Build-It Construction Company contracts with Classic Beverage Corporation to bui

Question

Build-It Construction Company contracts with Classic Beverage Corporation to build Classic Beverage’s corporate headquarters. Build-It Construction contracts with Dependable Tools & Materials Inc. for construction supplies but refuses to pick up the order. Meanwhile, Classic Beverage hires Elmo, a certified public accountant, to work in its cost-accounting division as an employee, with no authority to hire or supervise others. Elmo asks Fayette, an outside experienced accountant, to advise him on certain accounting procedures but fails to pay Fayette for the service. Classic Beverage also contracts with Gloria, a salesperson, to solicit orders for its products in a designated territory. Gloria obtains an order from Highpoint Concessions, Inc., which is assured the order will be filled soon. But Gloria does not follow through with the paperwork and fails to submit the order to Classic Beverage. Highpoint Concessions suffers a loss. Dependable Tools, Fayette, and Highpoint Concessions claim Classic Beverage is liable under agency law. Discuss fully whether an agency relationship was created by Classic Beverage with Build-It Construction, Elmo, or Gloria.

Explanation / Answer

Classic Beverages is not liable under agency law to indemnify, Dependable tools, Fayette, or Highpoint concessoins. Classic Beverages has hired only Elmo to work for them. Elmo is getting paid for that. Fayette is only contracted with Elmo. Classic beverages has got nothing to do with Fayette.

It is only Built it Constructions that makes contract with Dependable tools and not Classic beverages. So Classic Beverages has nothing to do with Dependable tools. Built it Constructions has also not acted on behalf of Classic beverages.

Gloria has been asked to solicit order or classic beverages. Gloria has not completed the order for Highpoint concessions to be solicited to Classic beverages. Hence Classic beverages not liable to Highpoint concessions also.

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