Business Law

RCD Ltd. sells household appliances, including washers, dryers, dishwashers, stoves, and refrigerators. Most of RCDs customers are developers of apartment buildings and condominium complexes. RCDs 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 RCDs application form, which states that contracts over $100 000 require written approval of RCDs vice president of sales, and Alastair on behalf of RCD accepted the order. RCD 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. RCD claimed to be protected from any liability for the faulty machines because Alastair had no authority to bind RCD to this contract. Does RCDs argument constitute a valid legal defence to a claim against RCD by BES? Explain.

This assignment relates to the following Course Learning Requirements:

1: Compare strategies used to manage risks in an organization's business activities

2: Synthesize substantive laws that may impact businesses

3: Explain the relevance of internal controls in a business that could mitigate business and legal risks and promote compliance with laws