180 Chapter 6Agency
that he can sell any books in stock, as long as he gets at least 75 per cent of the price dis-
played on them. He is told that under no circumstances should he buy any books.
While Padraig is away Arthur sells a book to Billy for 70 per cent of the price shown on it.
Billy thinks that Arthur owns the business. Charlene, who regularly does business with
Padraig, buys a book for 60 per cent of the price shown on it. She knows that Padraig usu-
ally insists on at least 75 per cent of the price shown, even as regards a trade buyer such as
herself. Arthur buys an antique Bible from David, on behalf of Padraig, for £50 because he is
sure that it is such a bargain that Padraig would want it. On his return, Padraig discovers that
the Bible bought from David is very rare and worth about £2,000. David has also discovered
the true value of the Bible and that Arthur had no authority to buy it. David says that the Bible
must be returned to him, but Padraig says that he is ratifying the contract.
Advise the parties of their legal positions.2 Hangpaper Ltd is a company which buys and sells wallpaper and decorating materials.
Hangpaper Ltd’s articles of association allow for the appointment of a managing director,
but none has ever been appointed. Adrian, a director of Hangpaper Ltd, has for the past
three years been allowed by the other directors to act as if he had been appointed manag-
ing director. Without the authority of his fellow directors, Adrian buys a large consignment of
wallpaper paste from Glueit and Co. When the paste ordered is delivered, it is found to be of
a type which is unsuitable for Hangpaper’s purposes. Hangpaper Ltd phone Glueit to say that
Adrian had no authority to buy the paste. Glueit insist that the contract must stand as they
believed that, as managing director, Adrian would have had authority. Advise Hangpaper Ltd
as to whether or not they will be bound by the contract with Glueit and Co, and of any rights
they might have or might acquire against either Adrian or Glueit and Co.3 Anita works for Pamela as a buyer of second-hand cars. Anita has been expressly forbidden
to buy any cars for more than £5,000 each. Acting in contravention of her instructions, Anita
buys a car from Tina for £6,250.
(a) Explain the circumstances in which this contract could be ratified by Pamela and how
such a ratification would be made.
(b) If there is an effective ratification of the contract, how would this affect the rights of
Pamela against Anita and Tina?4 Alfred is employed by PolishCo Ltd as a buyer of materials at a salary of £26,000 p.a. Alfred’s
job requires him to visit various manufacturers of solvents and to buy solvents which can be
used in the manufacture of polish. Recently, Alfred placed a large order with Madeit Ltd, a
company with which PolishCo Ltd had not previously dealt. The solvent delivered by Madeit
is slightly more expensive than that delivered by the previous supplier, but Alfred insists that
it is definitely of higher quality. Alfred also switched a regular order to SolvCo Ltd, a small
company with which PolishCo Ltd had not previously dealt. The solvent delivered by SolvCo
is slightly cheaper than that delivered by the previous supplier. It appears to be of exactly the
same quality. The managing director of PolishCo Ltd was watching the FA Cup Final on the
television when he noticed Alfred sitting in the crowd. The managing director has now dis-
covered that Alfred went to the Cup Final by courtesy of corporate hospitality supplied by
Madeit Ltd. The managing director has also discovered that Alfred has a significant share-
holding in SolvCo Ltd, and that the solvent supplied by Madeit is of no higher quality than
that previously supplied.
Advise PolishCo Ltd of any rights which they may have against either Alfred, Madeit Ltd
or SolvCo Ltd.