Discuss the application of corporate law in the cases stated
Discuss the application of corporate law in the cases stated.This case has three issues that need to be addressed and the owner of the business Terrence, advised whether he has any contractual obligations to the other parties.
Issue 1: The first issue in the case is about Sara getting into a contract on behalf of Terrence without informing the customer that she was doing it on behalf of Terrence since the business is not hers. It is therefore important to assess and determine whether both Terrence and Gabby are legally bound by the contract made by Sara and Gabby.
Issue 2: The second issue in the case is the issue about Peter making a transaction with Mary in relation to gold supply. Peter makes the contracts despite Terrence telling him not to because the business had an over supply of gold. It is important for Terrence to know whether he is legally bound in this contract and whether he is obligated to receive the ordered gold and pay the amount agreed.
Issue 3: The third issue in the case further involves Terrence and Peter. Peter, who has already been sacked by Terrence, enters into a contract with Gordon buying $5000 worth diamonds, which he took with him. The issue that should be addressed is whether Terrence should pay Gordon the $5000 diamonds that Peter transacted in the company’s name.
In corporate law, the termination of the relationship is governed by express or implied by terms of the contract that exists between them (Leipziger, 2017, p 28). It continues to state that even in the case where the relationship has been nullified, the principal may still be liable considering the rules of ostensible authority. In the perspective of the third party, the agent still appears to hold some authority to act on behalf of the principle. In the second instance, Gordon who in this case is the third party again views Peter as an agent of Terrific Terry design. It is the company’s mistake to have left doorways open for the kind of liability they are facing (Zhou, 2014, p 76). There is no way terry terrific designs can prove they were not involved in the communication between Peter and Gordon happened via their business email system. Peter is guilty of defrauding Terry Terrific designs because he continued to transact business with full knowledge of his dismissal and is therefore liable to the company. He did not act in the best interests of the company. Terry terrific design is liable to pay Gordon five thousand dollars for the diamond peter defrauded them.