Business/commercial law essay question and answers

Mrs. Mutua employed Emmah as her sales agent. For several years Emmah sold goods to Mrs Cool, the proprietor of Ever Smart Boutique. Subsequently, Mrs. Mutua dismissed Emmah but did not inform Mrs. Cool of Emmah‟s dismissal.

After her dismissal, Emmah collected Sh. 50,000 from Mrs. Cool on behalf of Mrs.
Mutua. Mrs. Mutua has demanded the Sh. 50,000 from Mrs Cool who has refused to pay as she had already paid Emmah. Mrs Mutua intends to sue Mrs Cool.

Advise Mrs. Mutua.
ANSWER

• This problem is based on the liability of the principal for transactions entered into the agent.

• As a general rule the principal is liable on contracts entered into the agent within the scope of his authority.

• In this case it is implicit that Emmah had previously collected monies from Mrs. Cool having dealt with her on behalf of Mrs. Mutua. Hence she had authority to accept payment on behalf of Mrs. Mutua.

• Since Mrs. Mutua did not notify Mrs. Cool of the dismissal of Emmah as an agent, Mrs. Cool was discharged on payment to Emmah.

• Mrs. Mutua has no actionable claim against Mrs. Cool as payment to the agent discharges the 3rd party if the agent has authority to accept payment.



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