- 20 Marks
Question
Eddie is the manager of A-LIFE shopping mall owned by Bertha. In January he is told by Bertha not to buy biscuit from a new company called Crunch Ltd, because she has heard that their products are of poor quality.
On 18th February, Christa, a representative of Crunch Ltd, visits the A-LIFE shopping mall, and as a result, Eddie orders 10,000 cedis worth of biscuits. Christa is unaware of Bertha’s instructions.
When later in the day Bertha discovers what Eddie has done, they have arguments, and Eddie resigns. The following day Eddie goes to Drinkit Ltd, Bertha’s regular supplier of wine and spirit, and purchases 10 cases of whisky on credit in Bertha’s name. He then absconds with the whisky.
Bertha comes to seek your advice as to her liability to:
a. Crunch Ltd; (10 marks)
b. Drinkit Ltd. (10 marks)
(Total=20 marks)
Answer
a. Liability to Crunch Ltd:
i) The relationship between Eddie and Bertha is an Agency Relationship. (3 Marks)
ii) Eddie has authority to buy goods for the shop as his normal course of duty. (2 Marks)
iii) The instruction to Eddie not to buy from Crunch Ltd is not known to Crunch. (2 Marks)
iv) Therefore, Bertha is liable for the payment of the goods to Crunch Ltd. (3 Marks)
b. Liability to Drinkit Ltd:
i) The relationship between Eddie and Bertha is an Agency Relationship. (2 Marks)
ii) Eddie has authority to buy goods for the shop as his normal course of duty. (2 Marks)
iii) Being a regular supplier, Drinkit knows Eddie as the Manager of the shop. (2 Marks)
iv) The fact of Eddie’s resignation is not known to Drinkit or they were unaware. (2 Marks)
v) Bertha is therefore liable for the cost of the whisky. (2 Marks)
- Tags: Agency Law, Contractual Liability, Principal-Agent Relationship
- Level: Level 1
- Uploader: Dotse