Oliver is the owner of a pet hotel, which is a place where pet owners can leave their pets when they travel overseas. Due to the growing business of the pet hotel, Oliver hired an assistant who is trained in pet care, Andrew, to help him with the administration of the pet hotel, including the negotiation and entering of deals with prospective customers. This was expressly stated in Andrew's appointment letter, which was issued by Oliver to Andrew.

One day, Oliver had to travel overseas to attend to some personal matters. He left the pet hotel in the care of Andrew, with explicit instructions that Andrew must receive payment upfront from customers before accepting the admission of their pets. Two notable incidents happened while Oliver was away, as described below.

(I) Sponsorship deal with Purr Cat Foods ("PCF")

PCF is a manufacturer of premium cat food. While Oliver was away, a representative from PCF visited the pet hotel, and spoke to Andrew regarding a potential sponsorship deal, under which PCF would provide heavily discounted products to the pet hotel. Andrew thought that this was a good business opportunity. Therefore, after he explained to PCF's representative that Oliver is the actual owner of the pet hotel but was away at that time, Andrew said that he would be happy to accept the deal on behalf of Oliver. When Oliver came back from his trip a few days later, Andrew informed him of the sponsorship deal with PCF. Oliver agreed that it was a good deal and said that he will ratify it.

(II) Dealing with the customer called Caleb

While Oliver was away, Caleb brought his cat to the pet hotel, intending to leave his cat there while he went on an overseas work trip. As Caleb was rushing to catch a flight at the airport, he did not have time to complete the paperwork at the pet hotel, and instead told Andrew (whom Caleb thought was the owner of the pet hotel) that Caleb will settle all the paperwork (including making payment) a day later when Caleb has reached his destination. Caleb further mentioned that he would send Andrew a text message to set out his requirements relating to the care of his cat. Andrew agreed to these arrangements.

A day later, Caleb managed to contact Andrew (over the phone), and Caleb wanted to make payment via online means. As Andrew knew that Oliver did not have an online banking account, Andrew told Caleb to make an online transfer of the payment to Andrew's personal account. However, Andrew did not subsequently transfer the money back into Oliver's account.

After Caleb returned from his work trip, he discovered that Andrew had failed to take care of his cat in accordance with his requirements, as Andrew was too busy and had asked a friend (who was unaware of Caleb's requirements) to come in and help out with the care of Caleb's cat. After Caleb found out that Oliver is the actual owner of the pet hotel, Caleb wanted to take legal action against Oliver (instead of Andrew).

(a) Describe and explain how the agency relationship between Oliver and Andrew could have arisen based on actual authority and ratification. Support your answer with specific examples based on the above scenario. (17 m)

(b) Discuss the doctrine of the undisclosed principal, and explain whether it applies (in the scenario involving Caleb) such that Caleb can take legal action against Oliver (instead of Andrew). (8 m)

(c) Outline thefive (5)duties of an agent (which are owed to the principal), and analyse whether Andrew has breached these duties (in his agency relationship with Oliver) based on his interactions and dealings with Caleb in the given scenario. (20 m)