Exam 19: Agency and Other Methods of Carrying on Business

MC Electric Inc sold circuit boards.Dortmund was the director of sales for MC Electric.His employment contract said he was responsible for managing the sales force of five employees, including promoting sales.Pricing decisions and overall sales strategy were the responsibility of the president.In October, Dortmund was approached by GB Circuits Co, another supplier of circuit boards which had been asked to quote on a large order from a manufacturer of telephones, A-Tel.GB could not fill all the A-Tel order itself and proposed that MC should submit a quote for what GB could not supply and, if MC were successful, it would pay over 50 percent of its profits on the order to GB as compensation for giving the MC the opportunity to bid and the introduction to A-Tel.Dortmund agreed to this deal on behalf of Mc.Subsequently, MC supplied 2500 circuit boards to A-Tel which were paid for.MC refused to pay the 50 percent commission to Gb.Is there any legal basis upon which it could be argued that MC is NOT OBLIGED to pay the commission? Do you think that MC will be successful in avoiding payment?

Satinder is an employee of Bog Systems Inc.She acts as an agent on behalf of the corporation in that she buys office furniture on behalf of the corporation.Which of the following is TRUE?

Serena was selling her house and she entered into a contract with Jatinder under which he would act as her agent.Armin was interested in buying the house which had a vacant lot next door.Jatinder told Armin that the lot was too small to build on.Armin relied on this representation and bought the house for $200 000.Later the owner of the lot did build a house on it.Jatinder knew that the lot was big enough for a house but had lied to Armin to get him to buy Serena's house.Serena knew nothing about what Jatinder had told Armin.The true value of the house was $175 000.Which of the following are TRUE?

Four people, who are not partners, buy and sell a large number of apartment buildings.One of them, Marius, enters into a listing agreement with a real estate agent to sell one building.Marius says that he has authority to bind all four owners to the listing agreement.In fact, none of the others have authorized Marius to enter into the listing agreement, and they have no intention of selling their interests in the building.Which of the following is TRUE?

Maja is negotiating to become a Bread King franchisee with Bread King Inc.Maja is interested in getting a location near her home in Hamilton, Ontario.If Maja becomes a Bread King franchisee, which of the following are TRUE?

Jasmine enters into a contract to provide limousine services to Erin.Later, Jasmine tells Erin that she was acting as an agent on behalf of Big White Limousine Services Ltd.Which of the following is TRUE?

TopCo Inc appointed Ethel as its agent to negotiate a building lease on its behalf with DeGroot Realty Inc.At one point in the negotiations, DeGroot says to Ethel that it will buy her a new car if the negotiations are completed by the end of the week.Ethel cannot accept the car unless she obtains the permission of TopCo.

For many years, Street Sounds Inc, a music retailer, purchased its supply of CDs from Smithee Entertainment Ltd, a major music producer.And for all of those years, Smithee Entertainment entered into those supply contracts by using Alan as its agent.Alan would meet with the manager of Street Sounds, that manager would request a selection of CDs, immediately pay for the order, and Alan would arrange for Smithee Entertainment to deliver the goods to Street Sounds within one week.In March 2010, as he had done countless times before, Street Sounds' manager met with Alan, selected a number of CDs, paid for the order by giving $15 000 to Alan, and was told that a shipment from Smithee Entertainment would arrive within a week.What Street Sounds did not know, unfortunately, was that Smithee Entertainment had fired Alan several days earlier.Because it has not yet received any money from Alan, Smithee Entertainment refuses to deliver any CDs to Street Sounds.Which of the following statements is most likely to be TRUE?

I-Jack Inc and Sys/Com Ltd are two large corporations carrying on telecommunications businesses.They want to work together to set up a new business that would develop and sell telephones specifically designed to take advantage of the new Internet services each is offering.Their idea is that the new telephones could be sold with their telecommunications services as a package.Sys/Com will be responsible for the management of the business.This joint venture could be set up as

What are the purposes of the rules of agency?

Seldon owned several apartment buildings.Sheila is the president of Ivest-co Inc, a corporation incorporated under the Canada Business Corporations Act.Sheila entered into a lease with Seldon to rent some office space in one of Seldon's buildings on behalf of Invest-co.Seldon was confident that the lease would be enforceable against Ivest-co Inc because the president of the corporation had signed the lease on behalf of the corporation.Unknown to Seldon, the by-laws of the corporation said that the corporation could only enter into leases if two directors of the corporation signed them.Discuss whether the lease is enforceable.

Jennifer is the president and chief executive officer of Starburst Co, a corporation incorporated under the Canada Business Corporations Act carrying on a television production business.She has been discussing a new show with Stein.She enters into an agreement to buy Stein's idea for a new show.The by-laws of the corporation state that the president cannot agree to buy new story ideas without the approval of the board of directors.Jennifer did not obtain the approval of the board to buy Stein's idea.The contract is binding on Starburst nevertheless.

Hadi knew that he wanted to buy a car, but he also knew that he knew almost nothing about vehicles.His friend, Devon, in contrast, was an experienced mechanic.Devon agreed, in exchange for $250, to search the marketplace and obtain a suitable car for Hadi.Within a couple of days, Devon learned that Nadia was offering to sell two 2015 Honda Civics for a total price of $40 000.The blue Civic was in great shape and was absolutely perfect for Hadi.The yellow Civic, which Nadia called "a real lemon," required a complete engine replacement.Devon bought both cars, but after thinking about the situation for a night, kept the blue one for himself.The next day, Devon transferred the yellow car to Hadi in exchange for $20 000, which Devon said was Hadi's "fair share of the price." Hadi has now discovered the problem and wants to sue Devon.Which of the following statements is most likely to be TRUE?

Nora has entered into a joint venture with Scott to sell diet supplements.They have set up a corporation to carry on the business.They are the sole shareholders and directors.Nora is the president.Which of the following are TRUE?

Which of the following statements is TRUE with respect to franchises?

An agent can be liable for a contract that it negotiates on behalf of an unidentified principal.

Anton has entered into a contract with Donut Country Inc to supply Donut Country with coffee.Anton never intended to be responsible under the contract personally.He intended to find a commercial coffee supplier to undertake the obligations and pay him a fee for giving the supplier the contract with Donut Country.He did not disclose any of this to Donut Country, which thinks that they have contract with Anton.Which of the following best describes the situation with respect to the contract?

Carleton Computer Sales Inc carries on a business of buying and selling computers.Tara is negotiating to sell her computer to Carleton but no agreement has been reached between Tara and Carleton.In anticipation of selling it to Carleton, Tara agreed to leave her computer on a display rack at Carleton's store.Carleton sells Tara's computer to Eli for $1000, telling Eli that Carleton owned the computer.Which of the following best describes Tara's legal position based on the law of agency?

A strategic alliance includes

Oxford Management Inc is a management consulting firm.It has hired Jerome as its agent to buy new computers for its offices across the country.Jerome owns 10 computers, which are ideal for Oxford's needs.Oxford is a valued client, and he decides to sell the computers to Oxford for a price which is $10 000 less than their market value.As agent for Oxford, he decides to buy the computers for this price from himself.Which of the following is TRUE?