Question

Carlos instructs his sales agent, Edgar, not to sell on credit to Andrew because Carlos has experienced problems collecting from Andrew for prior purchases. Edgar sells on credit to Andrew, who pays properly. Has Edgar violated any obligation to Carlos?

1) No, Edgar has not violated any obligation since Andrew paid properly.
2) Yes, Edgar has violated the duty to exercise reasonable judgment.
3) Yes, Edgar has violated the duty to obey all instructions of the principal.

Answer 1

Option 1. Edgar has breached his obligation to Carlos by selling on credit to Andrew, despite the instruction not to do so. This is classified as a violation of the duty to obey the principal's instructions, regardless of Andrew's eventual proper payment.

Step-by-step explanation:

In the scenario where Carlos instructs Edgar not to sell on credit to Andrew and Edgar disregards this instruction, it creates a situation of potential breach of duty. Although Andrew paid properly this time, Edgar's action can still be seen as a violation of his obligation to Carlos. The relevant duty at hand is the duty to obey all instructions given by the principal (Carlos, in this case). This duty is fundamental in an agency relationship, where the agent (Edgar) is expected to follow the lawful instructions of their principal.

Comparatively, consider the example where you may have conflicting duties: a promise to meet a friend and the immediate need to help a coworker in distress. Judgement comes into play in prioritizing duties, and while helping your coworker would be the right action, it does not dilute the fact that the original promise, now unmet, was indeed something you were obliged to do. Similarly, for Edgar, even though the outcome was positive, the act of selling on credit was contrary to Carlos's explicit instructions and therefore constitutes a violation of the duty to obey.