Sometimes you are not an individual in your own right, sometimes you are an agent of a company or government department, you are the company personified.

What does that mean?  It means that what you do, you do on behalf of that government department and the government department is liable.

In a recent case the Federal Court of Australia said that because a council officer made statements about a pharmacist which the officer knew were untrue, and because the untrue statements were made by the officer in his official capacity to the Health Department, that the officer had been guilty of an abuse of his office.  Furthermore, the Council had to pay compensation to the pharmacist.

It is an abuse of a person's "office" or their official position if they do something with malicious intent to cause harm to someone else, even if the thing they did was something they could normally do.


When is an employee an agent?

If you run a business then it is important that you understand that your employees are often your agents, that is, you are liable for their actions.  Making your employees into sub contractors doesn't solve this problem.

An Agent is an authorised representative who has the authority to make decisions or create obligations for someone else who is called the Principal.  One of the key tests for agency is to look at how much authority the employee is given, including ostensible authority.  Ostensible authority is where the Agent doesn't have specific authority to act, but because of the action or inaction of the Principal a reasonable third party would believe the Agent had that authority.  

An example of ostensible authority would be an employee negotiating a reduction in price.  While the Principal may not have given the employee specific authority to negotiate that reduction, has the third party been alerted to the fact that only the Principal has authority to do this?  If the third party is dealing with that employee directly, and has no dealings with the Principal at all, what grounds do they have to believe that anyone other than the employee they are dealing with is the person that they should deal with?  If the employee offers the reduction and the third party assists, and proceeds to engage the services of that business and is not told until the end of the matter that the Principal never agreed to the reduction and his authority was necessary, then the third party is entitled to rely on the representations of the Agent (the employee) and to hold the Principal (the business) to the terms of the contract as negotiated with that Agent.



Bruce Coode

Need more information?

If you have had difficult difficulties in dealing with a government department, or if you are running a business and you want some advise in relation to agency law and employee management then make an appointment to speak with Bruce Coode.  Your first half hour appointment is free, and he can let you know whether you have an issue that is worth further investigation.  Bruce has been dealing with government departments for most of his forty year career, including at times acting for government departments, and can give you practical advise in plain English about your problem and any potential solutions.  Bruce has also been running his own business and advising small business owners for many decades.