Corporations: What happens after an unauthorized act is discovered?

[robert_columbia]

I've asked here about approaching a low-level employee at, say, a cell phone store and making changes to the gobbledygook standard form contract and whether or not the modified contract would hold up in court. Lots of people claim that low level employees are Not Authorized to agree to modifications of the contract.

What happens, practically, if an employee has committed a violation of company policy with respect to a transaction, but the transaction itself is practically closed and a fait accompli?

E.g. Suppose I wander in to Big Electronics Store and see a TV on sale for $500. I "purchase" the TV in the regular way. Six months later, Corporate @ Big Electronics Store does an audit and determines that my local Big Electronics Store manager violated Section II.A.3.y (Special Cost Policies for Korean-Made Electronics During the Spring Season) because they forgot about it. According to the policy, for some reason BES Corporate does not allow local stores to sell Korean TV's for anything less than $600 during April.

What can practically happen? Can the store use the force of law to make me return the TV or else pay out the difference?

[TriPolar]

I was given legal advice that basically said a corporation or business owner is responsible for the acts of it's employees, whether specifically authorized or not. The company has the responsibility to adequately train and manage it's employees. I don't recall the exceptions, but it was 'unforeseeable' type of stuff.

[Giles]

It's not a question of corporation law: it's a question of agency law, because the salesperson could have been employed by a sole trader or by a partnership. The salesperson is acting as an agent of the business owner, so it's a matter of how far the agent can bind the company. To take two extremes:

(1) The customer points out that the goods are damaged, so the salesperson takes 10% off the price. That would be within the normal scope of the job, even if the business owner has said "No discounts for any reason," so the sale contract is binding between the customer and the business owner.

(2) The customer says "I'd like to buy this building and all its contents for $100," and the salesperson purports to accept that offer, since he hates the owner. The customer has no reason to think that sort of contract would be within the authorised agency of the salesperson, so it would not be binding on the owner.

To a certain extent this is all common sense, but lawyers and courts have to draw a line somewhere between these extremes.

[dracoi]

I don't know the details of the answer, but I would point out that buying a TV and modifying a cell phone contract are two totally different beasts. For one, the UCC has a lot more to say about products than services. Under those rules, a sale of goods might be binding on the company regardless of whether the employee was authorized. For another, there's a big difference between coming into your house to take back a TV and refusing to offer future, unpaid services under a contract that isn't binding on them.

[savager]

Generally speaking, for any product that you can buy direct, without entering into any kind of financial agreement, is the responsibility of the salesperson in the store as these staff work under the authority of the store they work for. The receipt you receive for any goods is the legally recognizable confirmation that you have bought and paid for that item and that the ownership of that item is yours.
There are some caveats to that policy however. The person who sold you that item must be a legal employee of that company and be acting as their representative.
The responsibility for selling something below cost or at discount etc then lies with that employee.
For any item where a financial agreement is arranged this is a different situation. Whilst the staff memeber remains the representative for the store, there are still terms and conditions which must be accepted and adhered to. These usually detail the price to be paid. The customer agreeing to these does not make this binding if the staff member has mis-represented these. The store then could have some come-back to highlight to the customer that the goods or service might not be provided at the cost the staff had indicated. Usually here a refund or similar item can be offered if the existing offer cannot be honoured.

[md2000]

I would think that "reasonable" comes into play here. If it seems that you and the employee colluded to give you a completely unreasonable deal, then perhaps the store would have a case to retreive their merchandise. First, however, they would have to take you to court and prove this to a judge. They can't just walk in and help themselves.

Of course, the problem is dollars. Unless the employee gave you a new house or a new Rolls Royce, odds are the legal cost of pursuing you would far outweigh the value of the recovered goods.

As for any ongoing contract, you can bet their lawyers would go over it with a fine-toothed comb; but again, how likely that the cost of fighting it would exceed the value recovered?

Not sure what the legal repercussions would be for the employee, but if he throughly disregarded company policy to the point of giving away the store, he could be guilty of theft. How would this be different from walking out the door with merchandise? (and if they have sharp lawyers, then once the act was defined as theft, the recipient would have to return the stolen goods...)

But, you cannot be charged with possession of stolen goods if you bought them in good faith; although, getting a $500 TV for $5 rarely qualifies as a good faith transaction.