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Swimming Pool Co Pty Ltd

Swimming Pool Co Pty Ltd


Swimmingpool Co Pty Ltd employs Martin as the manager of their Tasmanian sales division. Martin is to
quote to potential customers the cost of installing the various pools that the company offers, to draw up
any new contracts on behalf of the company and further to ensure that a deposit is paid by potential
customers, monies which are then deposited in the company�s bank account. Martin is on a fixed salary
but his contract of employment allows for the payment of a bonus if he exceeds his annual target of
signing new customers.
The company is very impressed with Martin in the first month of his employment; he has signed at least
20 new customers and work has begun on at least half of the new projects signed.
After the lapse of another month the company receives a number of complaints from customers who
claim that the construction of their swimming pool is substantially different to what they had contracted
for. A number of customers were given wrong advice on the suitability of the placement of their new
swimming pool, which means some newly constructed pools are sinking into the ground, the repair of
which will cost the company considerably. It appears also that some of the deposits have not been paid
into the company�s bank. Martin appears to have kept part of the money collected. The company also
discovers that Martin is in the process of setting up his own business which will compete with Swimming
pool Co.
In considering the facts above make some legal observations on the following:

  1. Is Swimming pool Co liable for Martin�s actions? On what basis in law would this be the case?
  2. Can the company claim they are not liable for Martin because he has not followed instructions?
  3. Is Martin liable to his employer for any of his actions? On what basis in law would he be liable?
  4. Has Martin breached any law if he is planning to set up his business? Explain.
    Swimming Pool Co Pty Ltd is liable for Martin’s actions because Martin is employed
    by the company to work an agent of the company and, therefore, the company is bound by the
    contract entered into by the agent. However, if Martin were acting without the necessary
    authority from Swimming Pool Co Pty Ltd, then he would have been held liable. It is important
    to note that, an agent is not liable to third parties if he/she has an actual or apparent authority to
    act on behalf of the principal (Miller, 2012). This case will be handled under the law of agency.
    However, under the law of agency, the company can claim that they are not liable for
    Martin actions. An agent has a duty to undertake tasks as specified by the terms of agency and


with care and due diligence (Mann, & Roberts, 2013) . Martin did not undertake his duties as
specified by the company and thus, can be held liable for his actions.
Consequently, Martin is liable to his employer for giving the wrong advice on the
suitability of the placement of swimming pools and also for keeping part of the deposit
collected from the client. He would be liable for his action on the basis that he did not act
within the scope of the authority conferred upon him by Swimming Pool Co Pty Ltd.
However, Martin has not breached any law for planning to start his own business that is
similar to that of his employer. Martin has a right to start his own business even if it is similar
to his employer. This is because he did not enter into any non-competition agreement when
entering into a contract with Swimming Pool Co Pty Ltd barring him from setting up a similar
business with that of Swimming Pool Co Pty Ltd. An employer has a right to protect
confidential information and their good relationship with their clients (Mann & Roberts, 2013).
However, former employees according to law have a right to earn a living. As such, former
employees are free to start any business they want.

Miller, R. (2012). Business Law Today, Standard: Text & Summarized Cases. Cengage
Mann, R., & Roberts, B. (2013). Business law and the regulation of business. Cengage

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