David is a purchasing agent for ABC Corporation. Andy, a ABC corporate officer,

Question

David is a purchasing agent for ABC Corporation. Andy, a ABC corporate officer, gives David written authority to buy for the firm as many Apple devices as necessary. The next day, Andy calls David and tells him to buy only fifty iPads and nothing else. David shows the written authority to XYZ, Inc., and enters into a contract with XYZ to buy sixty iPads and a selection of iPods. XYZ ships the order to ABC. Is ABC liable to XYZ under the contract? Is David liable? In each case, if so, why? If not, why not?

Explanation / Answer

Since ABC Corporate Office (Andy) gave written authority to David (Purchasing Agent), it becomes official document and authority for David to purchase assets. Now inspite of Andy's purchase request of only 50 ipads, David purchased 60 ipads, ABC is liable to XYZ under contract. Also David is liable because he mis-used his authority of purchase.

ABC has to pay XYZ for 60 ipads. If Andy would have sent written communication, instead of phone call, he could have taken action against David for purchasing extra ipads and mis-used his authority.

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