Dubois Inc. wishes to accumulate $1,393,500 by December 31, 2024, to retire bonds outstanding. The company deposits $214,800 on December 31, 2014, which will earn interest at 10% compounded quarterly, to help in the retirement of this debt. In addition, the company wants to know how much should be deposited at the end of each quarter for 10 years to ensure that $1,393,500 is available at the end of 2024. (The quarterly deposits will also earn at a rate of 10%, compounded quarterly.) (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Solution.

1. Duchess Cruise Lines, Inc. dry-docked a ship, intending to have maintenance done. Melinda, the
ship's supply manager, decided to purchase some needed supplies from Marine Equipment
Services, Inc., on the ship's behalf while it was in dry-dock. She charged the supplies to her
personal credit card. The supplies were delivered and used, but the cruise line refused to
reimburse Melinda for the cost of the supplies because she hadn't obtained the required
approvals before making the purchase. Melinda takes the position that doing so would have
delayed the purchase of the materials, because the person who normally grants approvals was on
leave for several weeks. The cruise line takes the position that someone else would have handled
the matter promptly if Melinda had simply followed company procedure. Melinda is threatening
to sue to obtain reimbursement.
Meanwhile, Steve, a member of the ship's maintenance crew, on shore leave for a day, came
back to the ship late, after drinking to excess. Before retiring for the night, Steve turned several
wheels on the dry-dock's wall, which resulted in a flooding of the tanks on one side of the dry-
dock. The ship listed, slid off the blocks holding it up, then crashed against the dry-dock wall,
ruining much of the dry-dock. The dry-dock owner is suing Duchess Cruise Lines, Inc., for
reimbursement of the damages to the dry-dock.
Paul was hired by Duchess Cruise Lines, Inc. as an independent project manager to coordinate
the dry-dock maintenance project. He was not an "employee" of Duchess Cruise Lines, Inc. and
was not authorized to make any purchases or enter into any contracts on the cruise line's behalf.
All of his proposals were to be submitted to a management team for approval. After Steve caused
the ship to slide off the blocks and crash into the dry-dock wall, Paul met on the site with a crane
company owner, Al, telling Al that he was Duchess' project manager and requesting a bid from
Al's company to move the ship to a new dry-dock facility for repair. At the time, Paul was
wearing a Duchess Cruise Lines, Inc. jacket and directing various employees on the dock. Al
provided a bid, Paul accepted it, and Paul signed a services contract with Al's company, signing
his name followed by the words, "Project Manager, Duchess Cruise Lines, Inc." Duchess
Cruise Lines, Inc. did not approve the hiring of Al's company and refuses to pay Al's company
on the contract. Paul claims he has no personal liability because he was acting on Duchess'
behalf in an emergency.
A. What agency law issues does this scenario raise?
B. How should the courts decide these disputes? Why?
C. How could all of this have been handled to prevent some of these issues?
D. What is apparent authority. Is it applicable here?
Solution

2. A.
In the first scenario, Melinda has purchased the supplies on her own without taking approval
from the management before purchase. In this case, Melinda would not be liable for the
reimbursement because she is not qualified to be an agent. She does not have the authority or
permission to act on behalf of the company.
In the second case, Duchess Cruise Lines, Inc. cannot be held liable for the reimbursement as its
employee has not committed the damage “within his scope of employment”. The employee was
on leave for the day, furthermore, he was excessively drunk, therefore employer cannot be held
for the damages caused to the dry-dock.
In the third scenario, Duchess Cruise Lines, Inc. would not be liable for the hiring of Al’s
company. In this case, Paul was an independent project manager and he has made the contract
using fraudulent identity. Hence, the company could not be held in the process.
B.
In all the disputes, Duchess Cruise Lines, Inc. is not liable under any of the circumstances
because he cannot be held by the agency law.
C.
The company should make clear policies regarding the agency laws and communicate it properly
to each of the employees. It would help to reduce the first and third scenario. As far as second
scenario is concerned the company should prohibit drinking and smoking in the working area. It
would reduce the chances of such accidents.