POK Pty Ltd (POK) operates an investment counselling business specialising in advising its clients on how to invest their retirement benefits. While attending a conference, Adam, one of POK's non-executive directors, introduced himself to Janice, the managing director of MP Pty Ltd (MP) (a direct marketing company) and handed her his business card.

Janice told Adam that her company was negotiating an agreement to sell its innovative direct financial marketing systems to POK's main competitor.

Adam was particularly impressed with MP's direct financial marketing system. He was of the opinion that POK should move quickly and acquire the system before it went to POK's competitor. Adam offered Janice $3 million for the system. Janice gave Adam a sale agreement which he signed, "Adam, for and on behalf of POK".

Paul, POK's managing director, recently learned what Adam had done. He was not as enthusiastic as Adam about the direct financial marketing system and was of the opinion that POK was not bound by the agreement Adam signed, as the matter had not been approved by Paul or the full board of POK.

(a) Explain whether MP can enforce the sale agreement against POK. 

(b) Would your answer be different if the agreement had been entered into by.

(i) Paul, managing director, for and on behalf of POK.

(ii) Simon, the marketing manager of POK. Use Australia company law.

Answer rating: 100% (QA)

a MP may not be able to enforce the sale agreement against POK because Adam did not have actual or a... View the full answer