What result if Peter sues Laura for the agreed price of the goods?
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Alice was Peter’s traveling salesperson and was also authorized to collect accounts. Before the agreed termination of the agency, Peter wrongfully discharged Alice. Alice then called on Tom, an old customer, and collected an account from Tom. She also called on Laura, a new prospect, as Peter’s agent, secured a large order, collected the price of the order, sent the order to Peter, and disappeared with the collections. Peter delivered the goods to Laura per the order. What result if Peter sues Tom for his account? Alice was Peter’s traveling salesperson and was also authorized to collect accounts. Before the agreed termination of the agency, Peter wrongfully discharged Alice. Alice then called on Tom, an old customer, and collected an account from Tom. She also called on Laura, a new prospect, as Peter’s agent, secured a large order, collected the price of the order, sent the order to Peter, and disappeared with the collections. Peter delivered the goods to Laura per the order. What result if Peter sues Laura for the agreed price of the goods? |
Explanation
Individual T knew Individual A as the agent of Individual P. They had done business deals before too. Individual P terminated the agency with Individual A before the term period ended. In such a situation, it was the responsibility of Individual P to send a notice to all the third parties regarding the termination of the agency with Individual A. This was not done by Individual P. Without such a notice, Individual T had no reason to disbelieve Individual A. If Individual T carried out a transaction with Individual A, even after Individual P had sent out a notice of termination of agency with Individual A, Individual P would then have been able to sue Individual T; that is not the case here.
Verified Answer
Individual P cannot sue Individual T as a third party, who has done business transactions with the agent, Individual A, on behalf of Individual P, the principal. Individual A has actual authority here. No notice of termination of agency between Individual P and Individual A was given to Individual T, which made Individual T believe that Individual A was still the agent of Individual.
