Question

After running a small business from her home for a few years, quite successfully, Pilar took on a college student to help out as a part-time employee. She taught the student, Aru Shah, how to wrap up the firm’s products and ship them to the firm’s mail-order customers, plus several other more or less clerical tasks, which Aru Shah did entirely from the make-shift office Pilar had set up in her basement. Turns out Aru Shah found sitting down there by herself pretty boring, and so she took it on herself to make some improvements in the business—and after her initial shock, Pilar found both of them actually quite desirable. Her biggest step was signing a lease on Pilar’s behalf for warehouse space in which to move the business, with rent payable monthly. Secretly, a fact Pilar had shared with no one was that she’d actually been planning to take just this step, and after her initial surprise and anger at Aru Shah wore off, she realized that Aru Shah had actually found an ideal location at a good price. Thing is, though, the first Pilar heard of it was a month after Aru Shah did the deal, when the bill for the first month’s rent showed up. Anyway, after chewing out Aru Shah, she calmed down and said, “Ugh. Okay, it’s time to bite the bullet and take this risk.” Aru Shah’s other big step was to secure a used photocopy machine for the office, which she knew to be a steal at the offering price of $2000. Turns out, before Aru Shah could tell Pilar what she’d done, the seller called Aru Shah and said there’d been a mistake. He would not sell the machine for less than $3,000. a.) What costs is Aru Shah liable and responsible for? b.) What authority did Pilar have to enter into contracts? c.) As an attorney or consultant how would you recommend Pilar do against Aru Shah? And vice versa.

Answer 1

Answer 1- Aru shah is liable for the cost of photocopy machine which was presumed to be $2000 but is now $3000. She is also liable for the cost of warehouse.

Answert 2- The authority that Pilar had is known as power of attorney. It means the authority to act on the behalf of someone else on legal or financial decisions.

Answer 3- As an attorney I would recommend Pilar to sue Aru shah in court for misusing her powers and Aru shah should defend herself by claiming that she took the decisions as she was granted power of authority.