Kerry has a clothing store which she has operated for the past 10 years. She has employed Meg as her assistant and she has been working at the store for the past 5 years.Meg is responsible for opening and closing the shop and dealing with the customers and she also orders stock for the shop.The customers are always dealing with Meg as Kerry is constantly travelling over seas buying goods. She has given most of the faithful customers the pieces of clothing on credit with the consent of Kerry.Before Kerry left for her last trip she informed Meg, not to sell and items on credit as the recession was hitting her pocket real hard.Michelle, a regular customer who has previously purchased clothing on credit went to the store and purchased three blouses, two pairs of shoes and one pair of pants valued at$50,000.00 in total. She was given the items by Meg on credit and told that she had three months to pay.Another customer Lori, asked Meg for a personal favour to write a letter to the embassy that she worked there. Meg used one of Kerry's letterhead for the store on which she wrote the letter and signed as the Manager.When Kerry returns, Meg informed her that she sold Michelle the clothing and when asked for the cash by Kerry she informed her that this was on credit terms. Kerry calls Michelle and asks her to pay for the goods immediately or return them as goods on credit"not here anymore". Michelle refuses to return same.Kerry also found on the floor in the closet of the shop a spoilt copy of the letter that Meg had given to Lori to take to the embassy.

4. Using the facts stated in above, advise Kerry what to do when she discovered that

a) Meg has been selling the goods above the agreed price and has taken the difference every night for the past three years;

b) Although she had expressly stated to Meg that she could order stock from certain dealers she had told the dealers not to sell her any item which costsover $15,000.00. Meg bought a handbag for $20,000.00 and the dealer "Bag we have" is now requesting payment from Kerry.

5. Explain with the aid of cases how an agency is created by operation of law