Road Measuring Professionals is a surveying firm based in Newcastle, NSW. Its major client is the New South Wales government, for whom it surveys roads that are under construction. Smith, Jones and Peters have been partners in the firm for some time. There is an agreement between them limiting the authority of the partners to contracts up to $ 10 000. Smith has often purchased surveying equipment on behalf of the firm from Sydney Engineering Supplies, dealing with its manager, Mary.

Smith buys a surveying instrument costing $ 11 000 from Mary. It is delivered on 5 June, and the firm receives an invoice for the contracted amount.

Smith has always wanted the firm to branch into road transportation, as he is also a qualified truck driver, but his partners have continually rejected such a move. Hoping to demonstrate to them the profitable nature of such work, Smith signs a contract on behalf of the firm to buy an old truck from Used Trucks Ltd for $ 8 500. The firm has received an invoice for the truck, which is due to be delivered on 6 June.

Jones and Peters are angry when they see the invoices, and have told both Mary and Used Trucks Ltd that the firm will not pay them. Advise Mary and Used Tricks Ltd as to their legal position, citing relevant law.