QUESTION ONE The articles of association of Racing Parts Pte Ltd states that any
ID: 342890 • Letter: Q
Question
QUESTION ONE
The articles of association of Racing Parts Pte Ltd states that any purchase of motor parts must be approved by the board of directors and that Andy only has written authority to acquire motor parts on behalf of the company up to $80,000 without the need to obtain approval from Laurence the managing director.
Andy is busy in the warehouse and asks his assistant Ramon, the assistant warehouse manager to place an order with Repco Ltd.
Ramon rings Repco Ltd and was told over the phone if he ordered $100,000 of motor parts they would be cheaper because they were on special.
Repco Ltd which has dealt with Racing Parts Pte Ltd before accepts and prepares the order. Prior to delivery, Ramon rings Repco and asks them to deliver one box containing 3 oil filters to Ramon’s home. Ramon has paid Racing Parts Pte Ltd $45 being the cost price for these items.
Racing Parts Pte Ltd now refuses to pay $100,000 for the goods
Required:
Advise Repco Ltd if it can recover the $100,000 from Racing Parts Pte Ltd.
Explanation / Answer
Andy has actual authority to acquire things only upto $80,000. As becoz Andy remains busy in the warehouse, he asks his assistant Ramon to place order with Repo Ltd. But, can Andy give permission to Ramon to place order above $80,000? How can he give authority which he actually doesn't have? Ramon placed order with Repco Ltd.
Before delivery, Ramon asks Repco to deliver 1box containing 3 oil filters to Ramon's home. Ramon has paid Racing parts Pte Ltd. $45 for these items. It's ok. No issue regarding this. But incase Ramon didn't pay, Repco should have asked him why he took delivery at home.
Now Racing Parts Pte Ltd. refuses to pay $100,000 for the goods. Repco Ltd. which has dealt with Racing Parts Pte Ltd. should ask them the reason for the non-payment for the goods. Repco must know business procedures of Racing Parts Pte Ltd. before doing any business with them. Repco Ltd. should sort out this problem by discussing clearly with Racing Parts, because they have to do further business, their business isn't over here. They shouldn't disappoint customers. They should follow their business rules strictly. When a customer places an order, at that moment all the formalities, like payment,delivery period,delivery place & the person who is accountable for delivery should be finalized. and no other interruptions should be made before delivery. Both the parties & companies should have mutual understanding.Also Repco & Racing Parts Pte Ltd. should have good rule over the situation so that they can run their business smoothly.