Tammy works as a bank manager for CBA Ltd (the bank). Tammy wears a badge which clearly identifies her as "Branch Manager". Last week, Tammy used her "Approval" stamp to approve and sign off on a Professional Indemnity Insurance policy that was taken out by Bill Bryson (an Accountant). The policy states that the bank will pay up to $10m in compensation to any of Bill's clients who suffer financial loss as a result of negligent advice given by Bill. One of Bill's customers relied on some financial advice Bill had given and was suing Bill for $8m. Bill has now contacted CBA Ltd and wishes to make a claim for $8m under his insurance policy. This is the first time CBA hears about the policy.

CBA is furious and refuses to pay out the money, claiming that Tammy was only authorized to approve home loans valued up to $500,000. She had no actual authority to sign Insurance Policies.

Advice Bill whether he can enforce the contract and payment of the $8m against CBA Ltd.

Answer rating: 100% (QA)

Bill can enforce the contract and payment of the 8 million against CBA Ltd since the contract entered into was a valid one and binding to both parties ... View the full answer