The ACME Sheet Metal Co. was planning to add a new product to its line and required some new, customized equipment. ACME contacted Evans who advertised as an independent dealer in industrial machinery. Evans told ACME representatives that he was a sales agent for XYZ Machinery Inc. and that he would be able to order the equipment from XYZ custom made. ACME signed an agreement with Evans subject to confirmation by XYZ for the manufacture, sale and installation of the equipment. ACME gave Evans a deposit for part of the price and a promissory note for the remainder. Evans then delivered the agreement and note to XYZ. The note was accepted as payment and the contract approved. Delivery of the machinery was delayed and ACME faxed XYZ on several occasions requesting a progress report. XYZ responded to only one of ACME's faxes, but never indicated that it did not consider itself bound by the agreement with ACME. Eventually, XYZ delivered and installed the machinery. The equipment was completely unsatisfactory and did not perform in any way to specifications. When ACME contacted XYZ to demand the machinery be corrected, XYZ said that it had no contract with ACME. As far as XYZ was concerned, it had sold Evans the machinery and that ACME's contract was with Evans, not XYZ. XYZ explained that it never deals directly with customers and that it deals only with Evans. It accepts responsibility for its business dealings and machinery only from Evans and, therefore, denied any liability to ACME. ACME sued XYZ for breach of contract. Discuss the rights and liabilities of the parties and render a decision.

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The Answer of The ACME Sheet Metal Co. was planning to add a new product to its line and required some new, customized equipment. ACME contacted Evans who advertised as an independent dealer in industrial machinery. Evans told ACME representatives that he was a sales agent for XYZ Machinery Inc. and that he would be able to order the equipment from XYZ custom made. ACME signed an agreement with Evans subject to confirmation by XYZ for the manufacture, sale and installation of the equipment. ACME gave Evans a deposit for part of the price and a promissory note for the remainder. Evans then delivered the agreement and note to XYZ. The note was accepted as payment and the contract approved. Delivery of the machinery was delayed and ACME faxed XYZ on several occasions requesting a progress report. XYZ responded to only one of ACME's faxes, but never indicated that it did not consider itself bound by the agreement with ACME. Eventually, XYZ delivered and installed the machinery. The equipment was completely unsatisfactory and did not perform in any way to specifications. When ACME contacted XYZ to demand the machinery be corrected, XYZ said that it had no contract with ACME. As far as XYZ was concerned, it had sold Evans the machinery and that ACME's contract was with Evans, not XYZ. XYZ explained that it never deals directly with customers and that it deals only with Evans. It accepts responsibility for its business dealings and machinery only from Evans and, therefore, denied any liability to ACME. ACME sued XYZ for breach of contract. Discuss the rights and liabilities of the parties and render a decision.