LML4806 ASSIGNMENT 1 CORRECT ANSWERS SEMESTER 2 DUE DATE 25th AUGUST 2024 GUARANTEED DISTINCTION.
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LML4806
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University Of South Africa
LML4806 ASSIGNMENT 1
CORRECT ANSWERS
SEMESTER 2
DUE DATE 25th AUGUST
2024 GUARANTEED
DISTINCTION.
With reference to the relevant authority/principle and the facts, advise Nancy on what Cycle for
Life (Pty) Ltd must allege and prove in order to prevent Touring Africa by Bicycle (Pty) Ltd from...
lml4806 assignment 1 correct answers semester 2 du
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LML4806 ASSIGNMENT 1
CORRECT ANSWERS
SEMESTER 2
th
DUE DATE 25 AUGUST
2024 GUARANTEED
DISTINCTION.
With reference to the relevant authority/principle and the facts, advise Nancy on what Cycle for
Life (Pty) Ltd must allege and prove in order to prevent Touring Africa by Bicycle (Pty) Ltd from
arguing that it is not bound by the contract concluded by Nancy and James. (5)
The different types of authority that a director or agent must have in order to contract on behalf of a
company are:
1. Actual Authority: This is the authority that the director or agent has been explicitly given by the
company to enter into contracts on its behalf. It can be either express (clearly stated) or implied
(reasonably inferred from the director or agent's position or previous conduct).
, Question: 1
Jane, John and Jabulani are the directors of Touring Africa by Bicycle (Pty) Ltd (“the company”),
a company that is based in Johannesburg. The memorandum of incorporation of the company
provides that only the board of directors have the authority to enter into contracts on behalf of the
company. James, the branch manager of the company in Durban, attends an outdoor show in
Durban to scout for useful new products for the company’s cycling excursions. At the outdoor show
one of the exhibitors, Cycle for Life (Pty) Ltd, has a limited special offer on electric bicycles for the
amount of R120 000.00 per bicycle. James contacts the directors of the company by way of a Zoom
call, and while speaking to the directors of the company on the Zoom call, James keeps his mobile
phone on speakerphone. The directors instruct James to purchase six of the electric bicycles on
behalf of the company. Nancy, the representative of Cycle for Life (Pty) Ltd, hears the instruction,
and because James has previously entered into agreements with Cycle for Life (Pty) Ltd without
any problems, she enters into an agreement with James for the sale of six electric 4 bicycles to
Touring Africa by Bicycle (Pty) Ltd. The electric bicycles are delivered to the company’s Durban
office. When Cycle for Life (Pty) Ltd sends an invoice for payment of the total amount of R720
000.00 for the six electric bicycles, Touring Africa by Bicycle (Pty) Ltd refuses to pay, arguing that
it is not bound by the contract as James did not have the authority to act on its behalf. Nancy
approaches you for legal advice. With reference to the relevant authority/principle and the facts,
advise Nancy on what Cycle for Life (Pty) Ltd must allege and prove in order to prevent Touring
Africa by Bicycle (Pty) Ltd from arguing that it is not bound by the contract concluded by Nancy
and James. (5)
ANSWER 1
The different types of authority that a director or agent must have in order to contract on behalf of a
company are:
1. Actual Authority: This is the authority that the director or agent has been explicitly given by the
company to enter into contracts on its behalf. It can be either express (clearly stated) or implied
(reasonably inferred from the director or agent's position or previous conduct).
2. Apparent Authority: This type of authority arises when the company, through its actions or
representations, leads a third party to believe that the director or agent has the authority to enter into
contracts on its behalf. Even if the director or agent does not have actual authority, the company may still
be bound by the contract if the third party reasonably believed the director or agent had the authority
based on the company's actions or representations.
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