Case Scenario

A company sells household appliances. Most of the company's customers are developers of apartment buildings. The company's sales rep is Alastair Du. He is authorized to make contracts with buyers, as long as the value of the contract does not exceed $100,000. The sales rep ignored the restriction and concluded a contract to sell 50 sets of washers and dryers to a BES developer at a price of $500,000. BEs placed an order on the company's application form. which stated that the contracts over $100,000 requires written approval to the company's vice president of sale, and Alastair on behalf of the company accepted the order. The company delivered the 50 sets of washer and dryers and received payment from BES. BES complained that the machines vibrate to much and over heated. The machines caused damage to the apartments they were installed in. The company claimed to be protected from any liability for the faulty machines because Alastair has no authority to bind the company to this contract.

Does the company's argument constitute a valid legal defence to a claim against RCD by BES? Explain.

This Relates to:

• Compare strategies used to manage risks in an organization's business activities.
• Synthesize substantive laws that may impact businesses
• Explain the relevance of internal controls in a business that could mitigate business and legal risks and promote compliance with laws.