Tim’s Lenders is a business owned by Tim Baker which offers small loans to young entrepreneurs. Tim Baker, who serves as the Chief Executive Officer (CEO), has hired Catherine Mills to serve as ‘manager’ for Tim’s Lenders. As part of Catherine’s job description which are listed in her employment contract, she is required to process all small loan applications except loans over $50,000 which must be directly approved by him as CEO. On 19 June Nicholas goes to Tim’s Lenders seeking a loan of $75,000 to set up an internet business selling garden furniture. The CEO is out of office for the day and he is directed to speak to Catherine, the manager. Nicholas makes his proposal to Catherine and at the end of their meeting Catherine tells Nicholas to lodge his application with her. Catherine decides to approve Nicholas’s loan without forwarding it to Tim. On 21 June, Nicholas receives a letter signed by Catherine informing him that his ‘loan application with Tim’s Lenders has been approved’ and that ‘the sum of $75,000 will be deposited in his account within the next seven business days’. While awaiting the deposit, Nicholas spends $5,000 developing a website for his new business. However, on 26 June 2020, before the money was paid, Nicholas receives a letter from Tim Baker informing him that Catherine had agreed to the loan without authorisation and that the letter sent on 21 June should be ignored. Tim Baker’s letter further stated that Tim’s Lenders was not prepared to approve the loan for $75,000 because of the risks involved in internet businesses. Nicholas is unhappy with the communication about his $75,000 loan application as well as the $5,000 website investment that he stands to lose if the business does not get financed. Required: Advise Nicholas on his legal position in relation to the loan request made to Tim’s Lenders.
Restrict your analysis to legal principles and cases covered in Agency Law only (do not discuss the sub-topic of ‘Duties of an agent’ which is covered in the Sample IRAC answer).(30 Marks)
Font – Times New Roman, 12 point
Spacing – 1.5 lines Margin
No more than 1000 words (details on ‘word length penalties’)
Referencing – APA referencing (3-4 references,1-2 related case)
Sample Answer Structure: Students are required to use the IRAC legal problem solving format in answering this question.
What is the Issue?
What is the Relevant law?
Apply the law to the facts: