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3 ID Limited (ID) has recently been incorporated as a private limited company and carries on...

3 ID Limited (ID) has recently been incorporated as a private limited company and carries on fashion business. Donald is very experienced in this field and is employed by ID as an agent to purchase fashion clothes. Recently Donald has signed a contract with E Bop Limited (E Bop) for purchase of jewelry which has not been previously authorized by the company.
Advise the legal position of ID, in particular the rights and liabilities it may have under the contract with E Bop.
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Expert Solution

Principal is liable for the actions of his agent under actual authority as well as under implied ie apparent authority.

In the given case Donald was appointed by ID Ltd. Meaning, he is contractually an agent for purchasing fashion clothes. This is a the expressed or actual authority. However Donald entered into contract with Ebop for supplying jewellery and not garments. Hence Ebop being a third party believed Donald as an agent was authorized to procure the same and understandably can sue ID Ltd who is responsible for Donald's actions for breach of contract, had they refused to accept the order made for the said jewellery.

Donald on the other hand may defend his actions on grounds of apprentice authority.

Considering all the ground facts, since it clearly mentions in the question that the purchase of jewelry wasn't previously authorized, the contract is not legally binding in the hands of ID Ltd. Thus there is no apparent authority on Donald to procure any jewellery. Hence the contract is void. Moreover ID Lts has the the right to sue Donald for breach of duty.

ekkarill92 answered 1 year ago
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