RCD Ltd. sells household appliances, including washers, dryers, dishwashers, stoves, and refrigerators. Most of RCD’s customers are developers of apartment buildings and condominium complexes. RCD’s sales representative is Alastair Du. He is authorized to make contracts with buyers, provided the value of each contract does not exceed $100 000. Alastair ignored the restriction on his authority and concluded a contract to sell 50 sets of washers and dryers to BES Developers at a price of $500 000. BES placed its order on RCD’s application form, which states that contracts over $100 000 require written approval of RCD’s vice president of sales, and Alastair on behalf of RCD accepted the order. RCD delivered the 50 sets of washer and dryers, and received payment from BES. Within a month of delivery of the washers and dryers, BES complained that the washers vibrate excessively and the dryers overheat, and they have caused damage to the apartments in which they were installed. RCD claimed to be protected from any liability for the faulty machines because Alastair had no authority to bind RCD to this contract. Does RCD’s argument constitute a valid legal defence to a claim against RCD by BES? Explain.
Before starting discussion on this case, I would like to inform you that there might be different answers as the evidences related to this case may have different interpretation.
Firstly, Alastair Du made a contract against the policy of RCD Ltd. which sounds like more of a internal matter of RCD Ltd. So any contravention to policies is an internal matter and any outsiders does not have knowledge about such policies.
The products supplied by RCD Ltd. to BES is a different act altogether as it is now an contract of service with a external party. As these products were not working properly, this amount to deficiency in products and services where RCD shall be held liable.
In first case, an action can be taken against Alastair Du by RCD. But in the second case, a legal enforceable action can be taken by BES against RCD.
RCD Ltd. sells household appliances, including washers, dryers, dishwashers, stoves, and refrigerators. Most of RCD’s customers...
RCD Ltd. sells household appliances, including washers, dryers, dishwashers, stoves, and refrigerators. Most of RCD’s customers are developers of apartment buildings and condominium complexes. RCD’s sales representative is Alastair Du. He is authorized to make contracts with buyers, provided the value of each contract does not exceed $100 000. Alastair ignored the restriction on his authority and concluded a contract to sell 50 sets of washers and dryers to BES Developers at a price of $500 000. BES placed its...
RCD Ltd. sells household appliances, including washers, dryers, dishwashers, stoves, and refrigerators. Most of RCD’s customers are developers of apartment buildings and condominium complexes. RCD’s sales representative is Alastair Du. He is authorized to make contracts with buyers, provided the value of each contract does not exceed $100 000. Alastair ignored the restriction on his authority and concluded a contract to sell 50 sets of washers and dryers to BES Developers at a price of $500 000. BES placed its...