Explain whether, in the following situations, the company is acting as a principal or an agent. LO6 Company A negotiates with major airlines to purchase tickets at reduced rates compared with the price of tickets sold directly by the airlines to the public. The company agrees to buy a specific number of tickets and must pay for those tickets regardless of whether it is able to resell them. The reduced rate paid by the company for each ticket purchased is negotiated and agreed in advance.

Company A determines the prices at which the airline tickets will be sold to its customers. It sells the tickets and collects the consideration from customers when the tickets are purchased.

The company also assists the customers in resolving complaints with the service provided by airlines. However, each airline is responsible for fulfilling obligations associated with the ticket, including remedies to a customer for dissatisfaction with the service.

Company B sells vouchers that entitle customers to future meals at specified restaurants. These vouchers are sold by the company and the sales price of the voucher provides the customer with a significant discount when compared with the normal selling prices of the meals (for example, a customer pays £50 for a voucher that entitles the customer to a meal at a restaurant that would otherwise cost £100).

Company B does not purchase vouchers in advance; instead, it purchases vouchers only as they are requested by the customers. It sells the vouchers through its website and the vouchers are non-refundable.

Company B and the restaurants jointly determine the prices at which the vouchers will be sold to customers. Company B is entitled to 30% of the voucher price when it sells the voucher.

Company B also assists the customers in resolving complaints about the meals and has a buyer satisfaction programme. However, the restaurant is responsible for fulfilling obligations associated with the voucher, including remedies to a customer for dissatisfaction with the service.