Question
An agent's services are obtained by a principal to make specific purchases of materials and equipment not to exceed $10,000. Purchases are made by the
An agent's services are obtained by a principal to make specific purchases of materials and equipment not to exceed $10,000. Purchases are made by the agent on a weekly basis over a period of several years from one supplier. The principal regularly pays the supplier for the purchases made. Then one day the principal tells the agent to make no purchases during a given month because of some cash flow problems. The principal does not pass this information on to the supplier. During that month, the agent finds some good buys on equipment and purchases the equipment from the supplier anyway on the principal's account for $6,000. When making the purchases, the agent did not advise the supplier of the principal's instructions for the month. The principal receives the equipment and uses it for the work on its projects.
Must the principal pay the supplier for the purchases? What could the agent use in his defense to establish that he should not reimburse the principal for the purchases? And what could be the principal's argument?
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