Holmes Construction Company (Holmes) hired Luke as the Materials Manager. Luke was authorized to
enter into contracts to purchase materials for Holmes. On many occasions, Luke contracted to purchase
plumbing supplies from FloTec Industries. Because of a downturn in the economy, Holmes terminated
Luke�s employment on November 30. On December 9, Luke contacted FloTec to purchase materials on
behalf of Holmes; however, Luke provided a new delivery address, accepted delivery and wrongfully kept
the materials. FloTec was not aware that Holmes terminated Luke. On December 15, Holmes provided
written notice to FloTec Industries that Luke had been terminated.
a. When was Luke�s express authority to act for Holmes effectively terminated?
b. Did Luke have authority to enter into the contract with FloTec on December 9? If so, what type of
authority did he have?
c. Is Holmes obligated to perform the December 9th contract?
d. What should Holmes have done differently?
LAW 2
Scenario 2
When was Luke’s express authority to act for Holmes effectively terminated?
Based on the Holmes Company, Luke’s contract was terminated on the 9 th of December;
hence Luke had no authority to transact any business on the behalf of the company (Smith,
2012). However, the fact that Holmes had terminated Luke’s contract did not in any way prevent
him from making transactions on behalf of the company to third parties except through written
communication. The Express authority for Luke to act for Holmes was effectively terminated on
the 15 th of December. An express authority is a binding type of authority that is expressly granted
in writing. Therefore, Holmes could have written an express of authority to help FloTec
indicating that Luke’s contract had been terminated.
Did Luke have authority to enter into the contract with FloTec on December 9? If so, what
type of authority did he have?
Yes, the apparent authority. This form of authority involves the actions of an agent in
dealing with a third party. In this scenario, Luke could have used apparent authority to transact
with FloTech. Since with apparent authority, it gives Luke the permission to implied or express,
to have a binding contract with FloTech. Nonetheless, Flotech’s ignorance when it comes to
Luke’s actions could not have prevented the deal from taking place (Beavers, 2015).
Is Holmes obligated to perform the December 9th contract?
Based on the Holmes Company, Luke’s contract was terminated on the 9 th of December;
hence Luke had no authority to transact any business on the behalf of the company. However, the
fact that Holmes had terminated Luke’s contract did not in any way prevent him from making
transactions on behalf of the company to third parties except through written communication.
LAW 3
What should Holmes have done differently?
Upon terminating Luke’s contract, Holmes should have made a public notice through
newspaper telling its business associates that Luke had no authority to make transactions on
behalf of the company. Moreover, Holmes should have informed its respective partners through
written, indicating that Luke was no longer authorized to make any transactions on behalf of the
company (Feuer, 2015).
Scenario 3
Discuss the possibility that this policy may violate Title VII of the Civil Rights Act.
By employing only Hispanic, Azteca Industries had violated against Title VII of the Civil
Rights Act of 1964. In reality, Tittle VII outlaws any manner of discrimination when it comes to
employment opportunities that are pegged on race, skin color, religious affiliation, gender or
place of origin. The United States Equal Employment Opportunity Commission (EEOC) has the
obligation to ensure that all these laws are implemented. In short, Azteca Industries is liable for
prosecution (Aiken, Salmon & Hanges, 2013).
References
LAW 4
Aiken, J. R., Salmon, E. D., & Hanges, P. J. (2013). The origins and legacy of the civil rights act
of 1964. Journal of Business and Psychology, 28(4), 383-399.
Beavers, J. A. (2015). Extension OK where individual had apparent authority to sign it. The Tax
Adviser, 46(10), 795-796.
Feuer, A. (2015). When may an agent act on behalf of an ERISA plan participant or
beneficiary?*. Journal of Pension Planning and Compliance, 41(1), 1-27.
Smith, D. (2012). MUST THE LAW BE CAPABLE OF POSSESSING AUTHORITY? Legal
Theory, 18(1), 69-100.
