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Natural Products Co Ltd (NPL) owns and operates a business of manufacturing wooden components for residential building. Jim Alexander, chief executive of Residential Construction Co

Natural Products Co Ltd (NPL) owns and operates a business of manufacturing wooden components for residential building. Jim Alexander, chief executive of Residential Construction Co Ltd (RCL), rang NPL to purchase wooden products to construct wooden fences in a large residential development. Miriam Faithful, personal assistant to the chief executive of NPL, answered the phone. She realised Jims call related to sales, and she asked Jim to talk to Gary Robinson, a sales representative at NPL. Gary Robinson had in fact been appointed to another position in the company, and no longer worked in sales. When Gary received the call from Jim, he told Jim he no longer worked in sales. Jim responded he had already spoken to someone in management, and they had instructed him to deal with Gary. Consequently, Gary took the order, comprising a commitment to sell 30 tonnes of wooden products a month for 24 months at NPLs asking price of $1,000 per tonne, documented the order on NPLs sales form, signed it, and sent it to RCL. The price of timber increased because of increased demand, and NPL began losing large amounts of money on the contract with RCL. Required: Referring to relevant sections of the Companies Act 1993 and the general law, advise Natural Products Co Ltd whether it is bound by the contract with Residential Construction Co Ltd.

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