Question

Areva was the agent in charge of distribution and collections for The Cheese Store. Joe operated a grocery store and purchased cheese from The Cheese Store. Areva made false invoice sheets, showing delivery to Joe of greater quantities than Joe actually had ordered or received. Areva collected from Joe on the basis of these increased amounts, and then the overcharged amount herself. When Joe figured out what was happening, he sued The Cheese Store for the excess payments he had made. The Cheese Store claimed that Areva was not its agent relative to her criminal behavior. Why would Joe want to sue The Cheese Store instead of Areva? Can Joe sue The Cheese Store without suing Areva?

Answer 1

Solution –

This is a case of agent – principal – third party. Here the agent is Areva, the principal is The Cheese Store and the third party is Joe. Now for the legal liability the agent cannot be generally held liable till the agent does not go in for a contract under its own authority by falsifying the name of the principal. Now in this case Joe is right in suing the principal (The Cheese Store) but now the onus is on the principal now to prove that the agent Areva was disowned or relieved from the duties by the principal before indulging in the fraud transaction. So Joe would want to sue The Cheese Store because in his knowledge Areva acted on behalf of the principal and hence the principal is liable. Joe is legally empowered to sue the principal without suing the agent.