Question 6 (10 marks)

Pam is the owner of a store selling boutique handbags. Joy has been employed by Pam as the store manager and principal salesperson for the past two years. One day Robyn is shopping for a new handbag and fell in love with the 'one-of-a kind' handbag in Pam's store. She starts negotiating with Joy. She was not aware that Joy has been instructed by Pam to not sell that handbag for less than $3,000. After 30 minutes of bartering, Robyn manages to persuade Joy to sell the handbag to her for only $2,500. She also gave Robyn $50 "coffee money" for giving her such a huge discount. The next day, upon discovering that Joy had disobeyed her instructions and sold the handbag to Robyn for only $2,500, Pam immediately calls Robyn (who left her contact number with Joy) and insists that she returns the handbag to the store, claiming that Joy has no authority to sell it to her.

Is Pam legally entitled to do this under the law of agency? Why/Why not? Was Joy permitted to accept the $50 from Robyn under the law of agency? Why/Why not?