Brenda is the Director of Purchasing for Commodities Exchange Corporation. She m
ID: 337681 • Letter: B
Question
Brenda is the Director of Purchasing for Commodities Exchange Corporation. She manages the Purchasing Department for the company. The Purchasing Department consists of Brenda as the Director, Susan, the Administrative Assistant for the department, and Sam Fields and Jerry Brown who work as Purchasing Agents for the company. All of the people in the Purchasing Department are under Brenda's direct supervision. Brenda reports to George Brown, the Chief Financial Officer and a Vice President of the Company. George Brown calls Brenda into his office and tells her that the Company has decided to expand its internal audit function and that Brenda's department is to purchase a sufficient number of desks, chairs, computers and peripheral devices for use by the staff of the new internal audit department. He reminds Brenda that she is to make the purchases in accordance with the Company's existing purchasing department guidelines and procedures and that she is not authorized to spend more than $20,000 on the project. Brenda returns to her office and calls Mike Lee, the Company Comptroller. The new internal audit function will report to Mr. Lee. During her conversation with Mr. Lee, she ascertains how many people will staff the department and she and Mr. Lee agree on the number of desks, chairs, computers and peripheral devices that will be needed for the staff in the new internal audit department. Brenda calls Susan, Sam and Jerry into her office and informs them of the new project and its requirements. She assigns the purchasing of the desks and chairs to Sam and she assigns the purchasing of the computers and peripheral devices to Jerry. She tells them if they have any questions about the types of furniture, computers or peripheral devices they are to purchase they are to contact Mike Lee. She tells them they are not authorized to spend more than $20,000 on the project. Sam has an existing relationship Jane Dolan, a sales person with Superior Office Furniture. In the past he has purchased office furniture on behalf of Commodities from Superior, dealing exclusively through Jane. He supplies Jane with a list of the items he needs to purchase and Jane sends him an e-mail which contains a specific description of each item and the price for each item. Sam issues a purchase order to Superior for the purchase of each of the items listed in Jane's e-mail at the stated price. The total purchase price for the items listed on the purchase order is $11, 500. Sam and Jane have been involved in a clandestine sexual relationship. Jane creates a special discount for Commodities and instead of remitting the discount monies to Commodities, Sam allows Jane to keep the amount of the discount, in this case $1,500, as payment for her sexual favors. Jerry contacts Acme Computer Supply to purchase the necessary computer equipment and peripheral devices. Jerry deals with an Acme sales person named Harold Springer. Harold tells Jerry he is in luck because Acme is having a sale and he can sell Commodities the desired equipment for $9,500.00. However, the catch is Commodities must take delivery of the equipment before closing time that day. Jerry and Harold work out a deal where Harold will allow Jerry to take the equipment that day and Jerry will issue a purchase order and process the payment for the equipment before the end of the week. Jerry drives his personal vehicle to Superior's offices and he and Harold load the equipment into Jerry's car. Jerry offers to take Harold to lunch before he returns to Commodities. They go to a nearby Buffalo Wild Wings where they have a couple of plates of wings and two beers each while watching sports on television. After an hour, Jerry returns Harold to Superior and starts to drive back to his office at Commodities with the equipment still in his car. On his way back to his office, he realizes that he has been gone an extended period of time and he begins to rush through traffic in order to expedite his return. He tries to squeeze through an intersection after the traffic signal in his direction has turned red. He strikes a car driven by Alice White. As a result of the traffic accident, Alice's car is severely damaged and Alice is also injured. As a result of the accident, the computer equipment Jerry was transporting in his car is destroyed. When Brenda learns of these events she becomes curious. Through a third party at Superior, she learns of the liaison between Sam and Jane and how they have been handling the discount that Commodities is to receive for the purchase of the furniture. She also learns of Jerry accident and the injuries to Alice and the damage to her vehicle. She also learns that the computer equipment Jerry has purchased has been destroyed. Brenda takes steps to cancel the purchase of the office equipment from Superior and she refuses to pay for the computer equipment that Jerry has taken from Acme. Brenda is also contacted by a lawyer representing Alice White who is demanding payment for the damage to Alice's car and the payment of her medical bills and lost wages arising out of the accident. Identify which persons are acting as a principal and an agent and for whom. Commodities is refusing to pay Superior and Acme for any of the items involved in the two transactions. Discuss whether or not Commodities is liable to either Superior or Acme for the equipment in question. Discuss whether you believe Commodities will be liable to Alice White for the damage to her car and her injuries. Also discuss whether or not Sam or Jerry has violated any duties that they may owe to their employer.
Explanation / Answer
Brenda is the Director of Purchasing for Commodities Exchange Corporation. She manages the Purchasing Department for the company. The Purchasing Department consists of Brenda as the Director, Susan, the Administrative Assistant for the department, and Sam Fields and Jerry Brown who work as Purchasing Agents for the company. All of the people in the Purchasing Department are under Brenda's direct supervision. Brenda reports to George Brown, the Chief Financial Officer and a Vice President of the Company. George Brown calls Brenda into his office and tells her that the Company has decided to expand its internal audit function and that Brenda's department is to purchase a sufficient number of desks, chairs, computers and peripheral devices for use by the staff of the new internal audit department. He reminds Brenda that she is to make the purchases in accordance with the Company's existing purchasing department guidelines and procedures and that she is not authorized to spend more than $20,000 on the project. Brenda returns to her office and calls Mike Lee, the Company Comptroller. The new internal audit function will report to Mr. Lee. During her conversation with Mr. Lee, she ascertains how many people will staff the department and she and Mr. Lee agree on the number of desks, chairs, computers and peripheral devices that will be needed for the staff in the new internal audit department. Brenda calls Susan, Sam and Jerry into her office and informs them of the new project and its requirements. She assigns the purchasing of the desks and chairs to Sam and she assigns the purchasing of the computers and peripheral devices to Jerry. She tells them if they have any questions about the types of furniture, computers or peripheral devices they are to purchase they are to contact Mike Lee. She tells them they are not authorized to spend more than $20,000 on the project. Sam has an existing relationship Jane Dolan, a sales person with Superior Office Furniture. In the past he has purchased office furniture on behalf of Commodities from Superior, dealing exclusively through Jane. He supplies Jane with a list of the items he needs to purchase and Jane sends him an e-mail which contains a specific description of each item and the price for each item. Sam issues a purchase order to Superior for the purchase of each of the items listed in Jane's e-mail at the stated price. The total purchase price for the items listed on the purchase order is $11, 500. Sam and Jane have been involved in a clandestine sexual relationship. Jane creates a special discount for Commodities and instead of remitting the discount monies to Commodities, Sam allows Jane to keep the amount of the discount, in this case $1,500, as payment for her sexual favors. Jerry contacts Acme Computer Supply to purchase the necessary computer equipment and peripheral devices. Jerry deals with an Acme sales person named Harold Springer. Harold tells Jerry he is in luck because Acme is having a sale and he can sell Commodities the desired equipment for $9,500.00. However, the catch is Commodities must take delivery of the equipment before closing time that day. Jerry and Harold work out a deal where Harold will allow Jerry to take the equipment that day and Jerry will issue a purchase order and process the payment for the equipment before the end of the week. Jerry drives his personal vehicle to Superior's offices and he and Harold load the equipment into Jerry's car. Jerry offers to take Harold to lunch before he returns to Commodities. They go to a nearby Buffalo Wild Wings where they have a couple of plates of wings and two beers each while watching sports on television. After an hour, Jerry returns Harold to Superior and starts to drive back to his office at Commodities with the equipment still in his car. On his way back to his office, he realizes that he has been gone an extended period of time and he begins to rush through traffic in order to expedite his return. He tries to squeeze through an intersection after the traffic signal in his direction has turned red. He strikes a car driven by Alice White. As a result of the traffic accident, Alice's car is severely damaged and Alice is also injured. As a result of the accident, the computer equipment Jerry was transporting in his car is destroyed. When Brenda learns of these events she becomes curious. Through a third party at Superior, she learns of the liaison between Sam and Jane and how they have been handling the discount that Commodities is to receive for the purchase of the furniture. She also learns of Jerry accident and the injuries to Alice and the damage to her vehicle. She also learns that the computer equipment Jerry has purchased has been destroyed. Brenda takes steps to cancel the purchase of the office equipment from Superior and she refuses to pay for the computer equipment that Jerry has taken from Acme. Brenda is also contacted by a lawyer representing Alice White who is demanding payment for the damage to Alice's car and the payment of her medical bills and lost wages arising out of the accident. Identify which persons are acting as a principal and an agent and for whom. Commodities is refusing to pay Superior and Acme for any of the items involved in the two transactions. Discuss whether or not Commodities is liable to either Superior or Acme for the equipment in question. Discuss whether you believe Commodities will be liable to Alice White for the damage to her car and her injuries. Also discuss whether or not Sam or Jerry has violated any duties that they may owe to their employer.
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