Understanding Agency Law and Sale of Goods Act

Legal position of parties in contractual disputes governed by agency law

1. Grant got a job with Ace Computers Co. (“Ace”) as a salesman. He was given a course in salesmanship by Ace, business cards, several of the company's order forms, and brochures, and was assigned to an area in which to sell computers door-to-door on behalf of Ace. Grant would be paid on a commission basis. At his first house, he was so excited by the interest shown that he forgot the explicit instructions he had received -- only cash sales permitted. As agent for Ace, he sold a computer to be paid for in instalments to a 70-year-old woman: $25 per month for eight years because that was all she could afford. When Brown, Ace’s sales manager, heard of the deal, he fired Grant and said he would not go through with the contract. However, the woman insisted that Ace provide her with a computer as per the contract. Which of the following accurately describes the legal position of the parties

 

a. Ace is not bound by the contract because no representations of authority were made by it to the customer.

b. Ace would not be bound because Grant failed to follow the exact instructions he had received.

c. Ace would be bound to honor the sale contract because Grant acted within his apparent authority.

d. Grant had implied authority to sell computers to be paid for in instalments because that is the industry norm.

e. Brown is personally liable to the woman because he is the employee of the company who decided not to honour the contract.

 

 

2. With respect to duties owed by an agent to his principal, which of the following statements is false with regard to agency law? Explain your answer below.

 

a. Generally, an agent may not delegate his authority without the authorization of his principal.

b. Failure of an agent to perform his duties personally may allow his principal to sue the agent for breach of contract.

c. Failure of an agent to obey his principal and to act within the authority given him allows the principal to sue the agent for breach of warranty of authority.

d. An agent must use reasonable care, skill and diligence in the performance of his duties as agent.

e. When an agent enters a contract on behalf of his principal but does so in breach of his duties to the principal, the contract is void and cannot bind the principal.

 

Explanation:

 

 

 

 

3. In each of the following situations, name which rule that applies to determine when title passes, under the Sale of Goods Act and identify when title passes

 

a. Mrs. Jones orders a blanket from the Bay website.

 

 

b. Mary picks out a leather briefcase and leaves it with the seller so that initials can be engraved on it. The seller calls her to let her know that the engraving has been done and she can pick up the briefcase.

 

 

c. ABC Co. buys all the chemicals contained in a drum marked "A", but the price has to be ascertained by measuring the number of litres in the drum.

 

 

d. William is at Antiques Unlimited; he selects a certain desk on display and arranges to have it delivered to his office tomorrow and to be paid for in one month.

 

 

e. Merry Co. buys some Christmas trees in August from Trees Inc. which are growing and should be ready for delivery to Merry Co. in early December.

 

 

f. Katie buys a dress from Etsy but is not sure if she will like it. The seller agrees to ship the dress to her and if she does not approve of it, she can send it back without charge. Katie gets the dress and finds it fits perfectly; she forgets to contact the seller to let her know that she is going to keep it. She starts wearing it regularly.

 

 

 

4. Under the Sale of Goods Act what is the difference between the implied conditions of “fit for purpose” and “merchantable quality”?

 

 

 

 

5. Asif entered into an agreement to buy Jane’s house, he made it a condition of the sale that she get the roof repaired. Jane got the roof repaired, but before Asif moved in the house was damaged in a fire. Does the Sale of Goods Act apply, please briefly explain why or why not?

 

 

 

 

6. Describe what is meant if someone has “fiduciary duties”?

 

 

 

 

7. Please name and describe the tests that are used to indicate that someone is an employee rather than an independent contractor?

 

 

 

8. Kamala was hired as an employee of Kush Inc. At the time of her employment, she signed a contract which stated that if she were fired by Joe Inc. during her employment, that she would only be entitled to notice in accordance with the minimum standards under the Employment Standards Code (“ESC”). Assume there is no duress, undue influence, or duress and that Kamala understood the contract at the time of signing it.

 

(a) Kush Inc. fired Kamala without cause after 5 years of employment. Under the ESC, a five-year employee is entitled to pay in lieu of notice of 4 weeks. Joe Inc. gave Kamala the appropriate pay in lieu of notice in her final paycheque. Was she wrongfully dismissed and if so, does she have a claim to the higher common law amounts? Why or why not?
 

 

 

(b) If Kush Inc. fired Kamala and gave her 5 months’ pay in lieu of notice (assume that is what she would receive at common law for pay in lieu), because she told them that she was considering having a child and wanted to know more about their maternity policies, and in anticipation of her getting pregnant, Kush Inc. fired her because they did not want to pay her for her maternity leave and did not want to have someone who was off work for a year or longer, would she have been wrongfully dismissed? Why or why not? And what kinds of remedies could she ask for? (3 marks)

 

 

 

9. Jason worked in IT, setting up websites and other content for customers of his employer Web Co. Web Co had a lot of clients, and Jason was working on a large contract for one of Web Co.’s clients, Rex Inc. to set up a new line of business for them. When Jason was hired, he signed an employment agreement, which contained a non-solicitation clause, meaning he could not take any of Web Co.’s clients if he left their employment. It also contained a clause that he could not take any confidential information of the employer.

 

(a) Jason is earning $30 per hour as Web Co.’s employee. In the course of working on the project for Rex Inc. he decides that he can make more money by being paid by them directly, and he tells them that he will not do anymore work on their project unless they hire him directly and pay him $100 per hour. Rex Inc. reluctantly agrees because they need his work to start their new business line which they have invested a lot of money in. Web Co. finds out and fires Jason. Does Web Co. have to provide him with pay in lieu of notice? Why or why not?

 

 

 

(b) Assume Jason has left Web Co. and has set up a competing business with Web Co. This is in violation of the non-compete clause of the Employment Agreement which states, “Jason cannot set up a competing IT business for 5 years after employment that operates within 100 kms of Web Co.” Is this non-complete clause valid? Why or why not?