Heavy Trucks

Issue

The issue is whether Heavy Trucks Ltd is bound to deliver the trucks to Susan.

Law

Under s 129(3) of the Corporations Act 2001 (Cth) a person can assume that anyone who a company holds out as an agent or an officer has been duly appointed and has the authority to perform duties that would typically be associated with that role of a similar company.

If however a person knew or suspected that an assumption was incorrect under s 128(4) of the Corporations Act 2001 (Cth) they are not entitled to make said assumption.

Sunburst Properties Pty Ltd v Agwater Pty Ltd (2005) SASC 335 holds that although a person’s suspicions should have been aroused they do not lose the benefit of the assumption in s 129 of the Corporations Act 2001 (Cth).

Application

Susan could assume Gordon had authority to make the deal under s 129(3) of the Corporations Act 2001 (Cth) until 12th July, after which Gordon would not longer be an employee of Heavy Trucks Ltd and thus any contracts would not be binding. The fact that Gordon on 19th July said he was staying on and that they had a new account number would not relieve a reasonable person of suspicion which relates to s 128(4) of the Corporations Act 2001 (Cth).

Sunburst Properties Pty Ltd v Agwater Pty Ltd (2005) SASC 335 applies to Susan’s situation only until 12th July when Patrick Franklin, Heavy Trucks Ltd CEO personally tells Susan about Gordon’s termination.

Upon receiving the call from Gordon regarding the new deal Susan should have called Heavy Trucks Ltd to clarify that Gordon was in fact back with the company and the new account number is correct.

Conclusion

Heavy Trucks Ltd is not bound to deliver the trucks to Susan.