Commercial Agreement Essay Example | Topics and Well Written Essays - 2000 words

Commercial Agreement - Essay Example (Ogola, 1999) It follows from the above that an agent is a mere connecting link, bringing about a contractual relation between his principal and third parties. The acts of an agent, done within the scope of his authority, bind his principal. Once an agent has brought his principal into contractual relations with another, he drops out, and his principal sues or is sued on the contract. (Emanuel, 2004) Lopez had very strict instructions not to sell any other product other that tropical fruity juices produced by Fruity Limited Company. Using the company fund, he went ahead and bought cartons of bottled water from the local store at a discount and sold them to Danny making a profit of 100 from the deal which he failed to disclose to the company. Under the agency law, the agent must not make any secret profit or accept bribes. Where he does so, he is forced to refund all such amount to his principal and lose the right of receiving commission. Apart from this, the principal can, if chooses, repudiate the contract with the third party. For the case, Lopez makes secret profit which he was supposed to have disclosed to the company. Lopez as an agent for the company had very strict instructions on the specific products that were to be sold at the outlet. As an agent, he had not taken his duties seriously according to the agency law. According to the agency l... For this case, since Lopez undertook his duties against the company's instructions, the company had a right to terminate his agency without paying him for the work he had done. (Ogola, 1999) Advice to Lopez On the other hand, Lopez as an agent contract by the company to head the outlet, he should have kept proper accounts which he was supposed to produce them to his principal. He should not have mixed his principal's money with his own money unless the terms of the agency had permitted him to do so. For the case, Lopez had mixed his money with those of the company when he made secret profits. (Emanuel, 2004) Danny had ordered 10 boxes of tropical fruity juice from Lopez which he settled with Lopez previous personal debt owed to him. For the case, Lopez mixed his principal's money with his own against the agency agreement. For this case, Lopez was not supposed to settle personal debts with the company's money. Advice to Danny For the case of Danny whereby they settled personal debts with Lopez and also sold bottled water to Lopez, he has no case to answer. This is so because, an employee who has been placed in a position of responsibility may be assumed to have such authority as normally matches with the position, irrespective of what is his actual authority. This means that if a third party enters into a contract with such a person believing him to have proper authority of his employer, he will succeed directly against the employer. This is what is referred to as ostensible authority. For the case of Danny, he believed that Lopez being the manager of the outlet, had the authority to purchase on behalf of the company and also he could mix his money with the principal's money in the case