13000 with an additional water treatment cost of $4000. he informs CEO only about the $13000 but not mention about $4000. Is this not tort of negligence? Can the company sue Ricardo for economic damage?

Question is not asking you to address remedies available to the CEO. Having said that, your use innovative use of a tort which normally relates property damage or personal injury may be possible, I'm not sure.

I'd prefer to go with contractual nature of employee/employer relationship - maybe damages as the remedy. Hopefully someone else here can comment on this additional question.

 

[Robertocruz]

Hi, Rod, I am doing BSL 165 foundation of Business Law.
I was looking at a case ( Houghton v Arms, 2006 HCA 59 ) Misleading or deceptive conduct in trade or commerce,Houghton v Arms [2006] HCA 59 concerned the development of a business strategy by Mr Arms. Mr Arms retained WSA Online Ltd to develop the plan. Mr Houghton and Mr Student were employees of WSA Online Ltd. Mr Houghton and Mr Student were involved with false and misleading representations to Mr Arms which resulted in damages calculated by the court at $58,331.00.

Mr Arms was successful at first instance against WSA Online Ltd, but had his suit against Mr Houghton and Mr Student dismissed. As WSA Online Ltd was under a deed of company arrangement with its creditors, and as a consequence was potentially unable to satisfy any judgment, the action against the employees was especially relevant.

Mr Arms appealed to the Full Court of the Federal Court which held Mr Houghton and Mr Student were jointly liable for the damages. The Full Court's decision was appealed to the High Court of Australia.

 

[Robertocruz]

According to Competition and Consumer Act 2010 (Cth ) s 18 says it is relevant to all parties. So I am guessing if am employee makes economic damage to an employer can demand damage
in this case silence as conduct ( misleading and deceptive conduct ) would like to know what your thoughts are.

 

[Rod]

Houghton v Arms, 2006 HCA 59 is applying different legislation. You have a common law factual scenario to consider.

s18 applies to someone engaging in trade of commerce. Is an employee engaging in 'trade or commerce' or only the employer?