Question

Ms. V, a wealthy art collector in Country W, is interested in buying a rare painting from Mr. Y in Country Z. Both parties agree that the price is to be determined by an independent appraiser. V informs Y that she will send her agent, X, with a check to collect the painting. V draws a check payable to Y but leaves the amount blank. She gives the check to X and instructs him to deliver it to Y. Without authority, X fills in the amount for $1 million and presents it to Y, who has, in the meantime, received the appraisal. The appraised price is $750,000. X tells Y that Ms. V had made the check out for $1 million to ensure that it will exceed the appraisal price, and that V has instructed X to return with the painting and the difference in cash. Y gives X the painting and $250,000. X delivers the painting but then disappears with the $250,000 in cash. When V discovers what has happened, she stops payment on her check and offers to pay Y $750,000 for the painting. Y insists that V must pay the check's full face value of $1 million. Is Y correct? Why or why not?

Answer 1

Ms. V wants to buy a painting and so she delegated that to X. Now agent X buys the painting and issued a cheque of $1 million to Y when the painting is valued at $750000. So it has been agreed that as the issued cheque is in excess of the valued amount so Y will return the excess amount in cash.
However, X has disappeared with cash but delivered the painting and so V has stopped the payment of her cheque. Now V has offered to pay $750000 in cash but Y is insisting on $1 million amount.

In this situation, Y is correct to demand payment of $1 million because he has already fulfilled his part of the business. Y has handed over the painting to agent X and also returned the excess amount of cheque in cash to X. Now X is designated as agent or representative by V and so that legally V is responsible to receive the painting as well as cash.
It should be also noted that as the painting is valued at $750000 and Y has already paid $250000 in return so if Y has been paid $750000 then it means Y is getting the amount of $500000 for the painting. This is not fair to Y and he is within his rights to demand face value of cheque and that is $1 million.