Question 2

Question 2 Kuat was the principal who appointed Lanuni as his agent to manage a bookstore in Bandar Puteri. Her letter of appointment allows Lanuni to make purchases of books of up to RM20,000 only. A month after her appointment as agent, she entered into a RM25,000 contract for the supply of books from Bandar Kinrara Sdn Bhd. The books were duly delivered to Lanuni. After the delivery of the books, Bandar Kinrara Son Bhd claimed payment of RM25,000 from Kuat. Nevertheless, Kuat refused payment as he claimed that Lanuni had no authority to enter a contract above RM20,000. Based on the above facts of the case analyse the following: a) identify the issue involved in the case. [5 marks] b) with reference to the relevant legal principles on law of agency, advise Kuat and Bandar Kinrara Sdn Bhd on the rights or obligations, on the transaction entered by Lanuni with the latter on behalf of the former as stated in the case above. [20 marks]