Adam is a traveling salesperson for Peter Petri Plumbing Supply Corp. Adam has e

Question

Adam is a traveling salesperson for Peter Petri Plumbing Supply Corp. Adam has express authority to solicit orders from customers and to offer a 5 percent discount if payment is made within thirty days of delivery. Petri has said nothing to Adam about extending credit. Adam calls on a new prospective customer, John's Plumbing Firm. John tells Adam that he will place a large order for Petri products if Adam will give him a 10 percent discount with payment due in equal installments thirty, sixt, and ninety, days from delivery. Adam says he has authority to make such a contract. John calls Petri and asks if Adam is Authorized to make contracts giving a discount. No mention is made of payment terms. Petri replies that Adam has authority to give discounts on purchase orders. On the basis of this information, John orders $10,000 worth of plumbing supplies and fixtures. The goods are delivered and are being sold. One week later, John receives a bill for $9,500 due in thirty days. John insists he owes only $9,000 and can pay it in these equal installments, at thirty, sixty, and ninety days from delivery. Discuss the liability of Petri and John only.

Explanation / Answer

As there is no legall/written contract regarding the terms of payment and Adam is legally authorised to give only 5% discount.

So, liability of John for payment is (10000-5% discount) = $ 9500

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