Adam is a traveling salesperson for Petri Plumbing Supply Corp. Adam has been gi

Question

Adam is a traveling salesperson for Petri Plumbing Supply Corp. Adam has been given express authority to offer a 5 per cent discount to customers if payment is made within 30 days of delivery. Nothing is said about extending any further credit to customers. Adam calls on a new prospective customer John’s plumbing Firm. Adam tells John that if he orders from him Petri is prepared to give a 10 per cent discounts with payments to be made in equal installments 30, 60 and 90 days after date of delivery. John calls Petri to see if Adam had authority to enter into a contract on Petri’s behalf. Petri confirms this even though no mention was made of the payment of the agreement. Petri does state Adam may give a discount on purchase orders. On this basis John orders $10,000 of plumbing supplies from Adam. John recives a bill for $9,500 to be paid in full in 30 days. John argues that he should only be liable to pay $9,000 in 3 equal installments 30, 60 and 90 days out.

Discuss the rights and obligations of Adam, Petri and John.?

Thanks!

Explanation / Answer

Dear Friend ,   

Well question you have asked .

First we will understand the concept:    

1. As as sales person,Adam can give purchase discount but no authority to give the extended credit more than 30 days. This was confirmed by his employer company Petri.       

2. If Adam gives any discount on behalf of Petri, then Petry has to oblige that condition as Adam has that much of authority . Next, if he gives more than credit of 30 days, the extended credit period would not give any liability to Petry as Adam has no power to do so.         

In this context we will answer this question as follows:

                Rights :-

John      **He can take the discount of 10%

Petri-     **It can collect the bill amount within 30 days

Adam    **He can legible to get the remuneration from Ptri to get the business

                Obligation:-

John      ** He has to make the payment within 30 days

Petri-     ** It has to bear the cost of 10% discount.

Adam    ** He may liable to compensate the loss caused by him to Jo

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