The present case offers an interesting insight into various issues pertaining to Law of contract and Law of agency. In this regard, it is submitted that the Law of contract and agency is largely based on the common law principles of equity. For the purpose of rendering advice to Janapada, analysis of facts along with a few factual assumptions has to be made. Harry Redford was appointed as the sole selling of Janapada for Western Europe for a period of three year in March 2009. In October 2009, admittedly he entered into a three year contract worth $ 6 million per year as Janapada’s agent, with a Singaporean importer to supply meat. However this was done without reference to Janapada and beyond his express authority.
The facts of the case so far reveal that the agreement entered into by Redford was beyond his authority and as such, an unenforceable contract because he did not have the authority to bind Janapada. The reason behind this assumption is that he was the sole agent for Western Europe and not Asian Countries.
However the next statement in the facts discloses that the contract was otherwise being performed properly till May 2010. This clarifies that Janapada ratified the contract entered into by Redford which has the effect of making the contract a valid and enforceable one. As a result of this advice to Janapada on the first issue would be that the contract with IndiBeef is a legally valid and enforceable one. The important factor out here is the fact that IndiBeef has already received supply of meat from Janapada and in effect, Janapada has ratified the contract by implication. Once the third party has received something in pursuance of the agreement that it believed to be true and valid since its inception, then the right of repudiation of the agreement rests with the principal. In this case, as Janapada ratified Redford’s agreement by supplying beef to IndiBeef for a period of more than seven months, by implication, the Janapada has ratified the agreement with retrospective effect. It is submitted here that even though the agreement at the time of its inception was voidable, it was voidable at the option of the supplier, i.e. Janapada and not at the option of the importer, i.e. IndiBeef.
The advice to Janapada on the second issue would be that Harry Redford is entitled to payment of commission subject to the rate as per Queensland Law. The rationale behind this is again the act of ratification by his principal. In case that the agreement entered into by Redford was repudiated by Janapada at the time of its inception, then Redford would not have been eligible to receive any commission from Janapad as his agreement in itself was without any authority. However, Janapad went ahead with the performance of contract by supplying the beef to importer resulting in the ratification of contract. Janapada cannot take a stance that it would like to retain the benefits of the contract with IndiBeef as the deal was extremely profitable and at the same time deny Redford commission for the deal.
The last part of the advice sought by Janapada actually is dependent on the terms and conditions agreed upon by the parties vide the written agency agreement. If the agency agreement carried a clause prohibiting Redford from soliciting business from Asian Countries or to the effect that he would not be able to receive any commission while liable to have his agency contract terminated in the event, he breaches the aforementioned clause.
However, it is highly unlikely that agency agreement would be having such a strong exclusionary clause. Assuming that the agreement stipulated that Harry Redford would be the sole selling agent for the Janapad Beef for the region of Western Europe but there was no prohibitive clause restricting him from soliciting any business from Singapore in particular and Asian Countries in general. Under such a circumstance Janapada would not have been able to terminate the agency agreement with Harry Redford.
There is another possible scenario is that just like Janapada entered into an agency contract appointing him as the sole selling agent for Western Europe, similarly Janapada could have appointed a different sole selling agent for a different area such as Asia and in that case, acts of Harry Redford would be illegal and in that case agency agreement of Harry Redford would be liable to be terminated.
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