Phillip Fox has been hired as Micro-Tels Ltd representative for the North West Territories. While he has the power to negotiate contracts for the sale of computers on behalf of Micro-Tel. Company Ltd., he is told he must always get head office approval before the contract is concluded.

Upon completion of training, Phillip is given a Micro-Tel van, business cards which state "Manufacturer's Agent for the Northern Region", and a package of Microtel's authorized contract forms.

In the first 60 days, Phillip successfully negotiates 60 contracts for Microtel, each time with approval 0 head office In Toronto before completing and signing the contract. Phillip loses over 75 sales however in the same period when he can't immediately gee prior approval rom head office.

Frustrated by what he thinks Is a stupid rule, Phillip starts signing contracts and later getting head office approval. He dates the contracts the same day as he phones for approval and no one discovers his deception.

In the next 6 months Phillip has tripled his sales (& his commissions), but forgets to obtain head office approval at ail for 2 small orders to individual consumers. Both are processed by Microtel without a word of complaint.

In the next month, Phillip enters into first time negotiations with the Government of the NVT to supply 400 TDX computers. He gives them a break of 15% on the price (without telling anyone at Microtel) and signs a $445,000 contract with the GNVT. He is so happy with the deal he decides co personally deliver the contract to his boss Eric in Toronto and does so the next day.

"Not bad, eh?" says Phillip as Eric reads the contract. Eric responds "That's a great deal of money but we don't have 400 TDX computers in stock and we are not making any new ones. So, afraid we can't supply these.

Besides, its on the wrong form and no one here approved it! We're not bound by this.

Considering the involving Microtel and Phillip Fox, what could Microtel have done to prevent any liability regarding delivery of the computers?