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Tony Enters into a Contract to Purchase a Car from Rip-Off

Question 6

Multiple Choice

Tony enters into a contract to purchase a car from Rip-off Motors Pty Ltd for $150 000 (it is a Porsche once owned by Prince William) . The contract is signed by Peter on behalf of Rip-off Motors Pty Ltd. Peter is a salesperson employed by Rip-off Motors Pty Ltd. Rip-off Motors Pty Ltd's constitution provides that any contract in excess of $100,000 must be in writing, signed by two directors with the company seal affixed thereto. Julia, who is a Prince William fan, has approached Rip-off Motors Pty Ltd and has offered more than Tony to purchase the car. Can Tony enforce the contract against Rip-off Motors Pty Ltd?


A) No, because the contract was not signed by two directors and the seal was not affixed therefore the contract is invalid.
B) Yes, because it doesn't matter that two directors didn't sign the contract and the seal was not affixed as provided in the constitution. Tony can always assume that Rip-off Motors Pty Ltd's constitution has been complied with.
C) Yes, provided Tony was not aware of the limitations set forth in Rip-off Motors Pty Ltd's constitution, he can assume that Rip-off Motors Pty Ltd's constitution has been complied with.
D) No, because an employee cannot enter into a contract on behalf of a company.

Correct Answer:

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