Sally works as a manager in the gardening section of her local Bunnings Store. Recently, Sally was approached by a customer asking questions about the store's range of buil-in kitchens. Allhough she knew nothing about the products, Sally recommended the deluxe kitchen package which came with free installation. Aftter completing the sale, Sally handed the customer her Bunnings business card (which identified her as a manager), explained that the customer should get his new kitchen professionally installed and to forward her the 3 party's invoice-which Bunnings would pay. A few weeks later, the customer is shocked to learn that Bunnings is refusing to pay his carpenter's $10,000 invoice and that Sally failed to mention that the offer was capped at $500. Required: a) With reference to Pacific Carriers v Paribas, what is the test for deciding if an agent had apparent authority? b) Analyse whether Sally had apparent authority to bind Bunnings Pty Ltd to this $10,000 contract. c) How would your answer be different if the customer knew that Sally didn't have permission to authorise this transaction

Sally works as a manager in the gardening section of her local Bunnings Store. Recently, Sally was approached by a customer asking questions about the store's range of buil-in kitchens. Allhough she knew nothing about the products, Sally recommended the deluxe kitchen package which came with free installation. Aftter completing the sale, Sally handed the customer her Bunnings business card (which identified her as a manager), explained that the customer should get his new kitchen professionally installed and to forward her the 3 party's invoice-which Bunnings would pay. A few weeks later, the customer is shocked to learn that Bunnings is refusing to pay his carpenter's $10,000 invoice and that Sally failed to mention that the offer was capped at $500. Required: a) With reference to Pacific Carriers v Paribas, what is the test for deciding if an agent had apparent authority? b) Analyse whether Sally had apparent authority to bind Bunnings Pty Ltd to this $10,000 contract. c) How would your answer be different if the customer knew that Sally didn't have permission to authorise this transaction

Contemporary Auditing

11th Edition

ISBN:9781337650380

Author:KNAPP

Publisher:KNAPP

Chapter3: Internal Control Issues

Section3.2: Howard Street Jewelers, Inc.

Problem 3Q

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