Drew and Bev are employed by Kirk as his sales assistant in his business of selling building and decorating supplies and related products hence they are his agent. An agent is a person employed expressly to do any act for another or to represent another in dealing with a third party.The work of an agent is to linking the principal with a third party bringing about a contractual relation between his principal and a third party. (Saleemi, 1992)Eileen runs a large office went to Kirk firm to make a big order of 1000 potted plants. He was served by Drew, one of the sales assistant in Kirk firm. Drew informed her that the price for the potted plant was 20 per plant. Just to be sure about it, Eileen requested to confirm about the price from Kirk, his boss. Kirk told Eileen that he had authority to make such an agreement on his own but he would confirm about this particular order with his boss.Drew went to the back of the office out of Eileen's sight and returned saying he had confirmed the deal with his boss. Drew did not confirm about this order with Kirk since he was on phone but Eileen believed him.Kirk is liable for the contract entered by Drew and he should not escape the contract. Drew as Kirk's sales assistant is presumed that there is creation of agency between them by express agreement. Hence Drew possesses a contractual capacity to make a contract with a third party on behalf of his principal which is binding. Eileen believed that even though Drew had no capacity to make sales agreement for big order, he confirmed about the sale when he visited their premises and Drew confirmed this from Kirk at the back of the shop out of her sight.
This case would also be ostensible authority where an employee who has been placed in a position of responsibility mat be assumed to have such authority as normally matches with the position, irrespective of what is his actual authority. For this case, entered into contract with Drew believing that he had proper authority of his employer. So, the employer is liable for the contract.
A similar case studied is that of:
Watteu v Fenwic, 1893
In this case, a manager of a public house was expressly instructed by
his employer to order all hotel requirements through him. In
breach of these instructions, the manager ordered some cigars and
other goods from the plaintiff. It was held that the owner of the
public house was bound by the manager's act because it matches
his position. (Emanuel, 2004)
Advice to Kirk
Kirk might not be liable for the contract if Drew as an agent acted on the contract by exceeding his authority. If for example there is an agreement during creation of agency that the agents have only authority to make sales agreements not exceeding a certain quantity, then Kirk might not be liable.
Advice to Drew
Drew might be liable for the contract if he exceeded his authority while making that contract. A breach of implied warranty of authority arises when a person exceeds his authority. In this case the principal is not under no liability on the contract and the agent becomes personally liable for the breach of implied warranty of authority to the third party. It is immaterial for this purpose that Drew (agent) believed himself to have such authority.
Wendy was a manufacturer of table saw and she approached Bev to make an offer to sell table saws for 400 per table saw provided he picked them up from her factory. Bev agreed to Wendy's offer even though he had authority to sell but not to purchase. Ten days after the