Three months after rendition of the judgment, Stan sued Nancy for the purchase price of the goods. Is Nancy liable? Explain.

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Three months after rendition of the judgment, Stan sued Nancy for the purchase price of the goods. Is Nancy liable? Explain.

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Stan sold goods to Bill in good faith, believing him to be a principal. Bill in fact was acting as agent for Nancy and was within the scope of his authority. The goods were charged to Bill, and on his refusal to pay, Stan sued Bill for the purchase price. While this action was pending, Stan learned of Bill’s relationship with Nancy. Nevertheless, thirty days after learning of that relationship, Stan obtained judgment against Bill and had an execution issued that was never satisfied. Three months after rendition of the judgment, Stan sued Nancy for the purchase price of the goods. Is Nancy liable? Explain.

Explanation & AnswerSolution by a verified expert

Explanation

Individual B worked as an agent for Individual N. This information was unknown to Individual S while they sold goods to Individual B. As a result,Individual S sent the bill of purchased goods to Individual B as Individual S believed that they are the principal. However,as Individual B refused to make the payment, Individual S sued Individual B. It was while Individual S was waiting for the judgement, that they understood that Individual N was the principal. However,Individual S went ahead with the court proceedings, and Individual B was ordered to pay Individual S. If Individual S did not know of this fact about Individual N while the proceedings took place, Individual S would have asked for recovery from Individual N, which is not the case here. Individual N is liable only to Individual B and must reimburse the amount as the payment was done by Individual B to Individual S.

Verified Answer

Individual N is not liable to Individual S. Individual S had already obtained a judgement against Individual B for an undisclosed principal. Individual S obtained this judgement after understanding that Individual B worked on behalf of Individual N, thereby making it impossible to hold Individual N liable again.

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