Contract Law - Contracts made by an employee under express authority
Where an employee, acting under his employer's express instructions1, enters into a contract with a third person the employer is liable to the third person upon the contract provided the employee, in making the contract, has strictly observed the tenor of his instructions2. If, therefore, without his employer's knowledge, the employee departs from his instructions3 and makes a contract different from that which he was in fact authorised to make, the employer isn't liable merely because of the existence of the original authority4. Therefore, an employee who is authorised to buy goods on behalf of his employer must, in the absence of circumstances pointing to a contrary conclusion5, buy them for cash6; he cannot, therefore, unless authorised to do so, render the employer liable to pay for them by buying them on credit7. Even the fact that the employer takes the benefit of his employee's contract doesn't necessarily impose any liability upon the employer under it, since he may be unaware that the contract, the benefit of which he takes, differs in its terms from the contract which he authorised8. If, therefore, he has arranged that the employee is to pay for the goods himself9, or if he has given the employee the money to pay for them10, the employee's failure to pay for the goods in accordance with his instructions doesn't of itself render the employer liable, even though the goods are in fact used for the employer's purposes11. Where, however, the contract is capable of severance, the employer remains liable to the extent to which the contract, as actually made, is in accordance with his instructions, though his liability extends no further12.
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Also in this section:
1171. When authority is implied
1172. Estoppel
1173. Ratification
1174. Employer's conduct
1175. Apparent scope of employee's authority
1176. Nature of contract and circumstances of employment
1177. Nature of employer's business
1178. Notice of determination of authority
1179. Employer under disability
1180. Employer a minor
1181. Employer suffering from mental disorder
1182. Corporations
1183. Liability of trustees and personal representatives for employees' acts
1184. Crown's liability on contracts
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