Please read the following hypothetical situation and answer the questions. The i

Question

Please read the following hypothetical situation and answer the questions. The instructor will post the correct response at the end of the course week Brenda is a purchasing agent for Commodities Exchange Corporation. Dennis, a Commodities corporate officer, gives Brenda written authority to buy for the firm as many computers and peripheral devices as necessary. The next day, Dennis calls Brenda and tells her to buy only fifty notebook computers and nothing else. Brenda shows the written authority to E-Products, Inc., and enters into a contract with E-Products to buy sixty notebook computers and a selection of printers, scanners, and extra storage media. E-Products ships the order to Commodities. Is Commodities liable to E-Products under the contract? Is Brenda liable? In each case, if so, why? If not, why not?

Explanation / Answer

In the given case, Commodities is liable to the E-Products, but Brenda is not liable to the E-Products.

Commodities is liable to E-Products on the basis of agency relationship and respondent Superior doctrine where the agent Brenda had the written authority to act on behalf of the company Commodities and that authority is provided to the E-Products. The company E-Products acted on the basis of this written authority as the company has no reason to cross verify the authority issued to Brenda and Commodities has also not intimated E-products to rescind the written authority. Hence, the company acted as per the terms of the written authority, and supplied the goods.
Here, Brenda can be held liable to the Commodities as she was directed to only buy the 50 notebook computers. But, Brenda breached the good faith and misused the written authority to buy the goods from E-Products.

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