Question:
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. RDC’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 RDC’s application form, which states that contracts over $100 000 require written approval of RDC’s vice president of sales, and Alastair on behalf of RCD accepted the order. RDC 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. RDC claimed to be protected from any liability for the faulty machines because Alastair had no authority to bind RDC to this contract. Does RDC’s argument constitute a valid legal defence to a claim against RDC by BES? Explain.