Question

Helena, the purchasing agent for Cassadine Inc., contacts five different suppliers to obtain price quotes for office supplies she needs to order. The price for the identical office supplies ranges from a high of $855 to a low of $500, includ­ing shipping and handling charges. As purchasing agent, Helena has complete autonomy on selecting suppliers and on placing orders up to $5,000; before placing orders in excess of $5,000, she must get signed authorization from the company’s comptroller.

A. If Helena purchases the supplies from the most expensive supplier because she is angry at her employer for turning down her recent request for a raise, what duty of an agent has she breached? What are Cassadine’s remedies?

B. Helena purchases a $20,000 computer system from Alpha Inc., a dealer she has never ordered from, but who knows Helena is the purchasing agent for Cassadine. If Cassadine refuses to accept the system when it arrives, what argument will Alpha make for Cassadine’s liability? What will be Cassadine’s defense?

Answer 1

A. If Helena purchases the supplies from the most expensive supplier because she is angry at her employer for turning down her recent request for a raise, she would be in breach of her duty of loyalty as an agent. Under agency law, agents are required to act in the best interests of the principal, and to make decisions that are not influenced by personal interests or emotions. In this case, Helena's decision to purchase from the most expensive supplier is not in the best interest of Cassadine, as it would result in additional costs, and is influenced by her personal feelings.

Cassadine's remedy would be to seek damages from Helena for any additional costs incurred as a result of her breach of duty. They can also terminate her agency agreement and seek legal action against her.

B. In this case, Alpha Inc. will argue that Cassadine is liable for the purchase as Helena, as the purchasing agent for Cassadine, had the apparent authority to make the purchase. Apparent authority is a legal concept that arises when a principal, through its conduct, causes a third party to reasonably believe that an agent has the authority to act on its behalf. Additionally, Alpha may also argue that Cassadine should have known that Helena had the authority to make the purchase and that the company should have provided clearer guidelines or instructions on how to place orders.

Cassadine's defense would be that Helena exceeded her actual authority as a purchasing agent by purchasing a computer system that exceeded the $5,000 limit without obtaining signed authorization from the comptroller. Additionally, Cassadine could argue that they did not have an established business relationship with Alpha Inc. and that they did not intend to enter into a contract with them, thereby claiming that there was no apparent authority.

"This answer provides an in-depth legal analysis of the situation and cites relevant legal principles such as the duty of loyalty of an agent, the concept of actual and apparent authority, and the principle of contractual liability. It provides a comprehensive understanding of the legal issues at play and would be appropriate for a law student or a legal professional".