Jack Pole and Mary Leask are the directors of Pole and Leask Ltd. Mary's son, Sam, is not a director but is employed as a clerk with no official title. His office is on the same floor as those of the directors. To impress his friends, Sam has a sign placed on his office door that reads: "Mr Sam Leask, Executive Manager". The sign is very similar in size and appearance to the signs on the doors of each director, except that on their signs the word "Director" appears under their names instead of "Executive Manager". Sam decides he needs a computer for his office and signs a contract on behalf of Pole and Leask Ltd to buy a laptop for $1,200.00 from Computer Supplies Ltd after a sales representative called on the company and talked to Sam in his office. Jack and Mary are annoyed by Sam's sign and his unauthorised purchase but they say nothing to Sam and the company honours the contract to buy the laptop. A few weeks ago, Sam decided he needed an extra big screen to go with his laptop. He signed a contract on behalf of Pole and Leask Ltd to buy one for $6,000.00 from Computer Supplies Ltd. The sales representative asked Sam if he is authorised to make the purchase. Sam replied, "Yes, I'm an Executive Manager, remember?" Both directors are horrified by Sam's choice of screen and the price. They wish to cancel the deal. 

Advise whether Pole and Leask Ltd is liable under the contract signed on its behalf by Sam to buy the screen

Answer rating: 100% (QA)

Based on the principle of apparent authority Pole and Leask Ltd could be liable under the contract s... View the full answer