Agatha is appointed by Toytoys Ltd to act as its agent in the purchase of toys, which will be sold through its shops. Agatha is instructed to obtain the consent of the company's board of directors before making any purchase above 10,000. Agatha has undertaken various actions.

i. Christie, a toy manufacturer, contacts Agatha offering to sell a consignment of toys. Christie is in financial difficulties and, therefore, offers the toys for 30,000, which represents a substantial discount on the normal price, but Christie requires an immediate decision. Agatha says, 'I don't really have the authority for such a large transaction, but the board usually backs my opinion on such matters, especially in an emergency like this.' Agatha, therefore, agrees to buy on behalf of Toytoys. The next day, Christie receives a better offer for the toys from another toy retailer. Christie telephones Agatha and says he is withdrawing from the deal. That afternoon, the board of directors of Toytoys decides it wishes to go ahead with the purchase from Christie.

Advice

ii. Agatha is offered toys for 15,000 by Dan. Dan knows Agatha does not have the authority to conclude the deal and so suggests that she seek such authority from the board of directors of Toytoys. The next day, Dan visits Toytoys Ltd and Agatha tells Dan that she has been given the necessary authority in front of the Board of Directors. The deal is concluded. In fact, the board of directors did not approve such power in their meeting but did not say anything to Dan. The board of directors later decides it does not wish to proceed with the purchase from Dan.

Dan wants to sue Toytoys Ltd. Advice Dan