Rights of Aurum and Dan Regarding the Land Contract - IRAC Analysis

Amy is a purchasing agent–employee for the Aurum Supply Company. Amy has authority to purchase gold on behalf of Aurum, which Aurum will then re-sells to its customers, and she carries an ID card identifying her as a purchasing agent for Aurum. While Amy is leaving a gold mine from which she has just purchased a large quantity of gold, she stops for a coffee in a local diner. While there, she encounters Dan, who owns 400 acres nearby with all mineral rights. Dan, in need of cash, offers to sell Amy the property for $6,000 per acre. On inspection of the property, Amy forms the opinion that the subsurface contains valuable gold deposits. Amy contracts to purchase the property for Aurum, signing the contract “Amy, as agent for Aurum Supply Company.” Amy takes the contract to Aurum. The CEO is furious, as Aurum is not in the property business and Amy is not authorized to purchase real property. The CEO informs Dan that it will not perform the contract because Amy did not have authority to act as its agent in this matter. Dan insists that he reasonably believed Amy was authorized, based on her ID card, and that the contract is enforceable.

Discuss, using the IRAC method, the rights of Aurum and Dan concerning the land contract.