Principal is a classic automobiles dealer. As is common in t…
Principal is a classic automobiles dealer. As is common in the classic automobiles business, Principal acquires inventory by using a group of buyers to purchase classic automobiles on his behalf. The buyers are given credentials identifying them as buyers for Principal, and they use these credentials to introduce themselves to potential sellers. The buyers, using Principal’s contract forms, enter into contracts with sellers. Principal trains the buyers to be able to evaluate potential purchases and sends them into the field with specific instructions as to the items Principal wants them to buy. Agent, one of Principal’s buyers, was sent out to purchase classic automobiles for Principal. Agent was expressly prohibited from committing Principal to pay more than $15,000 cash for any one car. Agent was also expressly limited to only contracting to purchase classic automobiles made before 1975. Agent was specifically prohibited from agreeing to purchase any Jaguar or Mercedes-Benz. Agent was provided with credentials to introduce themselves to potential sellers along with Principal’s contract forms to use for any contracts with sellers. Principal’s contract forms included prominent language indicating that the form was not to be used to purchase a Jaguar or Mercedes-Benz, due to some bad luck Principal had in the past with some rogue agents. During the next several months, the following transactions took place:Using Principal’s credentials, Agent contracted to buy a 1963 Buick for $17,000 from Buickseller, who believed that Agent was acting on behalf of Principal. Principal, who has received a demand from Buickseller, does not want to pay $2,000 more than his maximum intended budget for the ’63 Buick and tells Buickseller he doesn’t want to purchase the car. Agent contracted with Jaguarseller to purchase a 1970 Jaguar on Principal’s behalf for $15,000. Principal now refuses to pay Jaguarseller. When Principal learned of Agent’s transactions with Buickseller and Jaguarseller, he decided to stop using Agent as his buyer. Principal sent Agent a letter terminating his agency and asking Agent to return the credentials that Principal had provided to Agent. Is Principal liable to:1. Buickseller for the purchase of the 1963 Buick? Explain. 2. Jaguarseller for the purchase of the 1970 Jaguar? Explain.
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